E-Delivery

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 of the Fund 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 of the Fund that are held by clients of each registered dealer. (c) Fund operating expenses: Each class of preferred shares is responsible for the payment of its proportionate share of common operating expenses such as directors' fees, independent review committee fees, audit fees, filing fees, legal fees and other administrative expenses, in addition to the expenses that are attributable to a particular class of shares. e common operating expenses are allocated on a proportionate basis to each class of shares based on the weighted average number of preferred shares outstanding for the year. (d) Director fees: e Fund has appointed four directors that are independent of management to its board of directors. In respect of their services during the year, independent directors were provided compensation under the PSC plan as described in Note 1, or alternatively elected to receive compensation in the form of a $2,000 cash retainer for each year of service. For directors whose appointments were less than a full year, the cash retainer was prorated based on the number of months served. (e) Independent review committee fees: Effective January 10, 2013 the Fund appointed independent members to the lending review committee. In respect of their services during the years ended February 28, 2014 and February 28, 2013, members of the lending review committee that were independent of management were provided compensation of $100 for each meeting they attended during the year. 6. Related party balances and transactions: (a) As at February 28, 2014, $66,209 (2013 - $22,230) is payable by the Fund to the Fund Manager for management fees. In addition, $72,204 (2013 - $27,083) and $nil (2013 - $881) is payable by the Fund to the Fund Manager respectively for service fees and the reimbursement of Fund operating expenses paid by the Fund Manager. (b) e $5,000 other assets balance as at February 28, 2014 (2013 - $nil) was incurred by the Fund Manager on behalf of the Fund in respect of a refundable loan application fee. As of February 28, 2014, the Fund is not committed to the proposed line of credit. (c) As at February 28, 2014, $1,675 (2013 - $1,900) is payable by the Fund to the directors that are independent of management for remuneration as directors and members of the independent lending review committee. (d) As at February 28, 2013, the Fund was co-invested as a syndicate with one related party in a mortgage loan secured by real estate that was owned by a third party. e Fund's share in the mortgage investment was $475,000. As at February 28, 2014, the Fund has no such co-investments with related parties. (e) During the fiscal year ended February 28, 2013, the Fund incurred $7,373 in share issue costs to the Fund Manager for subscriptions to the Fund's preferred shares that occurred prior to June 1, 2012. After June 1, 2012 the Fund does not pay share issue costs in respect of the distribution of Class A and Class B preferred shares. (f ) e Fund incurred $237,648 (2013 - $85,596) in service fees to the Fund Manager during the year. 47

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