HORIZONS BETAPRO ETFs

Transcription

1 No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This Prospectus constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered for sale and only by persons permitted to sell these securities. PROSPECTUS Continuous Offering February 2, 2011 HORIZONS BETAPRO ETFs Double ETFs Horizons BetaPro S&P/TSX 60 Bull Plus ETF ( BetaPro HXU ) Horizons BetaPro S&P/TSX 60 Bear Plus ETF ( BetaPro HXD ) Horizons BetaPro S&P/TSX Global Base Metals Bull Plus ETF ( BetaPro HMU ) Horizons BetaPro S&P/TSX Global Base Metals Bear Plus ETF ( BetaPro HMD ) (the Double Equity ETFs ) Horizons BetaPro COMEX Gold Bullion Bull Plus ETF ( BetaPro HBU ) Horizons BetaPro COMEX Gold Bullion Bear Plus ETF ( BetaPro HBD ) Horizons BetaPro Crude Oil Bull Plus ETF ( BetaPro HOU ) Horizons BetaPro Crude Oil Bear Plus ETF ( BetaPro HOD ) Horizons BetaPro Natural Gas Bull Plus ETF ( BetaPro HNU ) Horizons BetaPro Natural Gas Bear Plus ETF ( BetaPro HND ) (the Double Commodity ETFs ) Inverse ETFs Horizons BetaPro S&P/TSX 60 Inverse ETF ( BetaPro HIX ) Horizons BetaPro S&P/TSX Capped Financials Inverse ETF ( BetaPro HIF ) Horizons BetaPro S&P/TSX Capped Energy Inverse ETF ( BetaPro HIE ) Horizons BetaPro S&P/TSX Global Gold Inverse ETF ( BetaPro HIG ) Horizons BetaPro S&P 500 Inverse ETF ( BetaPro HIU ) (the Inverse Equity ETFs ) Horizons BetaPro Natural Gas Inverse ETF ( BetaPro HIN ) Horizons BetaPro Crude Oil Inverse ETF ( BetaPro HIO ) (the Inverse Commodity ETFs ) Spread ETFs Horizons BetaPro Long Natural Gas/Short Crude Oil Spread ETF ( BetaPro HNO ) Horizons BetaPro Long Crude Oil/Short Natural Gas Spread ETF ( BetaPro HON ) (the Spread Commodity ETFs ) Initial Public Offering Single ETF Horizons BetaPro COMEX Copper ETF ( BetaPro HUK ) (the Single Commodity ETF ) The Horizons BetaPro ETFs are commodity pools. The Horizons BetaPro ETFs are also exchange traded mutual funds and consist in total of forty eight open-end mutual fund trusts established under the laws of Ontario, twenty of which are offered pursuant to this prospectus and are collectively referred to herein as the ETFs or individually as an ETF. Class A units ( Units ) of each ETF are or will be offered for sale on a continuous basis by this prospectus and there is no minimum number of Units of an ETF that may be issued. The Units of each ETF shall be

2 - 2 - offered for sale at a price equal to the net asset value of such Units next determined following the receipt of a subscription order. The Toronto Stock Exchange ( TSX ) has conditionally approved the listing of Units of BetaPro HUK under the TSX ticker symbol HUK. Units of the ETFs, other than BetaPro HUK, (each, an Existing ETF and together, the Existing ETFs ), are already listed and trade on the TSX. The manager and trustee of the ETFs is BetaPro Management Inc. ( BetaPro, the Manager or the Trustee ). The Manager has retained JovInvestment Management Inc. (the Investment Manager ) to act as investment manager of the ETFs. The Investment Manager has in turn retained ProShare Advisors LLC (the Portfolio Manager ), a limited liability company organized under the laws of the State of Maryland, to act as the subadvisor, and to make and execute investment decisions, on behalf of the ETFs. See Organization and Management Details of the ETFs at page 71. The ETFs, other than the Single Commodity ETF, are very different from most other exchange-traded funds. The Double ETFs, and Spread Commodity ETFs use leverage, and are riskier than funds that do not. The Double ETFs do not and should not be expected to return twice (i.e., +200% or -200%, as applicable) the return of their underlying index or referenced futures contract over any period of time other than daily. The Inverse ETFs do not and should not be expected to return the inverse (i.e., -100%) of the return of their underlying index or referenced futures contract over any period of time other than daily. The Spread Commodity ETFs do not and should not be expected to return the sum of the return (i.e., +100%) of a long futures contract and the inverse of the return (i.e., -100%) of a short futures contract over any period of time other than daily. The Double ETFs, Inverse ETFs and Spread Commodity ETFs returns over periods longer than one day will likely differ in amount and possibly direction from the performance of their underlying index, referenced futures contract or referenced futures contracts, as applicable, for the same period. This effect becomes more pronounced as the volatility of the underlying index, referenced futures contract or referenced futures contracts, as applicable increases. Investors should monitor their investment in an ETF daily. The Double ETFs are designed to provide daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to a multiple or inverse (opposite) multiple of the daily performance of a specified underlying index or referenced futures contract. The Double ETFs do not seek to achieve their stated investment objective over a period of time greater than one day. The Inverse ETFs are designed to provide daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to the single inverse (opposite) of the daily performance of a specified underlying index or referenced futures contract. The Inverse ETFs do not seek to achieve their stated investment objective over a period of time greater than one day. The Spread Commodity ETFs are designed to provide daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to the sum of the daily performance of a long futures contract and the single inverse (opposite) of a short futures contract. The Spread Commodity ETFs do not seek to achieve their stated investment objective over a period of time greater than one day.

3 - 3 - The Single Commodity ETF is designed to provide investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to the performance of a specified futures contract. The Double Commodity ETFs, Inverse Commodity ETFs, Spread Commodity ETFs and Single Commodity ETF (the Commodity ETFs ) track specified futures contracts that are for delivery in the future (e.g., for a subsequent delivery month). None of the ETFs invests in the physical spot market. The Commodity Futures Trading Commission in the United States has proposed the implementation of speculative limits for futures contracts in certain energy commodities, including futures contracts for crude oil and natural gas, which, if implemented without amendment, are not expected to affect the Commodity ETFs or the counterparty to the Commodity ETFs. These proposed regulations are not final. In the event the final form of these regulations impose position limits that are materially different from those currently proposed, the Manager could be required to suspend new subscriptions of the affected Commodity ETFs. See Risk Factors - Commodity Market Risk at page 53. In order to achieve its investment objective, each ETF may invest in equity securities and/or other financial instruments, including derivatives. See Investment Objectives at page 7. Currently, each ETF seeks to achieve its investment objective by means of a forward contract. Each Double ETF and each Spread Commodity ETF will employ absolute leverage that will generally not exceed 2.0 times the net asset value of that ETF. See Investment Strategies of the ETFs at page 25. The ETFs are subject to certain investment restrictions. See Investment Restrictions at page 38. Investors are or will be able to buy or sell Units of each ETF on the TSX through registered brokers and dealers in the province or territory where the investor resides. Investors may incur customary brokerage commissions in buying and/or selling Units of an ETF. Unitholders may redeem Units of an ETF in any number for cash, subject to a redemption discount, or may redeem a prescribed number of Units (a PNU ) of an ETF or a multiple PNU of the ETF for cash equal to the net asset value of that number of Units of the ETF, subject to any redemption charge. Each ETF will issue Units directly to Designated Brokers and Dealers (each as hereafter defined). As of January 31, 2011, the closing market prices for Units of the Existing ETFs were as follows: ETF TSX Ticker Symbol Market Price of Unit as of January 31, BetaPro HXU HXU $22.65 BetaPro HXD HXD $8.84 BetaPro HMU HMU $23.13 BetaPro HMD HMD $5.02 BetaPro HBU HBU $30.06 BetaPro HBD HBD $5.97 BetaPro HOU HOU $7.62 BetaPro HOD HOD $7.36 BetaPro HNU HNU $6.61 BetaPro HND HND $7.98 BetaPro HIX HIX $10.52

4 - 4 - ETF TSX Ticker Symbol Market Price of Unit as of January 31, BetaPro HIF HIF $8.66 BetaPro HIE HIE $9.50 BetaPro HIG HIG $11.56 BetaPro HIU HIU $8.15 BetaPro HIN HIN $13.82 BetaPro HIO HIO $9.31 BetaPro HNO HNO $8.10 BetaPro HON HON $ If no market price is available on this Trading Day, the closest prior Trading Day on which the ETF was traded is used. No Dealer, Acceptable Counterparty or Initial Bank Counterparty (each as hereafter defined) has been involved in the preparation of this prospectus or has performed any review of the contents of this prospectus. The Canadian securities regulators have provided the ETFs with a decision exempting the ETFs from the requirement to include a certificate of an underwriter in the prospectus. The Designated Brokers and Dealers of the ETFs are not underwriters of the ETFs in connection with the distribution by the ETFs of their Units under this prospectus. For a discussion of the risks associated with an investment in Units of an ETF, see Risk Factors at page 41. Each investor should carefully consider whether their financial condition and/or retirement savings objectives permit them to buy Units of an ETF. Units of the ETFs are highly speculative and involve a high degree of risk, some not traditionally associated with mutual funds. No ETF by itself constitutes a balanced investment plan. An investor may lose a portion or even all of the money that they place in an ETF. The risk of loss in trading derivatives can be substantial. In considering whether to buy Units of an ETF, the investor should be aware that trading derivatives can quickly lead to large losses as well as large gains. Such trading losses can sharply reduce the net asset value of an ETF and consequently the value of an investor s Units in the ETF. Market conditions may also make it difficult or impossible for an ETF to liquidate a position. The ETFs are subject to certain conflicts of interest. See Organization and Management Details of the ETFs - Conflicts of Interest at page 79. An ETF will be subject to the charges payable by it as described in this prospectus that must be offset by revenues and trading gains before an investor is entitled to a return on his or her investment. See Fees and Expenses at page 38. It may be necessary for an ETF to make substantial trading profits to avoid depletion or exhaustion of its assets before an investor is entitled to a return on his or her investment. BetaPro HUK is newly organized. The success of BetaPro HUK will depend on a number of conditions that are beyond the control of BetaPro HUK. There is a substantial risk that the investment objectives of BetaPro HUK will not be met. Participation in transactions by an ETF may involve the execution and clearing of trades on or subject to the rules of a foreign market. None of the Canadian securities regulatory authorities or Canadian exchanges regulates activities of any foreign markets, including the execution, delivery and clearing of transactions, or has the power to compel enforcement of the rule of a foreign market or any applicable foreign law. Generally, any foreign transaction will be governed by applicable foreign laws. This is true even if the foreign market is formally linked to a Canadian market so that a position taken on a market may be liquidated by a transaction on another market. Moreover, such laws or

5 - 5 - regulations will vary depending on the foreign country in which the transaction occurs. For these reasons, entities such as the ETFs may not be afforded certain of the protective measures provided by Canadian legislation or Canadian exchanges. In particular, funds received from investors for transactions by an ETF on foreign exchanges may not be provided the same protection as funds received in respect of transactions by an ETF on Canadian exchanges. Although the ETFs are mutual funds under Canadian securities legislation and each ETF is considered to be a separate mutual fund under such legislation, certain provisions of such legislation and the policies of the Canadian Securities Administrators applicable to conventional mutual funds and designed to protect investors who purchase securities of mutual funds, do not apply. The Investment Manager currently acts as investment advisor to several mutual funds and commodity pools. The Portfolio Manager has extensive experience in the U.S. managing investment portfolios similar to the ETFs. THESE BRIEF STATEMENTS DO NOT DISCLOSE ALL OF THE RISKS AND OTHER SIGNIFICANT ASPECTS OF INVESTING IN THE ETFs. AN INVESTOR SHOULD CAREFULLY READ THIS PROSPECTUS, INCLUDING THE DESCRIPTION OF THE PRINCIPAL RISK FACTORS OF THE ETFs AT PAGE 41, BEFORE INVESTING IN THE ETFs. In the opinion of Fasken Martineau DuMoulin LLP, counsel to the ETFs, provided that an ETF qualifies as a mutual fund trust within the meaning of the Income Tax Act (Canada) (the Tax Act ), or the Units of an ETF are listed on a designated stock exchange within the meaning of the Tax Act, Units of that ETF will be qualified investments under the Tax Act for a trust governed by a registered retirement savings plan, a registered retirement income fund, a deferred profit sharing plan, a registered disability savings plan, a registered education savings plan or a tax-free savings account. While each ETF is or will be a mutual fund under the securities legislation of certain provinces and territories of Canada, each has been granted exemptive relief from certain provisions of Canadian securities legislation applicable to conventional mutual funds. Registrations and transfers of Units of an ETF will be effected only through the book-entry only system administered by CDS Clearing and Depository Services Inc. Beneficial owners will not have the right to receive physical certificates evidencing their ownership. Additional information about the ETFs is or will be available in the most recently filed annual financial statements together with the accompanying auditor s report, any interim financial statements filed after these annual financial statements and annual and interim management reports of fund performance, of each ETF. These documents are or will be incorporated by reference into this prospectus which means that they legally form part of this prospectus. For further details, see Documents Incorporated by Reference on page 96. You can get a copy of these documents at your request, and at no cost, by calling the Manager at or toll-free at , or from your dealer. These documents are also available on the Manager s website at or by contacting the Manager by at info@hbpetfs.com. These documents and other information about the ETFs are also available on the website of SEDAR (the System for Electronic Document Analysis and Retrieval) at BetaPro Management Inc. 26 Wellington St East, Suite 700 Toronto, Ontario M5E 1S2 Tel: Fax: Toll Free:

6 TABLE OF CONTENTS page PROSPECTUS SUMMARY i Organization and Management of the ETFs... xii Summary of Fees and Expenses... xiii GLOSSARY...1 OVERVIEW OF THE LEGAL STRUCTURE OF HORIZONS BETAPRO ETFS...6 INVESTMENT OBJECTIVES...7 INVESTMENT STRATEGIES...25 Overview...25 General Investment Strategies...28 Overview of the Investment Structure...36 OVERVIEW OF THE SECTORS THAT THE ETFS INVEST IN...36 INVESTMENT RESTRICTIONS...38 Tax Related Investment Restrictions...38 FEES AND EXPENSES...38 Fees and Expenses Payable by the ETFs...38 Fees and Expenses Payable Directly by the Unitholders...40 ANNUAL RETURNS...40 RISK FACTORS...41 Commodity Risk...41 Leverage Risk...41 Long Term Performance Risk...44 Price Volatility Risk...44 Spot v. Futures Risk...47 Aggressive Investment Technique Risk...47 Concentration Risk...48 Trading in Derivatives is Highly Leveraged...48 Corresponding Net Asset Value Risk...48 Counterparty Risk...49 Correlation Risk...49 Inverse Correlation Risk...49 Spread Correlation Risk...49 Liquidity Risk...52 Market Risk...52 Early Closing Risk...52 Regulatory Risk...52 Commodity Market Risk...53 No Assurance of Meeting Investment Objective...53 Equity Risk...53 Tax Risk...53 Conflicts of Interest...54 Price Limit Risk...55 Liability of Unitholders...55 No Assurance of Continued Participation...55 Reliance on the Manager and the Investment Manager...55 Reverse Repurchase Transaction Risk...55 Designated Broker/Dealer Risk...55 Exchange Risk...56 page Units may Trade at Prices other than Net Asset Value...56 Borrowing Risk...56 Changes to the Underlying Index...56 Foreign Exchange Risk...56 Exchange Rate Risk...57 Securities Lending Risk...57 DISTRIBUTION POLICY...57 PURCHASES OF UNITS...57 Issuance of Units of an ETF...57 Buying and Selling Units of an ETF...58 REDEMPTION OF UNITS...59 Book-Entry Only System...60 Short-Term Trading...61 PRIOR SALES...61 Trading Price and Volume...61 INCOME TAX CONSIDERATIONS...67 Status of the ETFs...68 Taxation of ETF...68 Taxation of Holders...69 Taxation of Registered Plans...71 Tax Implications of the Fund s Distribution Policy...71 ORGANIZATION AND MANAGEMENT DETAILS OF THE ETFS...71 Manager of the ETFs...71 Officers and Directors of the Manager...71 Duties and Services to be Provided by the Manager...74 Investment Manager...75 Officers and Directors of the Investment Manager...75 Details of the Investment Management Agreement...76 Duties and Services to be Provided by the Portfolio Manager...77 Details of the Portfolio Management Agreement...77 Designated Brokers...78 Conflicts Of Interest...79 Independent Review Committee...79 The Trustee...80 Custodian...81 Auditors...81 Transfer Agent and Registrar...81 Promoter...81 CALCULATION OF NET ASSET VALUE...81 Valuation Policies and Procedures of the ETFs..81 Reporting of Net Asset Value...83 ATTRIBUTES OF THE SECURITIES...83 Description of the Securities Distributed...83 Modification of Terms...84 UNITHOLDER MATTERS i-

7 TABLE OF CONTENTS (continued) page Meetings of Unitholders...84 Matters Requiring Unitholder Approval...84 Amendments to the Trust Declaration...85 Reporting to Unitholders...86 TERMINATION OF THE ETFS...86 Procedure on Termination...87 PLAN OF DISTRIBUTION...87 BROKERAGE ARRANGEMENTS...87 RELATIONSHIP BETWEEN ETFS AND DEALERS...87 PRINCIPAL HOLDERS OF UNITS OF THE ETFS...87 PROXY VOTING DISCLOSURE FOR PORTFOLIO UNITS HELD...88 MATERIAL CONTRACTS...91 LEGAL AND ADMINISTRATIVE PROCEEDINGS...91 EXPERTS...91 EXEMPTIONS AND APPROVALS...92 OTHER MATERIAL FACTS...92 Index Information...92 Futures Information...94 PURCHASERS STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION...95 DOCUMENTS INCORPORATED BY REFERENCE...96 AUDITORS CONSENT...97 AUDITORS REPORT...98 AUDITORS REPORT...99 AUDITORS CONSENT (NEW ETF) AUDITORS REPORT (NEW ETF) CERTIFICATE OF THE ETFS, THE MANAGER AND PROMOTER...109

8 PROSPECTUS SUMMARY The following is a summary of the principal features of this distribution and should be read together with the more detailed information and financial data and statements contained elsewhere in this prospectus or incorporated by reference in the prospectus. Capitalized terms not defined in this summary are defined in the Glossary. The ETFs The Horizons BetaPro ETFs consist in total of forty eight open-end mutual fund trusts established under the laws of Ontario, twenty of which are offered pursuant to this prospectus. See Overview of the Legal Structure of Horizons BetaPro ETFs at page 6. Based on the way each ETF seeks to track its specified underlying index, referenced futures contract or referenced futures contracts, the ETFs offered in this prospectus can be divided into six categories: Double Equity ETFs; Inverse Equity ETFs; Double Commodity ETFs; Inverse Commodity ETFs; Spread Commodity ETFs; and a Single Commodity ETF and, depending on what kind of index or referenced futures contract an ETF seeks to track, each ETF is either a Commodity ETF or an Equity ETF. Double Equity ETFs Investment Objectives The Double Equity ETFs are designed to provide daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to a multiple or inverse (opposite) multiple of the daily performance of their specified Underlying Index. The Double Equity ETFs do not seek to achieve their stated investment objective over a period of time greater than one day. In order to achieve its investment objective, each Double Equity ETF may invest in equity securities and/or other financial instruments, including derivatives. See Other Material Facts Index Information at page 92. Double Equity ETFs Underlying Index Daily Objective BetaPro HXU S&P/TSX 60 Index 200% of the daily performance of its Underlying Index BetaPro HXD S&P/TSX 60 Index 200% of the inverse of the daily performance of its Underlying Index BetaPro HMU BetaPro HMD S&P/TSX Global Base Metals Index S&P/TSX Global Base Metals Index 200% of the daily performance of its Underlying Index 200% of the inverse of the daily performance of its Underlying Index

9 - ii - Risk Factors Investing in Units of a Double Equity ETF can be speculative, can involve a high degree of risk and may only be suitable for persons who are able to assume the risk of losing their entire investment. Prospective investors should therefore consider the following risks, among others, before subscribing for Units of a Double Equity ETF. Long Term Performance Risk. Concentration Risk Corresponding Net Asset Value Risk Correlation Risk Market Risk Regulatory Risk No Assurance of Meeting Investment Objective Tax Risk Price Limit Risk No Assurance of Continued Participation Reverse Repurchase Transaction Risk Exchange Risk Borrowing Risk Foreign Exchange Risk Securities Lending Risk Exchange Rate Risk Leverage Risk Price Volatility Risk Aggressive Investment Technique Risk Trading in Derivatives is Highly Leveraged Counterparty Risk Inverse Correlation Risk Liquidity Risk Early Closing Risk Equity Risk Conflicts of Interest Liability of Unitholders Reliance on the Manager and the Investment Manager Designated Broker/Dealer Risk Units may trade at prices other than net asset value Changes to the Underlying Index See Risk Factors at page 41. Double Commodity ETFs Investment Objectives The Double Commodity ETFs are designed to provide daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to a multiple or inverse (opposite) multiple of the daily performance of their specified Referenced Futures. The Double Commodity ETFs do not seek to achieve their stated investment objective over a period of time greater than one day. In order to achieve its investment objective, each Double Commodity ETF may invest in equity securities and/or other financial instruments, including derivatives. See Other Material Facts Futures Information at page 94. Double Commodity ETFs BetaPro HBU BetaPro HBD Referenced Futures COMEX gold futures contract for a subsequent delivery month COMEX gold futures contract for a subsequent Daily Objective 200% of the daily performance of its Referenced Futures 200% of the inverse of the daily performance of its

10 - iii - delivery month Referenced Futures BetaPro HOU BetaPro HOD BetaPro HNU BetaPro HND Risk Factors light sweet crude oil futures contract for a subsequent delivery month light sweet crude oil futures contract for a subsequent delivery month Natural Gas futures contract for a subsequent delivery month Natural Gas futures contract for a subsequent delivery month 200% of the daily performance of its Referenced Futures 200% of the inverse of the daily performance of its Referenced Futures 200% of the daily performance of its Referenced Futures 200% of the inverse of the daily performance of its Referenced Futures Investing in Units of a Double Commodity ETF can be speculative, can involve a high degree of risk and may only be suitable for persons who are able to assume the risk of losing their entire investment. Prospective investors should therefore consider the following risks, among others, before subscribing for Units of a Double Commodity ETF. Commodity Risk Long Term Performance Risk. Spot v. Futures Risk Concentration Risk Corresponding Net Asset Value Risk Correlation Risk Market Risk Regulatory Risk No Assurance of Meeting Investment Objective Tax Risk Price Limit Risk No Assurance of Continued Participation Reverse Repurchase Transaction Risk Exchange Risk Borrowing Risk Foreign Exchange Risk Securities Lending Risk Leverage Risk Price Volatility Risk Aggressive Investment Technique Risk Trading in Derivatives is Highly Leveraged Counterparty Risk Inverse Correlation Risk Liquidity Risk Early Closing Risk Commodity Market Risk Equity Risk Conflicts of Interest Liability of Unitholders Reliance on the Manager and the Investment Manager Designated Broker/Dealer Risk Units may trade at prices other than net asset value Exchange Rate Risk See Risk Factors at page 41.

11 - iv - Inverse Equity ETFs Investment Objectives Inverse Equity ETFs are designed to provide daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to the single inverse (opposite) of the daily performance of their specified Underlying Index. The Inverse Equity ETFs do not seek to achieve their stated investment objective over a period of time greater than one day. In order to achieve its investment objective, each Inverse Equity ETF may invest in equity securities and/or other financial instruments, including derivatives. See Other Material Facts Index Information at page 92. Inverse Equity ETFs Underlying Index Daily Objective BetaPro HIX S&P/TSX 60 Index 100% of the inverse of the daily performance of its Underlying Index BetaPro HIF S&P/TSX Capped Financials Index 100% of the inverse of the daily performance of its Underlying Index BetaPro HIE S&P/TSX Capped Energy Index 100% of the inverse of the daily performance of its Underlying Index BetaPro HIG S&P/TSX Global Gold Index 100% of the inverse of the daily performance of its Underlying Index BetaPro HIU S&P % of the inverse of the daily performance of its Underlying Index Risk Factors Investing in Units of a Inverse Equity ETF can be speculative, can involve a high degree of risk and may only be suitable for persons who are able to assume the risk of losing their entire investment. Prospective investors should therefore consider the following risks, among others, before subscribing for Units of an Inverse Equity ETF. Long Term Performance Risk. Inverse Correlation Risk Concentration Risk Corresponding Net Asset Value Risk Correlation Risk Market Risk Price Volatility Risk Aggressive Investment Technique Risk Counterparty Risk Liquidity Risk Early Closing Risk Equity Risk

12 - v - Leverage Risk Trading in Derivatives is Highly Leveraged Regulatory Risk No Assurance of Meeting Investment Objective Tax Risk Price Limit Risk No Assurance of Continued Participation Reverse Repurchase Transaction Risk Exchange Risk Conflicts of Interest Liability of Unitholders Reliance on the Manager and the Investment Manager Designated Broker/Dealer Risk Units may trade at prices other than net asset value Changes to the Underlying Index Borrowing Risk Foreign Exchange Risk Securities Lending Risk Exchange Rate Risk See Risk Factors at page 41. Inverse Commodity ETFs Investment Objectives Inverse Commodity ETFs are designed to provide daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to the single inverse (opposite) of the daily performance of their specified Referenced Futures. The Inverse Commodity ETFs do not seek to achieve their stated investment objective over a period of time greater than one day. In order to achieve its investment objective, each Inverse Commodity ETF may invest in equity securities and/or other financial instruments, including derivatives. See Other Material Facts Futures Information at page 94. Inverse Commodity ETFs BetaPro HIN BetaPro HIO Risk Factors Referenced Futures natural gas futures contract for a subsequent delivery month light sweet crude oil futures contract for a subsequent delivery month Daily Objective 100% of the inverse of the daily performance of its Referenced Futures 100% of the inverse of the daily performance of its Referenced Futures Investing in Units of an Inverse Commodity ETF can be speculative, can involve a high degree of risk and may only be suitable for persons who are able to assume the risk of losing their entire investment. Prospective investors should therefore consider the following risks, among others, before subscribing for Units of an Inverse Commodity ETF. Commodity Risk Long Term Performance Risk Spot v. Futures Risk Concentration Risk Leverage Risk Price Volatility Risk Aggressive Investment Technique Risk Trading in Derivatives is Highly

13 - vi - Corresponding Net Asset Value Risk Correlation Risk Market Risk Regulatory Risk No Assurance of Meeting Investment Objective Tax Risk Price Limit Risk No Assurance of Continued Participation Reverse Repurchase Transaction Risk Exchange Risk Borrowing Risk Foreign Exchange Risk Securities Lending Risk Leveraged Counterparty Risk Inverse Correlation Risk Liquidity Risk Early Closing Risk Commodity Market Risk Equity Risk Conflicts of Interest Liability of Unitholders Reliance on the Manager and the Investment Manager Designated Broker/Dealer Risk Units may trade at prices other than net asset value Exchange Rate Risk See Risk Factors at page 41. Single Commodity ETF Investment Objectives The Single Commodity ETF is designed to provide investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to the performance of its specified Referenced Futures. In order to achieve its investment objective, the Single Commodity ETF may invest in equity securities and/or other financial instruments, including derivatives. See Other Material Facts Futures Information at page 94. Single Commodity ETF BetaPro HUK Risk Factors Referenced Futures COMEX copper futures contract for a subsequent delivery month Investment Objective the performance of its Referenced Futures Investing in Units of the Single Commodity ETF can be speculative, can involve a high degree of risk and may only be suitable for persons who are able to assume the risk of losing their entire investment. Prospective investors should therefore consider the following risks, among others, before subscribing for Units of a Single Commodity ETF. Commodity Risk Spot v. Futures Risk Concentration Risk Corresponding Net Asset Value Risk Correlation Risk Market Risk Regulatory Risk No Assurance of Meeting Investment Objective Aggressive Investment Technique Risk Trading in Derivatives is Highly Leveraged Counterparty Risk Liquidity Risk Early Closing Risk Equity Risk Conflicts of Interest Liability of Unitholders

14 - vii - Tax Risk Price Limit Risk No Assurance of Continued Participation Reverse Repurchase Transaction Risk Exchange Risk Borrowing Risk Foreign Exchange Risk Reliance on the Manager and the Investment Manager Designated Broker/Dealer Risk Units may trade at prices other than net asset value Exchange Rate Risk Securities Lending Risk See Risk Factors at page 41. Spread Commodity ETFs Investment Objectives Spread Commodity ETFs are designed to provide daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to the sum of the daily performance of their Long Futures and the single inverse (opposite) of their Short Futures. The Spread Commodity ETFs do not seek to achieve their stated investment objective over a period of time greater than one day In order to achieve its investment objective, each Spread Commodity ETF may invest in equity securities and/or other financial instruments, including derivatives. See Other Material Facts Futures Information at page 94. Spread Commodity ETFs Referenced Futures s Long Futures Short Futures Daily Objective BetaPro HNO Natural Gas futures contract for a subsequent delivery month light sweet crude oil futures contract for a subsequent delivery month sum of 100% of the daily performance of the Long Futures and 100% of the inverse of the daily performance of the Short Futures BetaPro HON light sweet crude oil futures contract for a subsequent delivery month Natural Gas futures contract for a subsequent delivery month sum of 100% of the daily performance of the Long Futures and 100% of the inverse of the daily performance of the Short Futures

15 - viii - Risk Factors Investing in Units of a Spread Commodity ETF can be speculative, can involve a high degree of risk and may only be suitable for persons who are able to assume the risk of losing their entire investment. Prospective investors should therefore consider the following risks, among others, before subscribing for Units of a Spread Commodity ETF. Commodity Risk Long Term Performance Risk Spot v. Futures Risk Concentration Risk Corresponding Net Asset Value Risk Correlation Risk Spread Correlation Risk Market Risk Regulatory Risk No Assurance of Meeting Investment Objective Tax Risk Price Limit Risk No Assurance of Continued Participation Reverse Repurchase Transaction Risk Exchange Risk Borrowing Risk Foreign Exchange Risk Securities Lending Risk Leverage Risk Price Volatility Risk Aggressive Investment Technique Risk Trading in Derivatives is Highly Leveraged Counterparty Risk Inverse Correlation Risk Liquidity Risk Early Closing Risk Commodity Market Risk Equity Risk Conflicts of Interest Liability of Unitholders Reliance on the Manager and the Investment Manager Designated Broker/Dealer Risk Units may trade at prices other than net asset value Exchange Rate Risk See Risk Factors at page 41. Investment Strategies A forward contract is used to achieve the investment objective of each ETF. Each Double ETF and each Spread Commodity ETF will employ absolute leverage that will generally not exceed 2.0 times the net asset value of that ETF. See Investment Strategies at page 25. The ETFs are subject to certain investment restrictions. See Investment Restrictions at page 38. Each ETF has invested or intends to invest initially in a basket of Canadian equity securities. Such securities will then be sold to an Acceptable Counterparty pursuant to the Initial Forward Documents. Initially, the Initial Bank Counterparty acts or will act as the counterparty to the Initial Forward Documents. The ETFs may replace an Acceptable Counterparty, including the Initial Bank Counterparty, or engage additional Acceptable Counterparties at any time. An Acceptable Counterparty or its guarantor must have an approved credit rating within the meaning of NI The purchase price payable by an Acceptable Counterparty under the Initial Forward Documents will be based upon: (i) (ii) a two times multiple or inverse (opposite) multiple of the daily performance of the applicable Underlying Index or Referenced Futures in respect of the Double ETFs; a one times inverse (opposite) multiple of the daily performance of the applicable Underlying Index or Referenced Futures in respect of the Inverse ETFs;

16 - ix - (iii) (iv) the performance of the applicable Referenced Futures in respect of the Single Commodity ETF; or the sum of the daily performance of a Long Futures and a one times inverse (opposite) multiple of the daily performance of a Short Futures in respect of the Spread Commodity ETFs. Each ETF will be entitled to pre-settle the Initial Forward Documents in whole or in part from time to time as needed to fund Unit redemptions and market repurchases of Units, pay administrative expenses, meet other liquidity needs and such other purposes as that ETF may determine. Each ETF, other than a US$ ETF, will be rebalanced every day on which a session of the TSX is open. Each US$ ETF will be rebalanced when the TSX and the New York Stock Exchange are both open and provided it is not a Bank Holiday. An Acceptable Counterparty will also be entitled to advance the settlement date of the Initial Forward Documents upon the occurrence of certain specified events of default or termination events. In the United States the CFTC has proposed the implementation of speculative limits for futures contracts in certain energy commodities, including futures contracts for crude oil and natural gas, which, if implemented without amendment, are not currently expected to affect the Commodity ETFs or the counterparty to the Commodity ETFs. These proposed regulations are not final. In the event the final form of these regulations impose position limits that are materially different from those currently proposed, the position limits could impact an affected Commodity ETF s ability to rebalance (e.g., it may impact a Double ETF s ability to maintain a consistent daily absolute leverage of two times its current net assets), could impair its ability to seek additional exposure as a result of new subscriptions, could adversely affect its ability to achieve its investment objective, or could impact the counterparty s ability to hedge its obligations to the Commodity ETF and, as a result, the Manager could be required to suspend new subscriptions of the affected Commodity ETFs. See Risk Factors - Commodity Market Risk at page 53. Offering Units of each ETF are or will be offered for sale on a continuous basis by this prospectus, and there is no minimum number of Units of an ETF that may be issued. The Units of each ETF shall be offered for sale at a price equal to the net asset value of such Units next determined following the receipt of a subscription order. See Plan of Distribution at page 87. As mentioned above, in the United States the CFTC has proposed the implementation of speculative limits for futures contracts in certain energy commodities, including futures contracts for crude oil and natural gas, which, if implemented without amendment, are not currently expected to affect the Commodity ETFs or the counterparty to the Commodity ETFs. These proposed regulations are not final. In the event the final form of these regulations impose position limits that are materially different from those currently proposed, the Manager could be required to suspend new subscriptions of the affected Commodity ETFs. See Risk Factors - Commodity Market Risk at page 53. The Toronto Stock Exchange has conditionally approved the listing of Units of BetaPro HUK under the TSX ticker symbol HUK.

17 - x - The Manager expects that the first issuance, listing and trading of Units on the TSX of the Single Commodity ETF will occur on or about February 9, Units of each Existing ETF are currently trading on the TSX. See Attributes of the Securities at page 83. Brokerage Arrangements Special Considerations for Purchasers Subject to the prior written approval of the Manager, the Portfolio Manager is authorized to establish, maintain, change and close brokerage accounts on behalf of each ETF. The provisions of the so-called early warning requirements set out in Canadian securities legislation do not apply in connection with the acquisition of Units of an ETF. In addition, each ETF has obtained exemptive relief from the securities regulatory authorities to permit a Unitholder of that ETF to acquire more than 20% of the Units of that ETF through purchases on the TSX without regard to the takeover bid requirements of applicable Canadian securities legislation, provided such Unitholder, and any person acting jointly or in concert with such Unitholder, undertakes to the Manager not to vote more than 20% of the Units of that ETF at any meeting of Unitholders of that ETF. The ETFs have also obtained exemptive relief from the restrictions relating to redemptions of seed capital invested in a commodity pool. Market participants are permitted to sell Units of an ETF short and at any price without regard to the restrictions of the Universal Market Integrity Rules that generally prohibit selling securities short on the TSX unless the price is at or above the last sale price. See Attributes of the Securities - Description of the Securities Distributed at page 83. Distributions and Automatic Reinvestment The ETFs will distribute sufficient net income (including net capital gains) so that no ETF will be liable for income tax in any given year. The Manager intends, but is under no obligation, to make such distributions, usually on an annual basis. All distributions will be automatically reinvested on behalf of each Unitholder in additional Units of the applicable ETF and then consolidated. Distributions of an ETF are expected to consist primarily of returns of capital and capital gains for income tax purposes. These distributions are intended to benefit Unitholders since returns of capital are generally not subject to tax (but reduce the adjusted cost base of the Units) and distributions of capital gains will generally be taxed at a lower rate than distributions of interest and other ordinary income. As long as the Initial Forward Documents are in effect, the level of distributions paid by an ETF to its Unitholders will depend upon payments received by the ETF thereunder. If the Initial Forward Documents are terminated, the level of distributions paid by an ETF to its Unitholders will depend on the replacement investment strategy adopted by the ETF. See Distribution Policy at page 57. Redemptions In addition to the ability to sell Units of an ETF on the TSX, Unitholders of an ETF may redeem Units of that ETF in any number for cash, subject to a redemption discount, or may redeem a PNU of an ETF or a multiple PNU of an ETF for cash equal to the net asset value of that number of Units, subject to any redemption charge.

18 - xi - Each ETF has also obtained exemptive relief from the securities regulatory authorities to permit each ETF to borrow up to 15% of its net asset value under an overdraft facility, and in each case to provide a security interest over its portfolio assets in connection therewith. The purpose of entering into an overdraft facility will be to accommodate redemptions of PNUs (or multiple thereof) by Dealers or Designated Brokers which exceed the 5% borrowing threshold in applicable Canadian securities legislation. Notwithstanding the foregoing, no ETF has engaged in any borrowing to date, nor does the Manager anticipate any ETF borrowing in the near future. The Manager will advise affected Unitholders if an ETF is required to borrow more than 10% of its net asset value. See Redemption of Units at page 59. Income Tax Considerations Each ETF has made, or intends to make, an election in accordance with the Tax Act to have each of its Canadian securities (including Common Share Portfolio securities) treated as capital property, such that gains or losses realized by that ETF on the sale of Canadian securities will be taxed as capital gains or capital losses. A Unitholder of an ETF will generally be required to include, in computing income for a taxation year, the amount of income (including any taxable capital gains) that is paid or becomes payable to the Unitholder by the ETF in that year (including such income that is reinvested in additional Units of the ETF). A Unitholder of an ETF who disposes of a Unit of the ETF that is held as capital property, including on a redemption or otherwise, will realize a capital gain (or capital loss) to the extent that the proceeds of disposition (other than any amount payable by the ETF which represents an amount that is otherwise required to be included in the Unitholder s income), net of costs of disposition, exceed (or are less than) the adjusted cost base of the Unit of the ETF. Pursuant to the Trust Declaration, an ETF may allocate and designate any income or capital gains realized by the ETF as a result of any disposition of property of the ETF undertaken to permit or facilitate the redemption of Units to a Unitholder whose Units are being redeemed. In addition, each ETF has the authority to distribute, allocate and designate any income or capital gains of the ETF to a Unitholder who has redeemed Units of the ETF during a year in an amount equal to the Unitholder s share, at the time of redemption, of the ETF s income and capital gains for the year or such other amount that is determined by the ETF to be reasonable. Any such allocations will reduce the redeeming Unitholder s proceeds of disposition. Each investor should satisfy himself or herself as to the federal and provincial tax consequences of an investment in Units of an ETF by obtaining advice from his or her tax advisor. See Income Tax Considerations at page 67. Eligibility for Investment Provided that an ETF qualifies as a mutual fund trust within the meaning of the Tax Act, or the Units of the ETF are listed on a designated stock exchange within the meaning of the Tax Act, Units of the ETF will be qualified investments under the Tax Act for a trust governed by a registered retirement savings plan, a registered retirement income fund, a registered disability savings plan, a deferred profit sharing plan, a registered education savings plan or a tax-free savings account.

19 - xii - Documents Incorporated by Reference Termination Additional information about the ETFs is available or will be in the most recently filed annual and interim financial statements of each ETF and the most recently filed annual and interim management report of fund performance of each ETF. These documents are or will be incorporated by reference into this prospectus. Documents incorporated by reference into this prospectus legally form part of this prospectus just as if they were printed as part of this prospectus. These documents are or will be publicly available on the website of the ETFs at and may be obtained upon request, at no cost, by calling toll-free or by contacting your dealer. These documents and other information about the ETFs are also publicly available at See Documents Incorporated by Reference at page 96. The ETFs do not have a fixed termination date but may be terminated at the discretion of the Manager in accordance with the terms of the Trust Declaration. See Termination of the ETFs at page 86. Organization and Management of the ETFs The Manager and Trustee Investment Manager Portfolio Manager Custodian Auditors BetaPro Management Inc., a corporation incorporated under the laws of Canada, is the manager and trustee of each ETF. The Manager will be responsible for providing or arranging for the provision of administrative services required by the ETFs. The principal office of BetaPro is 26 Wellington Street East, Suite 700, Toronto, Ontario, M5E 1S2. BetaPro was incorporated under the laws of Ontario and was primarily organized for the purpose of managing investment products, including the ETFs. See Organization and Management Details of the ETFs Manager of the ETFs on page 71. JovInvestment Management Inc., a corporation incorporated under the laws of Ontario, is the investment manager of the ETFs and an affiliate of the Manager. Investment advisory and portfolio management services will be provided to the ETFs by the Investment Manager. The Investment Manager is a wholly-owned subsidiary of Jovian, a management and holding company with interests in a variety of financial service firms specializing in wealth and asset management. The principal office of the Investment Manager is at 26 Wellington Street East, Suite 608, Toronto, Ontario M5E 1S2. See Organization and Management Details of the ETFs Investment Manager on page 75. ProShare Advisors LLC has been appointed portfolio manager of the ETFs. The Portfolio Manager has been retained by the Investment Manager to make and execute investment decisions on behalf of the ETFs. The Portfolio Manager is registered as an investment advisor with the U.S. Securities and Exchange Commission and is exempt from registration as a commodity pool operator and commodity trading advisor. The Portfolio Manager is a limited liability company organized under the laws of the State of Maryland on January 14, The Portfolio Manager is independent of the Manager. The principal office of the Portfolio Manager is located at 7501 Wisconsin Avenue, Suite 1000, Bethesda, Maryland. See Organization and Management Details of the ETFs Duties and Services to be Provided by the Portfolio Manager on page 77. State Street Trust Company Canada is the custodian of each ETF and is independent of the Manager. The Custodian will provide custodial services to the ETFs. The Custodian is located in Toronto, Ontario. See Organization and Management Details of the ETFs Custodian on page 81. KPMG LLP is responsible for auditing the annual financial statements of each ETF. The auditors are independent of the Manager. The head office of the auditors is located in Toronto, Ontario. See Organization and Management Details of the ETFs Auditors on page 81.