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2015 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 including record keeping and reporting. 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. e Manager's eligibility to receive the management fee for any month is subject to the Fund generating net income and comprehensive income, after accounting for the management fee, 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 Manager is a registered dealer, and receives the Class A Service Fees in respect of purchasers that it has introduced to the Fund. 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. e Manager pays commissions and fees equal to 5.00% of the subscription proceeds to third party registered dealers for Class B preferred share sales that are attributable to their efforts. After 5 years from the date of such Class B preferred share sales, the Manager will also pay a 1.00% annual trailing fee, calculated and paid at the end of each fiscal quarter, to third party registered dealers that are attributable to the efforts of these distributors. 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 $1,064,344 (2014 - $521,686) resulting in a management expense ratio inclusive of the effects of amortizing share issue costs ("MER ratio") of 2.10% (2014 - 2.21%). e total expenses of the Fund include management Fees of $397,754 (2014 - $191,015). 30

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