Horizons Gold Yield ETF - HGY

ETF Overview

The investment objective for Horizons Gold Yield ETF ("Horizons HGY") is to provide Unitholders with:

exposure to the price of gold bullion hedged to the Canadian dollar, less the ETF's fees and expenses
tax-efficient monthly distributions
in order to mitigate downside risk and generate income, exposure to a covered call option strategy on 33% of the securities of the Gold Portfolio

The level of covered call option writing to which Horizons HGY is exposed may vary based on market volatility and other factors.

Additional Fund Information

Horizons HGY seeks to achieve its investment objectives by gaining exposure to a portfolio of securities and other instruments that provide exposure to the price of gold bullion (the "Gold Portfolio").

Horizons HGY will enter into a forward purchase and sale agreement (the "Gold Forward Agreement") with a Canadian chartered bank (the "Bank Counterparty") pursuant to which it will gain exposure to the Gold Portfolio.

The Gold Portfolio is comprised primarily of exchange-traded funds that are directly, or indirectly, and only, exposed to gold bullion ("Gold Bullion ETFs"), but may include gold futures contracts from time to time.

The Gold Portfolio is held by the Gold Yield Trust and is managed and advised by the Investment Manager.

The Gold Yield Trust seeks to be fully exposed to the price of gold bullion at all times, but does not replicate the performance of gold prices due to the covered call writing strategy and fees and expenses.

The Investment Manager will, depending on market conditions, write at-the-money or out-of-the-money covered call options on approximately, and not more than, 33% of the securities in the Gold Portfolio.

Active Management

This fund has an active management mandate ( A minority of ETFs have an active investment management mandate or a degree of active investment management. Full active management involves an investment manager actively managing the fund - deciding which securities to buy/sell, and when etc. However, many 'active' ETFs employ only partial active investment management, not full. ), not passive ( Most ETFs are passively managed - they have no active investment management. Passive ETFs simply try to replicate the returns of an index as closely as possible, such as the S&P/TSX 60 Index. ).

The fund's benchmark ( Most actively managed funds have a benchmark. The fund manager typically aims to exceed the performance of that benchmark. ) is:

Not defined

The Forward Agreement Structure

The Fund utilizes a Forward Agreement structure to gain exposure to the target portfolio.

Be aware that the forward structure adds additional costs to the ETF. These costs are not included in the MER.

Key ETF Data

Fundamentals
Category (main)	Active Commodity (Gold) and Covered Calls
Category (other)	Active Commodity (Gold) & Covered Call
Underlying Index	No Index
ETF Structure	Active management. No index
Asset Class	Commodity (Gold) and Options (Covered Calls)
Region	-
Issuer	Horizons ETFs (Canada)
ETF Home Page	Available here

Fund Facts
Inception Date	Dec 20, 2010
Total Holdings	Unknown
Distribution Frequency	Monthly
Leverage	None
Significant Currency Exposure	Yes
Currency Hedging	Yes

Fees
Management Fee	0.60%
Management Expense Ratio (MER)	1.44% *
Forward Structure Costs	0.45%

* 2011

Trading Information
Ticker	HGY
Exchange	TSX (Toronto Stock Exchange)
Currency	CAD

Eligibility
Eligibility *	RRSP, RRIF, RESP, TFSA, DPSP, RDSP
DRIP available **	Yes
PACC Plan available **	Yes
SWP available **	Yes

* Always check eligibility with your plan operator as plans and accounts can differ

** Not all brokers can facilitate these plans. Check with your broker.

Current Price, Fund Performance, Yield, NAV, Charts etc

To view the TSX or Morningstar fund page for this ETF click on the Fund Data menu tab or below:

ETF Analysis

Covered Call Strategy ETFs typically have a dual strategy: they try to replicate the returns of an index, and sell covered call options on some/all of their holdings.

The upside of selling covered call options is that the fund earns a premium for each option sold. The downside is that the upside potential of the ETF is limited due to the covered call option selling.

Before buying an ETF that uses a covered call strategy ensure you understand how such strategies work, and are comfortable with its advantages, risks and limitations.

Options are a somewhat complex financial instrument. They are relatively easy for some investors to understand, difficult for others. Since Covered Call Strategy ETFs use options, it would be wise to understand how they work before investing in any Covered Call Strategy ETFs.

Also understand the amount (if any) of Return of Capital the fund may pay out with distributions. ROC payments reduce your holding's capital.

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