E-Delivery

ANNUAL REPORT MANAGEMENT & SERVICE FEES e Manager is responsible for the day-to-day operations, including administration of the Fund's mortgage loan investments. e Manager monitors and evaluates the Fund's performance, pays for the investment advice provided by the Fund's portfolio manager and provides certain administrative services required by the Fund. In respect of these services, the Fund pays to the Manager a management fee. e management fee paid by the Fund is equal to 7.50% of the Fund's revenue, and is calculated monthly and paid quarterly (see discussion in "Related Party Transactions" for a summary of the management fee structure prior to June 1, 2012). e Manager's eligibility to receive the management fee for any month is subject to the Fund generating an increase in net assets from operations, after accounting for the management fee, that is sufficient to provide a minimum 8.00% annualized return on the opening monthly capital of the Fund. Class A preferred shares pay each registered dealer that introduced the Fund to purchasers of these securities a fee equal to 1.00% per annum of the subscription proceeds received by the Fund that are attributable to the efforts of these distributors (the "Class A Service Fees"). e Class A Service Fees are calculated and paid at the end of each fiscal quarter. Class B preferred shares pay the Manager a service fee equal to 1.00% per annum of the subscription proceeds received by the Fund from all outstanding Class B preferred shares (the "Class B Service Fees"). e Class B Service Fees are calculated and paid at the end of each fiscal quarter. In respect of receiving the Class B Service Fees, the Manager pays commissions and fees to registered dealers for Class B preferred share sales that are attributable to their efforts. e payments from the Manager to the registered dealers for sales of Class B preferred shares equate to 5.00% of the subscription proceeds as a front load cash payment and also include a trailing fee that commences after 5 years from the subscription date. Once payable, the trailing fee paid by the Manager to registered dealers is equal to 1.00% per annum of the subscription proceeds received by the Fund that are attributable to the efforts of these distributors, and is calculated and paid at the end of each fiscal quarter. In addition to the management fees disclosed above, the Fund is responsible to pay for all expenses incurred by it in connection with the operation and management of its business. For the Year, total expenses of the Fund were $521,686 (2013 – $228,659) resulting in a management expense ratio inclusive of the effects of amortizing share issue costs ("MER ratio") of 2.21% (2013 – 2.66%). e total expenses of the Fund include management Fees of $191,015 (2013 - $81,045). At the end of fiscal 2014, Independent directors held 25,326 Class A preferred shares, with a total dollar value of $ 253,261 26

• Cover