G.I.

Alternative Income Strategy November 2011

GI Capital

G.I. Alternative Income Strategy

The Alternative Income Strategy is an alternative to traditional bond funds, which although carry very low credit risk, currently have minimal return; and to equity funds that exhibit high volatility. The Alternative Income Strategy seeks to invest in alternative income strategies like private mortgages and asset backed loans that offer higher returns, while still providing reasonable security to cover the loans. The strategys objectives are to preserve capital, minimize volatility, have a low or zero correlation with stock and bond markets, and achieve an annualized return of 8-10% net of all fees.

Portfolio Performance for Alternative Income Strategy

Year 2010 2011 Jan -0.63% Feb -0.68% Mar -1.33% Apr -0.91% May -0.72% Jun -1.91% Jul 0.84% 1.26% Aug 0.78% 0.93% Sep 0.87% 0.90% Oct 0.80% 1.11% Nov 0.83% 0.83% Dec 0.54% YTD 4.75% 11.79%

Property by Classification 5% 19% 26% 40% 10%

Residential Hospitality Retail Mixed Use Self Storage
*Note: The property classifications only apply to real estate holdings.

Portfolio Breakdown by Allocation

Loan To Value Ratio 66% 65% 72% n.a. 50% 0% 0% 65.57% Average Expected Maturity (Months) 31 30 21 41 1 11 0 25.36 Average
Expected

Security Type First Mortgage Subordinated First Second Mortgage Real Estate Equity Asset Backed Loans

Percentage Weighting 4% 44% 18% 16% 7% 8% 3% 100.0%

Yield 14% 12% 10% 10% 12% 15% 0% 10.8%

Property by Location 10% 30% 40% 9% 10%

Distressed Debt Cash Total/Weighted AVG

AB BC ON QC USA

FEATURE INVESTMENT
Subordinated First Mortgage, Condos, Montreal:
This is an inventory loan on a condo project in downtown Montreal. The total loan is $10.7 million and our piece of the first mortgage sits between 37% and 46% on a loan to value ratio. However, the developer has pre-sales on 56% of the condo units for $10.6 million, of which $7.4 million is expected to close within 4 months of advancing the mortgage. Once these units close, the funds will be used to pay down the priority piece of the first mortgage, which will bring the loan to value ratio on our subordinated piece down to 21%. There is also 21,000 square feet of commercial space attached to the project that is under contract for sale. The proceeds of this will also go to reduce the priority piece of the loan bringing the leverage and the LTV down even further, or pay it off completely. The loan is for 12 months and the interest rate is 13.5%. The developer is very experienced with over 20 years of real estate development experience, and has given a personal guarantee on the loan.

*Note: The property locations only apply to real estate holdings.

Service Providers
Custodian (for Fund) Administrator Legal Auditor Custodian (for Managed Accounts) TD Waterhouse

G.I. Capital Corp.

3625 Dufferin St. Suite 340 Toronto, Ontario M3K 1Z2

Mark Irwin, CFA 647-776-4028 mark.irwin@gicapital.ca

Jim Goren, CFA 647-776-4029 jim.goren@gicapital.ca

Bill Hallman, CFA 905-510-0963 bill.hallman@gicapital.ca

G.I. Capital Corp. (GI) is a wealth management firm specializing in developing customized investment solutions for its clients. We are a boutique firm focused on managing our clients portfolios, offering a high level of research and service to a limited number of clients. Our client base consists of professionals, executives and business owners. Visit us at www.gicapital.ca

This monthly update does not constitute or purport to constitute a complete description of the G.I. Capital Corp. Alternative Investment Strategy and is in all respects subject to the more detailed provisions found in the fund's declaration of trust. The Alternative Income Strategy is only available to GI clients who have engaged GI to manage their account under the alternative income mandate as outlined in their investment policy statement. The returns above are net of all fees, other than management fees. The references to the target rates of return are provided for illustrative purposes only and there can be no assurance that the fund will be able to achieve the targeted rates of return.