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2015 ANNUAL REPORT 9. Related party balances and transactions: Transactions with related parties are in the normal course of business and are recorded at the exchange amount, which is the amount of consideration established and agreed to by the related parties. (a) Syndicate mortgage loan investments: As at February 28, 2015, the Fund was co-invested as a syndicate with two related parties in three separate mortgage loan investments secured by real estate that was owned by third parties. As at February 28, 2015, the Fund's share in the mortgage investments totaled $3,212,600 (February 28, 2014 - $nil). As at March 1, 2013, the Fund was co-invested as a syndicate with a related party in one mortgage loan investment secured by real estate that was owned by a third party. As at March 1, 2013, the Fund's share in this mortgage investment was $475,000. (b) Preferred shareholders: e following is a breakdown of Class A and B preferred shares held by related parties as at February 28, 2015, February 28, 2014 and March 1, 2013: Feb 28, 2015 Feb 28, 2014 Mar 1, 2013 Class A preferred shares Non-independent directors and immediate family $ 619,593 $ 686,455 $ 714,507 Independent directors and LRC members 425,907 253,261 31,605 Other key management 316,539 - - Corporations related to other key management 567,788 595,000 795,336 Class B preferred shares Other key management 50,037 - - Corporations related to other key management 20,498 - - Total held by related parties $ 2,000,362 $ 1,534,716 $ 1,541,448 (c) Transactions during the period: (i) Service fees: e Fund pays each registered dealer service fees in respect of outstanding Class A preferred shares that are held by clients of that registered dealer. In respect of outstanding Class B preferred shares, the Fund pays service fees to the Fund Manager. Service fees are calculated and paid at the end of each fiscal quarter. For the year ended February 28, 2015, the Fund incurred service fees of $534,593 (2014 - $273,034) with $149,983 (February 28, 2014 - $72,204 and March 1, 2013 - $27,083) of this amount included in accounts payable at February 28, 2015. (ii) Management fees paid to Fund Manager: e Fund Manager is responsible for the day-to-day operations, including administration of the Fund's mortgage loan investments. In respect of these services, the Fund pays to the Fund Manager a management fee. For the year ended February 28, 2015 the Fund incurred management fees of $397,754 (February 28, 2014 - $191,015) with $113,333 (February 28, 2014 - $66,209 and March 1, 2013 - $22,230) of this amount included in accounts payable at February 28, 2015. Under the terms of the Management Agreement between the Fund and the Fund Manager, the management fee paid by the Fund is equal to 7.50% of the Fund's revenue, and is calculated monthly and paid quarterly. 52

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