Horizons Gold Yield Fund has filed a preliminary prospectus for and initial public offering of its Class A and Class F units at $10 per unit, AlphaPro Management Inc. said Monday.

Toronto-based AlphaPro is the manager and trustee of the fund.

The fund was created to offer investors a low cost exposure to the price of gold bullion, while providing monthly tax-efficient distributions.

It aims to provide unitholders with exposure to the price of gold bullion hedged to the Canadian dollar, less the fund’s fees and expenses. It addition, the fund intends to provide unitholders with tax-efficient monthly distributions, initially expected to be $0.0542 per unit ($0.65 per year to yield 6.5% on the issue price of $10 per unit). It is initially expected that monthly distributions received by investors will consist primarily of return of capital.

The fund will seek to achieve its investment objectives by gaining exposure to a portfolio consisting of securities and other instruments that provide exposure to the price of gold bullion. The gold portfolio will be managed by JovInvestment Management Inc. JovInvestment intends to write at-the-money covered call options on approximately, and not more than, 33% of the securities in the gold portfolio. JovInvestment says it will not manage the call option writing strategy to achieve a specific target return, but will manage it to generate attractive option premiums that temper the volatility associated with owning the gold portfolio.

The fund is expected to automatically convert into an ETF by no later than July 30, 2012.
Prospective purchasers may purchase Units either by cash payment or an exchange of selected freely tradeable securities. Prospective purchasers under the exchange option will be required to deposit their exchange eligible securities prior to 17:00 ET on November 23.

The exchange eligible securities in Canadian- and U.S.-based ETFs.

The Canadian-based ETFs are:
> Claymore Gold Bullion ETF, TSX:CGL
> Horizons BetaPro COMEX Gold Bullion Plus ETF, TSX:HBU
> Horizons BetaPro COMEX Gold ETF, TSX:HUG
> Horizons BetaPro S&P/TSX Global Gold Bull Plus ETF, TSX:HGU
> iShares CDN S&P/TSX Global Gold Index Fund, TSX:XGD

The U.S.-based ETFs are:
> Goldman Sachs Commodity Index (GSCI) Total Return Index ETF, GSP
> iShares COMEX Gold Trust ETF , IAU
> PowerShares DB Gold Fund ETF, DGL
> PowerShares Global Gold & Precious Metals ETF, PSAU
> SPDR Gold Shares ETF, GLD

The syndicate of agents for the offering is being led by BMO Capital Markets, CIBC World Markets Inc. and National Bank Financial Inc. and includes, RBC Capital Markets, HSBC Securities (Canada) Inc., GMP Securities L.P., Raymond James Ltd., Dundee Securities Corporation, Mackie Research Capital Corporation, Macquarie Private Wealth Inc., MGI Securities Inc., Rothenberg Capital Management Inc. and Wellington West Capital Markets Inc.

IE