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ANNUAL REPORT During the Year, the Fund generated an increase in net assets from operations of $2,025,183 (2013 - $781,198) or a per share increase of $0.85 (2013 – $0.87). e Fund was able to declare distributions of $2,020,761 (2013 - $770,066) or $0.85 (2013 - $0.87) per share. e Fund either pays distributions in cash to preferred shareholders, or automatically reinvests these amounts into additional preferred shares of the same Class, as directed by each shareholder under the dividend reinvestment program. Per share net asset value after distributions of both Class A and Class B preferred shares at February 28, 2014 is $10.00 (2013 - $10.00). Total revenue earned by the Fund for the Year increased to $2,546,869 from $1,009,857 or an increase of 152.20% from the year ended February 28, 2013. e increase in revenue was primarily due to the Fund increasing its portfolio of mortgage investments by $24,048,604, or 184.72%, from February 28, 2013 to February 28, 2014. Total expenses for the Year increased to $521,686 from $228,659 for the year ended February 28, 2013. is increase is primarily due to management and servicing fees that increased in proportion to the revenue generated by the Fund's invested assets, and available capital respectively. With the exception of legal fees, all other expenses during the year also increased over those incurred during the year ended February 28, 2013, as operational activities increased with the growth of the mortgage portfolio. During the year ended February 28, 2013, the Fund paid legal fees of approximately $20,000 in one-time restructuring costs to create the Class B preferred shares that were not incurred again this Year. e majority of the Fund's expenses consist of management fees of $191,015 (2013 – $81,045) and service fees of $273,034 (2013 - $87,381). Recent Developments and Outlook During fiscal 2014, the Fund continued to benefit from its right of first refusal with respect to mortgages originated by the Manager. is preferential position allowed the Fund to selectively invest in the mortgage securities offered by the Manager and significantly contributed to the Fund's ability to efficiently deploy its capital and build a portfolio that was consistent with its asset allocation model while achieving rapid growth. Over the last 12 months, the Manager has noted an increase in the number of lenders operating in the Alberta private mortgage market and competition for new originations. All other things being equal, increased competition for originations introduces downward pressure on yields and upward pressure on leverage as the market becomes more efficient. It is the Manager's assessment that strong economic fundamentals continue to exist in Alberta and will continue to drive strong and growing real estate transactional activity into fiscal 2015 – particularly with respect to the market for new construction where the bulk of the Fund's investments occur. The Fund declared distributions of $ 2,020,761 during fiscal 2014 22

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