Horizons ETFs Announces Share Consolidations and Security Splits

TORONTO – October 21, 2022 – Horizons ETFs Management (Canada) Inc. (“Horizons ETFs”) has announced today that it intends to consolidate shares or units (each individually a “Security”, or collectively, the “Securities”) of certain ETFs (the “Consolidating ETFs”) and split the Securities of certain ETFs (the “Splitting ETFs”) as indicated in the tables below.

Security Consolidations
After the close of trading on Friday, November 4, 2022, on the Toronto Stock Exchange (the “TSX”), the Securities of the Consolidating ETFs will be consolidated on the basis of the ratio (the “Consolidation Ratio”) set out in the table below, and will begin trading on a post-consolidated basis on Monday, November 7, 2022, the effective date of the consolidation:

 
When a Security consolidation occurs, the net asset value per Security is increased by the same ratio as the Security consolidation so that the Security consolidation has no impact on the value of the investor’s total Security position. An investor’s cost per Security is also increased by the same ratio as the Security consolidation, although their total cost remains unchanged.

No fractional Securities will be issued. Where the consolidation results in a fractional Security, the number of post-consolidation Securities will be rounded down to the nearest whole Security, in the case of a fractional interest that is less than 0.5, or rounded up to the nearest whole number, in the case of a fractional interest that is 0.5 or greater.

Security Splits

The Securities of the Splitting ETFs listed in the table below will be subdivided on the basis of the ratio (the “Split Ratio”) as set out below. The split will be payable on Friday, November 4, 2022, to securityholders of record on Thursday, November 3, 2022. Securities will trade on a “due bill” basis at the opening of the TSX on Wednesday, November 2, 2022 until, November 4, 2022, inclusive with the “due bill redemption date” on Tuesday, November 8, 2022. The Securities of the Splitting ETFs will commence trading on a split-adjusted basis on the “ex-dividend” date of Monday, November 7, 2022. Securities of the Splitting ETFs purchased on the ex-dividend date will no longer have an attached entitlement to the Security split.

 
When a split occurs, the net asset value per Security is decreased by the same ratio as the Security split so that the Security split has no impact on the value of the investor’s total Security position. An investor’s cost per Security is also decreased by the same ratio as the Security split, although their total cost remains unchanged. Securityholders of the Splitting ETFs on the record date will be entitled to receive additional Securities for every Security of the Splitting ETF they own on that date, as stated in the table above.

The “due bill” trading procedures of the TSX will apply to the Splitting ETFs split of their Securities. A due bill is an entitlement attached to listed securities undergoing a corporate action, such as the ones described above. Securities of the Splitting ETF will trade on a due bill basis from one trading day prior to the record date until the payment date, inclusive (the “Due Bill Period”). Any trades that are executed on the TSX during the Due Bill Period will be identified to ensure purchasers of the Securities of the Splitting ETF receive the entitlement to the Security split.

Horizons ETFs reserves the right to cancel or amend these corporate actions if we deem it appropriate to do so, before the effective date of Monday, November 7, 2022.

Securityholder Information

Securityholders of the Consolidating ETFs or Splitting ETFs do not need to take any action to effect these transactions. Securityholders will have their brokerage accounts automatically updated to reflect the consolidations and splits. A securityholder’s broker may take several days to reflect these transactions in the securityholder’s account (the “Settlement Period”). However, the securityholder is still able to trade the Securities of the Consolidating ETFs and/or the Splitting ETFs during this time. Horizons ETFs recommends investors contact their broker by phone during the Settlement Period in order to trade the post-consolidation securities and post-split securities.

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 $18.5 billion of assets under management and 93 ETFs listed on major Canadian stock exchanges.

For further information:
Contact Martin Fabregas, Investor Relations, (416) 601-2508 or (866) 641-5739

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

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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 Horizons Exchange Traded Products 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 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(s) or future returns on investment in the ETF(s). Only the returns for periods of one year or greater are annualized returns.

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 Inverse Bitcoin ETF (“BITI”), which is a -1X ETF, as described in the prospectus, is a speculative investment tool that is not a conventional investment. Its Target, an index which replicates exposure to rolling Bitcoin Futures and not the spot price of Bitcoin, is highly volatile. As a result, the 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.

Horizons TRI ETFs include ETFs that use physical replication instead of a total return swap to gain exposure to their benchmark index. These ETFs are a class of shares in a corporate class structure that allows the ETF to deliver its returns in a tax-efficient manner. With this structure, the ETF will receive the total return of the Index (less any withholding tax payable on constituent distributions if applicable), which is reflected in the NAV of the ETF. However, investors are not expected to receive any taxable distributions from these ETFs. 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 a cash deposit that can change over time.

This communication is intended for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to purchase exchange traded products (the “Horizons Exchange Traded Products”) managed by Horizons ETFs Management (Canada) Inc. and is not, and should not be construed as, investment, tax, legal or accounting advice, and should not be relied upon in that regard. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies. These investments may not be suitable to the circumstances of an investor.

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