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Kv Mortgage Fund Inc. Statements of Changes in Net Assets Years ended February 28, 2013 and February 29, 2012 2013 Net assets, beginning of year Class A Preferred shares $ Increase in net assets from operations 1,000 Total $ - (4,377) 781,198 - 1,271,237 8,050,136 (770,066) - 6,918,959 5,000 Redemption of shares - 5,000 - - 99,421 367,160 Net proceeds from dividend reinvestment plan - 99,421 Recovery of previously paid share issue costs 487 - - - (2,246,740) $ 11,933,257 $ Class A Preferred shares $ Increase in net assets from operations 4,450,722 1,271,298 $ Class B Preferred shares $ - 1,000 367,647 (2,246,740) $ 13,205,555 $ 4,451,722 Common shares $ 1,000 Total 537,764 Net proceeds from issuance of shares - - 537,764 (513,132) Dividends to shareholders - - (513,132) 3,522,719 Redemption of shares - - 3,522,719 225,488 Net proceeds from dividend reinvestment plan Net assets, end of year $ 5,647,722 Share based compensation issued to board members Net assets, beginning of year - Common shares 3,951 (765,689) Net proceeds from issuance of shares 2012 $ 777,247 Dividends to shareholders Net assets, end of year 8,049,136 Class B Preferred shares - - 225,488 (174,425) $ 8,049,136 $ - $ 1,000 (174,425) $ 8,050,136 See accompanying notes to financial statements. 31

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