G.I.

ALTERNATIVE INCOME STRATEGY OCT 2012

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 2012 0.63% 0.81% 0.68% 0.53% 1.33% 0.68% 0.91% 2.43% 0.72% 2.95% 1.91% 0.06% Jan Feb Mar Apr May Jun Jul 0.84% 1.26% 0.15% Aug 0.78% 0.93% 0.29% Sep 0.87% 0.90% 0.89% Oct 0.80% 1.11% 0.57% Nov 0.83% 0.83% Dec 0.54% 2.50% Total 4.75% 14.59% 9.83%

PROPERTY BY CLASSIFICATION 1% 43% 6% 9% 41% Residential Hospitality Retail Mixed Use Self Storage
*Note: The property classifications only apply to real estate holdings.

PORTFOLIO BREAKDOWN BY ALLOCATION

Percentage Weighting 6% 23% 12% 26% 6% 6% 21% 100% Loan To Value Ratio 44% 66% 72% N/A 48% N/A 0% 44% Av erage Expected Maturity (Months) 20 21 16 47 3 21 0 22 Av erage Expected Yield 7% 12% 11% 8% 9% 12% 0% 7.7%

Security Ty pe F irst Mortgage Subordinated F irst Second Mortgage Real Estate Equity Asset Backed Loans Distressed Debt Cash

PROPERTY BY LOCATION 3% 15% AB 28% 14% 3% BC ON QC MB USA

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

Total/Weighted AVG

FEATURE INVESTMENT
Cobourg Self Storage, Real Estate Equity, Ontario
This is a property of which the pool owns a 50% stake. It was purchased from the original builder who was willing to finance the purchase through a vendor-take-back mortgage at very favourable terms. Our operational partner on the deal is TVG Canada. TVG is a New York based development and management company specifically focused on self storage. TVG felt that the rents were below market and that additional storage space could be developed on the property. We purchased it at a very attractive valuation, ie a cap rate of 10, and are targeting a low double digit cash flow yield, and an IRR in the low 20s, through increased asset value once net operating income is ramped up through improved operational efficiencies and the build out of the additional capacity. The exit strategy would be an outright sale, or a re-financing that would repatriate our original equity while allowing us to maintain an ongoing interest in the property. We felt this was an attractive return profile given that self storage is a very low risk class of real estate given its simplicity, low operational costs, and the fact that it is fairly insensitivity to economic activity.

37%

SERVICE PROVIDERS
Custodian (for Fund) Administrator Legal Auditor Custodian (for Managed Accounts)

240 Duncan Mill Rd Suite 806 Toronto, Ontario M3B 3S6

G.I. CAPITAL CORP.

Mark Irwin, CFA 647-260-3388*223

mark.irwin@gicapital.ca

Jim Goren, CFA

647-260-3388*222

jim.goren@gicapital.ca

Bill Hallman, CFA

647-260-3388*228

bill.hallman@gicapital.ca

Gino Scialdone

647-260-3388*229

gino.scialdone@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.