Securities Law & Instruments

Headnote

Subsection74(1) - Exemption from sections 25 and 53 of the Act in connectionwith the writing of over-the-counter call options by the issuer,subject to certain conditions.

Section59, Schedule 1 - Issuer exempt from section 28 of Schedule 1to the Regulation in connection with the writing of over-the-countercall options.

StatutesCited

SecuritiesAct, R.S.O. 1990, c.S.5, as am. 25, 53 and 74(1).

RegulationsCited

Regulationmade under the Securities Act, R.R.O. 1990, Reg. 1015, as am.,ss. 28 and 59 of Schedule 1.

INTHE MATTER OF

THESECURITIES ACT

R.S.O.1990, CHAPTER S.5, AS AMENDED (the "Act")

AND

INTHE MATTER OF

R.R.O.1990, REGULATION 1015, AS AMENDED

(the"Regulation")

AND

INTHE MATTER OF

INCOMEFINANCIAL PLUS TRUST

RULINGAND EXEMPTION

(Subsection74(1) of the Act and Section 59(1) of Schedule 1 of the Regulation)

UPONthe application of Quadravest Inc. (the "Manager"), as managerof Income Financial Plus Trust (the "Trust"), to the OntarioSecurities Commission (the "Commission") for a ruling:

(i) pursuant to subsection 74(1) of the Act that the writingof certain over-the-counter covered call options ("OTC Options")by the Trust is not subject to section 25 or 53 of the Act;and

(ii) pursuant to subsection 59(1) of Schedule 1 of the Regulationfor an exemption from the fees required to be paid under section28 of Schedule 1 of the Regulation in connection with the writingof certain OTC Options by the Trust;

ANDUPON considering the application and the recommendationof the staff of the Commission;

ANDUPON Quadravest having represented to the Commissionas follows:

1.The Trust is an investment trust that will be established underthe laws of the Province of Ontario pursuant to a trust agreement(the "Trust Agreement") to be entered into between the Manager,in its capacity as manager, and the Royal Trust Company, inits capacity as trustee of the Trust.

2.The Trust will be authorized to issue an unlimited number oftransferrable, redeemable units (the "Units") of the Trust (the"Offering").

3.The Trust is a reporting issuer under the Act having filed apreliminary prospectus (the "Preliminary Prospectus") datedDecember 20, 2001 with the Commission and with the securitiesregulatory authority in each of the other provinces of Canadawith respect to a proposed offering of Units.

4.It is expected that the Units will be listed on The TorontoStock Exchange.

5.By virtue of the redemption features attaching to the Units,the Trust is considered a "mutual fund" within the meaning ofthe Act and other applicable legislation.

6.The Manager is a corporation incorporated under the laws ofthe Province of Ontario. Quadravest Capital Management Inc.("Quadravest") is a corporation incorporated under the lawsof the Province of Ontario. Quadravest will act as investmentmanager of the Trust pursuant to an investment management agreement(the "Investment Management Agreement") to be entered into betweenQuadravest and the Trust.

7.Quadravest is registered under the Act as an adviser in thecategories of "investment counsel" and "portfolio manager" andas a dealer in the category of "mutual fund dealer".

8.The Trust's investment objectives are:

(i) to provide holders of the Units with monthly distributionsin the amount of $0.2083 per Unit to yield 10% per annum, and

(ii) to preserve and potentially enhance the value of the Trust'sportfolio assets in order to return at least the original issueprice of Units to holders of Units at the time of the redemptionof such Units on January 1, 2008 (the "Termination Date").

9.In order to pay the Trust's distributions and to achieve theTrust's capital repayment and capital enhancement objectives,the net proceeds of the Offering will be invested in a diversifiedportfolio (the "Portfolio") consisting primarily of common sharesissued by corporations operating in the financial services industryplus shares issued by non-financial services corporations whoseshares form part of the Standard & Poor's 500 CompositeStock Price Index. The Portfolio will be actively managed byQuadravest.

10.To generate additional returns above the dividend income generatedby the Portfolio, the Trust will, from time to time, write coveredcall options on all or part of the equity securities in thePortfolio. As call options will be written only in respect ofequity securities that are in the Portfolio and the investmentcriteria of the Trust will prohibit the sale of equity securitiessubject to an outstanding option, the call options will be "covered"at all times. Such call options may be either exchange tradedoptions or OTC options.

11.The composition of the Portfolio, the securities which are subjectto call options and the terms of such call options will vary,from time to time, based upon Quadravest's assessment of marketconditions.

12.The purchasers of OTC Options written by the Trust will generallybe major Canadian financial institutions and all purchasersof OTC Options will be persons or entities described in AppendixA attached hereto.

13.The writing of OTC options by the Trust will not be used asa means for the Trust to raise new capital.

ANDUPON the Commission being satisfied that to do so wouldnot be prejudicial to the public interest;

ITIS RULED, pursuant to subsection 74(l) of the Act,that the writing of OTC Options by the Trust, as contemplatedby this ruling, shall not be subject to section 25 or 53 ofthe Act provided that:

(a) the portfolio adviser advising the Trust with respect tosuch activities is registered as an adviser under the Act andmeets the proficiency requirements in Ontario for advising withrespect to options;

(b) each purchaser of an OTC Option written by the Trust isa person or entity described in Appendix A to this ruling; and

(c) a receipt for the (final) prospectus has been issued bythe Director under the Act;

ANDPURSUANT to section 59 of Schedule 1 to the Regulationthe Trust is hereby exempted from the fees which would otherwisebe payable pursuant to Section 28 of Schedule 1 to the Regulationin connection with any OTC Options written by the Trust in relianceon the above ruling.

January15, 2002.

"PaulMoore"       "Robert W. Korthals"




APPENDIXA

QUALIFIEDPARTIES

Interpretation

(1)The terms "subsidiary" and "holding body corporate" used inparagraphs (w), (x) and (y) of subsection (3) of this Appendixhave the same meaning as they have in the Business CorporationsAct.

(2)All requirements contained in this Appendix that are based onthe amounts shown on the balance sheet of an entity apply tothe consolidated balance sheet of the entity.

QualifiedParties Acting as Principal

(3)The following are qualified parties for all OTC derivativestransactions, if acting as principal:

Banks

(a)a bank listed in Schedule I, II or III to the Bank Act (Canada);

(b)the Business Development Bank of Canada incorporated under theBusiness Development Bank of Canada Act (Canada);

(c)a bank subject to the regulatory regime of a country that isa member of the Basel Accord, or that has adopted the bankingand supervisory rules set out in the Basel Accord, if the bankhas a minimum paid up capital and surplus, as shown on its lastaudited balance sheet, in excess of $25 million or its equivalentin another currency;

CreditUnions and Caisses Populaires

(d)a credit union central, federation of caisses populaires, creditunion or regional caisse populaire, located, in each case, inCanada;

Loanand Trust Companies

(e)a loan corporation or trust corporation registered under theLoan and Trust Corporations Act or under the Trust and LoanCompanies Act (Canada), or under comparable legislation in anyother province or territory of Canada;

(f)a loan company or trust company subject to the regulatory regimeof a country that is a member of the Basel Accord, or that hasadopted the banking and supervisory rules set out in the BaselAccord, if the loan company or trust company has a minimum paidup capital and surplus, as shown on its last audited balancesheet, in excess of $25 million or its equivalent in anothercurrency;

InsuranceCompanies

(g)an insurance company licensed to do business in Canada or aprovince or territory of Canada;

(h)an insurance company subject to the regulatory regime of a countrythat is a member of the Basel Accord, or that has adopted thebanking and supervisory rules set out in the Basel Accord, ifthe insurance company has a minimum paid up capital and surplus,as shown on its last audited balance sheet, in excess of $25million or its equivalent in another currency;

SophisticatedEntities

(i)a person or company that, together with its affiliates,

(i) has entered into one or more transactions involving OTCderivatives with counterparties that are not its affiliates,if

(A) the transactions had a total gross dollar value of or equivalentto at least $1 billion in notional principal amount; and

(B) any of the contracts relating to one of these transactionswas outstanding on any day during the previous 15-month period,or

(ii) had total gross marked-to-market positions of or equivalentto at least $100 million aggregated across counterparties, withcounterparties that are not its affiliates in one or more transactionsinvolving OTC derivatives on any day during the previous 15-monthperiod;

Individuals

(j)an individual who, either alone or jointly with the individual'sspouse, has a net worth of at least $5 million, or its equivalentin another currency, excluding the value of his or her principalresidence;

Governments/Agencies

(k)Her Majesty in right of Canada or any province or territoryof Canada and each crown corporation, instrumentality and agencyof a Canadian federal, provincial or territorial government;

(l)a national government of a country that is a member of the BaselAccord, or that has adopted the banking and supervisory rulesof the Basel Accord, and each instrumentality and agency ofthat government or corporation wholly-owned by that government;

Municipalities

(m)any Canadian municipality with a population in excess of 50,000and any Canadian provincial or territorial capital city;

Corporationsand other Entities

(n)a company, partnership, unincorporated association or organizationor trust, other than an entity referred to in paragraph (a),(b), (c), (d), (e), (f), (g) or (h), with total revenue or assetsin excess of $25 million or its equivalent in another currency,as shown on its last financial statement, to be audited onlyif otherwise required;

PensionPlan or Fund

(o)a pension fund that is regulated by either the Office of theSuperintendent of Financial Institutions (Canada) or a provincialpension commission, if the pension fund has total net assets,as shown on its last audited balance sheet, in excess of $25million, provided that, in determining net assets, the liabilityof a fund for future pension payments shall not be included;

MutualFunds and Investment Funds

(p)a mutual fund or non-redeemable investment fund if each investorin the fund is a qualified party;

(q)a mutual fund that distributes its securities in Ontario, ifthe portfolio manager of the fund is registered as an adviser,other than a securities adviser, under the Act or securitieslegislation elsewhere in Canada;

(r)a non-redeemable investment fund that distributes its securitiesin Ontario, if the portfolio manager of the fund is registeredas an adviser, other than a securities adviser, under the Actor securities legislation elsewhere in Canada;

Brokers/InvestmentDealers

(s)a person or company registered under the Act or securities legislationelsewhere in Canada as a broker or an investment dealer or both;

(t)a person or company registered under the Act as an internationaldealer if the person or company has total assets, as shown onits last audited balance sheet, in excess of $25 million orits equivalent in another currency;

FuturesCommission Merchants

(u)a person or company registered under the CFA as a dealer inthe category of futures commission merchant, or in an equivalentcapacity elsewhere in Canada;

Charities

(v)a registered charity under the Income Tax Act (Canada) withassets not used directly in charitable activities or administration,as shown on its last audited balance sheet, of at least $5 millionor its equivalent in another currency;

Affiliates

(w)a wholly-owned subsidiary of any of the organizations describedin paragraph (a), (b), (c), (d), (e), (f), (g), (h), (j), (n),(o), (s), (t) or (u);

(x)a holding body corporate of which any of the organizations describedin paragraph (w) is a wholly-owned subsidiary;

(y)a wholly-owned subsidiary of a holding body corporate describedin paragraph (x);

(z)a firm, partnership, joint venture or other form of unincorporatedassociation in which one or more of the organizations describedin paragraph (w), (x) or (y) have a direct or indirect controllinginterest; and

GuaranteedParty

(aa)a party whose obligations in respect of the OTC derivativestransaction for which the determination is made is fully guaranteedby another qualified party.

QualifiedParty Not Acting as Principal

(4)The following are qualified parties, in respect of all OTC derivativetransactions:

ManagedAccounts

1.Accounts of a person, company, pension fund or pooled fund trustthat are fully managed by a portfolio manager or financial intermediaryreferred to in paragraphs (a), (d), (e), (g), (s), (t), (u)or (w) of subsection (3) or a broker or investment dealer actingas a trustee or agent for the person, company, pension fundor pooled fund trust under section 148 of the Regulation.

SubsequentFailure to Qualify

(5)A party is a qualified party for the purpose of any OTC derivativestransaction if it, he or she is a qualified party at the timeit, he or she enters into the transaction.