E-Delivery

2015 ANNUAL REPORT We are very pleased to report that KV Mortgage Fund completed its 6th consecutive fiscal year of assets and earnings growth. During the year, the Fund surpassed $50,000,000 of assets and ended fiscal 2015 with a portfolio that exceeds $60,000,000. Achieving these milestones represents a strong vote of confidence in the Fund by an increasingly broad investor base, and demonstrates the attractiveness of our dual mandate to protect capital and generate income. In addition to significant asset growth, the Fund realized strong operational results throughout the year that included maintaining our track record of $0.00 losses since inception and generating an 8.73% internal rate of return. We are entering fiscal 2016 with a portfolio that is well positioned and a balance sheet that is strong. In the fourth quarter of fiscal 2015 volatility in oil prices emerged. As we have seen before, price changes in oil and gas can foster speculation across many asset classes, including within the market for Alberta real estate. We remain confident in the portfolio and that the core principles of the Fund continue to be appropriate in balancing downside risks to our dual mandates of protecting capital and generating monthly income throughout all phases of real estate cycles. Change is a fundamental driver of opportunities, and we are excited for the opportunities that are being created for non-bank lenders to capture deal flow that has been price prohibitive during times of aggressive bank lending. e comfort we have with the Fund's portfolio is based in our local knowledge of the real estate that is held as security and the hands on experience we have originating, underwriting and servicing each mortgage in which the Fund invests. Our purposeful construction of the portfolio and disciplined lending approach is demonstrated at the end of fiscal 2015 by the following key metrics of the Fund's deployed capital: • 50.54% (2014: 51.31%) weighted average loan to value; • 98.39% (2014: 99.80%) secured by first position mortgages; • 5 month (2014: 6 month) weighted average term to mortgage maturity; and • 95.22% (2014: 89.78%) current mortgage status. Over fiscal 2016 we will continue to create value for you in KV Mortgage Fund by leveraging the expertise of our professional staff, maintaining segregation of duties between the origination and underwriting functions and by harnessing the extensive experience of the Fund's independent board of directors and independent lending review committee in the execution of our mandate. ank you for investing with us. Curtis Power, CA Chief Operating Officer - Mortgages Aleem Virani, CA, CBV Jonathan Herman, CA President Chief Financial Officer 16

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