E-Delivery

Annual report 2013 For the year ended February 28, 2013, the Fund declared dividends on Class A preferred shares of $765,689 (February 29, 2012 – $513,132) on the issued and outstanding preferred shares. As at February 28, 2013, $43,380 (February 29, 2012 – $30,886) was payable to the Class A preferred shareholders. For the year ended February 28, 2013, the Fund declared dividends on Class B preferred shares of $4,377 (February 29, 2012 – $nil) on the issued and outstanding preferred shares. As at February 28, 2013, $3,681 (February 29, 2012 – $nil) was payable to the Class B preferred shareholders. (b) Dividend reinvestment plan: The Fund has instituted a dividend reinvestment plan ("DRIP") available to Class A and Class B preferred shareholders. Under the DRIP, shareholders may enroll to have their cash dividends reinvested to purchase additional preferred shares of the same class. The preferred shares are issued from treasury at an amount of $10.00 per share. For the year ended February 28, 2013 – 36,716 (February 29, 2012 – 22,549) Class A preferred shares were issued under the DRIP, resulting in reinvested dividends of $367,160 (February 29, 2012 – $225,488). For the year ended February 28, 2013 – 48 (February 29, 2012 – nil) Class B preferred shares were issued under the DRIP, resulting in reinvested dividends of $487 (February 29, 2012 – $nil). Dividend reinvestments are recorded on a monthly basis. 4.Expenses: (a) Management fees: The Fund Manager is responsible for the day-to-day operations, including administration of the Fund's mortgage loan investments. In respect of these services, the Fund pays to the Fund Manager a management fee. For the year ended February 28, 2013 the Fund incurred management fees of $81,045 (February 29, 2012 – $65,254). On June 1, 2012 the Fund and the Fund Manager mutually agreed to revise the management fee on a go forward basis. Subsequent to June 1, 2012 the management fee paid by the Fund is equal to 7.5% of the Fund's revenue, and is calculated monthly and paid quarterly. The Fund Manager's eligibility to receive the management fee for any month is subject to the Fund generating an increase in net assets from operations that is sufficient to provide a minimum 8% annualized return (the "Hurdle Rate") on the opening monthly capital of the Fund. Prior to June 1, 2012 the Fund Manager's management fee was calculated as 10% of the Fund's revenue and was not subject to achieving a Hurdle Rate. (b) Service fees: The Fund pays each registered dealer service fees in respect of outstanding Class A preferred shares that are held by clients of that registered dealer. In respect of outstanding Class B preferred shares, the Fund pays service fees to the Fund Manager. Service fees are calculated and paid at the end of each calendar quarter. For the year ended February 28, 2013, the Fund incurred service fees of $87,381 (2012 – $32,128). On June 1, 2012 the Fund revised the service fees it pays to registered dealers. Subsequent to June 1, 2012 the service fees paid by the Fund is equal to 1% per annum, calculated and paid quarterly, of the paid up capital for outstanding preferred shares that are held by clients of each registered dealer. Prior to June 1, 2012 the service fees paid by the Fund was equal to 0.5% per annum, calculated and paid annually, of the paid up capital for outstanding preferred shares that are held by clients of each registered dealer. 38

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