E-Delivery

0.61 times). Further, new originations from the Year equate to approximately 54.32% of the Fund's mortgage investments at year end. In addition to its other techniques, the Manager actively manages risks associated with changes to real estate prices by maintaining short terms to maturity and redeploying capital throughout real estate cycles. e weighted average interest rate on the portfolio at February 28, 2015 was 10.29% (2014 - 10.60%). e slight decrease over the Year in the weighted average interest rate is mainly a result of increased competition within the market during the first three quarters exerting downward pressure on yields, and the Manager strategically allocating the Fund's capital pool to mortgage opportunities provided by borrowers with increased strength and capacity. e Fund's capital was very efficiently utilized throughout the year, and the portfolio was generally fully deployed. Accordingly the average loan advance during the Year of $298,685 (2014 - $334,635) declined slightly from the prior year as the Fund's participation in the available syndicated mortgages was constrained by its available cash balances at the funding dates. e Fund continues to strategically maintain a diversified portfolio of mortgage investments located primarily on Alberta real estate. At February 28, 2015, 91.81% (2014 – 98.30%) of the mortgage portfolio was allocated to Alberta, 8.19% (2014 – 0.00%) to Ontario and 0.00% (2014 - 1.70%) to Saskatchewan. e Fund has continued to maintain significant exposure to Alberta as it benefits directly from the local expertise of the Manager in originating, underwriting and servicing these mortgage investments and deal flow available within this market has remained strong. e Fund was again able to operate opportunistically and secure attractive risk adjusted returns during fiscal 2015. e Manager places a high degree of emphasis on closely monitoring the portfolio and actively managing the servicing and enforcement of mortgages where appropriate. e Manager will adjust the fair value of a mortgage investment if it is determined that the full value of the Fund's investment and accrued interest is unlikely to be recovered. No fair value adjustment has been recorded in the February 28, 2015 financial statements as the Manager assessed that no impairments exist. As of June 15, 2015 the Manager's assessment is unchanged, and it expects the Fund to fully recover the principal on all mortgage loan investments, although there is no assurance that it will be able to do so. At February 28, 2014, the Manager was engaged in enforcement actions against three of the mortgage investments in which the Fund had participated. During the year ended February 28, 2015, the Manager discontinued these enforcement actions because full repayment of the principal and accrued interest was received on two of the mortgages, and the title of the third was transferred to the second position mortgage holder who has maintained the mortgage as current since the transfer. During the Year enforcement actions were commenced and stayed against another first mortgage investment in which the Fund has invested $1,050,000. As at February 28, 2015 $10,500 accrued interest on the mortgage was past due, however enforcement actions remain stayed because of continued cooperation from the borrower and the ongoing receipt of regular payments in accordance with a revised weekly interest installment schedule. Subsequent to February 28, 2015, the past due interest on this mortgage has been collected in full by the Fund. The Manager actively manages risks associated with changes to real estate prices by maintaining short terms to maturity and redeploying capital throughout real estate cycles 25

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