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Annual report 2013 (j) Future accounting standards: International Financial Reporting Standards ("IFRS"): Effective January 1, 2011, Canadian GAAP for publicly accountable enterprises converged with IFRS. In December 2011, the Accounting Standards Board of the Canadian Institute of Chartered Accountants required investment companies applying Accounting Guideline 18, to further defer adoption of IFRS until fiscal years beginning on or after January 1, 2014 by extending the mandatory requirement for all Canadian publically accountable enterprises to prepare their financial statements in accordance with IFRS as issued by the International Accounting Standards Board. The Fund will adopt IFRS for its fiscal year beginning March 1, 2014, and will issue its first financial statements in accordance with IFRS, including comparative IFRS information for the previous fiscal period, for the year ending February 28, 2015. The Fund Manager continues to monitor changes to IFRS and is assessing the impact for the Fund. 2. Mortgage loan investments: The balance of mortgage loan investments at the year ends is as follows: % Interest in first mortgages 92 Interest in second mortgages behind own first Feb 28, 2013 11,993,170 77 400,000 $ % 15 3 Interest in second mortgages behind a third party 626,000 $ 100 $ 6,033,654 1,180,830 8 13,019,170 5 100 Feb 29, 2012 626,000 $ 7,840,484 Mortgage loan investments are secured by the real property to which they relate, bear interest at a weighted average interest rate of 10.88% (2012 – 10.57%), and mature between the remainder of calendar year 2013 and 2014. As at February 28, 2013 the Fund has no unadvanced mortgage commitments (February 29, 2012 – $nil). Principal repayments based on contractual maturity dates are as follows: 2013 balance of calendar year $ 11,397,170 $ 13,019,170 2014 Total 1,622,000 All of the mortgage loans contain a prepayment option, whereby the borrower may repay the principal at any time prior to maturity, subject to payment of an interest penalty that is specific to each mortgage. As part of the assessment of fair value, the Fund Manager routinely reviews each mortgage loan investment for changes in the credit quality of the mortgage and underlying real estate assets and determines whether such changes result in changes in the fair value of the mortgage. As of February 28, 2013, the Fund Manager does not believe any fair value adjustment is required for any mortgage loan investment. As such, no adjustment to the fair value of the investments has been recorded. 36

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