E-Delivery

2015 ANNUAL REPORT To the Shareholders of KV Mortgage Fund Inc. We have audited the accompanying financial statements of KV Mortgage Fund Inc., which comprise the statements of financial position as at February 28, 2015, February 28, 2014, and March 1, 2013, the statements of comprehensive income, changes in equity and cash flows for the years ended February 28, 2015 and February 28, 2014, and notes, comprising a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. ose standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. e procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of KV Mortgage Fund Inc. as at February 28, 2015, February 28, 2014 and March 1, 2013, and its financial performance and its cash flows for the years ended February 28, 2015 and February 28, 2014 in accordance with International Financial Reporting Standards. Chartered Accountants April 29, 2015 Edmonton, Canada KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG Canada provides services to KPMG LLP. KPMG Confidential KPMG LLP Chartered Accountants 10125 – 102 Street Edmonton AB T5J 3V8 Canada Telephone (780) 429-7300 Fax (780) 429-7379 Internet www.kpmg.ca 40

• Cover