THE FUND

Market Overview

• Canadian investors generally tend to be underexposed to real estate as an investment class.
    
• As at October 2009, $952 billion in mortgage debt was reported to be outstanding in Canada, of which the mortgage broker channel reportedly brokered 23% of all activity in that year.
   
• The private mortgage market is a multi-billion dollar industry in Canada.
   
• The recent credit crunch worldwide has created additional demand/opportunity for the private lending Industry and has also resulted in a significant re-pricing shift (increase) of risk premiums charged on loans and mortgages. 
   
• As an alternative investment strategy, a Mortgage Investment Corporation is designed to generate positive returns in any market environment because of the focus on absolute returns. These types of investments have a low correlation to equity returns. For example, a well managed MIC should continue to generate good yields even while equity markets under perform.

Mortgage Market Oversight/Regulation

The mortgage market is regulated by and licensed with the Financial Services Commission of Ontario (FSCO).  HarbourEdge Capital Corporation (The Manager) is a licensed mortgage administrator (Licence #11214) enabling HarbourEdge Mortgage Investment Corporation to lend and administer mortgages.

However, as The Manager we are not a licensed mortgage broker, and we do not originate mortgages.  Under this license every mortgage we underwrite MUST originate from an independent licensed mortgage broker or intermediary. They are responsible for ensuring the loan is legitimate and properly documented and they must also carry errors and omissions and fraud insurance as specified by FSCO.  In the event that requirements in the regulatory jurisdictions in which we operate change, HarbourEdge MIC and The Manager will adapt to comply with these changes.