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ANNUAL REPORT For the fiscal year ended the last day of February The Fund's net assets per Class B preferred share 2014 2013 2012 2011 2010 Net assets, beginning of period $ 10.00 $ 10.00 $ - $ - $ - Increase (decrease) from operations: Total revenue 1.07 1.12 - - - Total expenses (0.22) (0.25) - - - Realized gains (losses) for the period - - - - - Unrealized gains (losses) for the period - - - - - Total increase (decrease) from operations: 0.85 0.87 - - - Distributions: From income (0.85) (0.87) - - - From dividends - - - - - From capital gains - - - - - Return of capital - - - - - Total distributions for the period (0.85) (0.87) - - - Net assets, at end of period $ 10.00 $ 10.00 $ - $ - $ - Ratios and supplemental data: Total net asset value (1) $ 12,847,921 $ 1,271,298 $ - $ - $ - Number of shares outstanding (1) 1,284,792 127,172 - - - Management expense ratio (2) 2.21% 2.66% - - - Portfolio turnover rate (3) 0.61 1.03 - - - Payout ratio (4) 99.78% 98.58% - - - Redemption value $ 10.00 $ 10.00 $ - $ - $ - (1) This information is at the period end of the year shown. (2) Management expense ratio is based on total expenses and amortized share issue costs for the stated period and is expressed as an annualized percentage of the daily weighted average redemption value of the share class presented. (3) The Fund's portfolio turnover rate is calculated according to the following formula: [repayments of mortgage loan investments] / [daily weighted average size of the mortgage portfolio]. A portfolio turnover rate of 1.0 is equivalent to the Fund receiving repayment of all mortgage investments once in the course of the year. There is not necessarily a relationship between a high turn over rate and the performance of the Fund. In prior years the portfolio turnover rate was calculated based on fundings instead of repayments; the prior year comparatives have been presented in this report in accordance with the repayment calculation methodology. (4) Payout ratio is calculated according to the following formula: [dividends declared to holders of all classes of preferred shares] / [increase in net assets attributable to all classes of preferred shares] Dividends per share of $ 0.85 for fiscal 2014 28