Securities Law & Instruments

Headnote

Variation of prior relief granted under NP 39- Removal of condition prohibiting securities lending by theCompany.

Statutes Cited

Securities Act (Ontario), R.S.O. 1990, c.S.5,as am., s. 144.

VIA FAX AND MAIL

April 24, 2002

Fasken Martineau DuMoulin LLP
Barrister and Solicitors
Stock Exchange Tower
Suite 3400, P.O. Box 242
800 Place Victoria
Montreal, Québec
H4Z 1E9

Attention: François-Bernard Poulin

Dear Sirs/Mesdames,

RE: CanCap Preferred Corporation(the "Company")
- MRRS Application pursuant to Securities Legislation fora variation of a prior decision under National Policy Statement39 Mutual Funds ("NP 39")
- Application # App. 131/02

By letter dated February 15, 2002 (the "Application"),you applied to the local securities regulatory authority orregulator in each of the provinces of British Columbia, Ontario,Prince-Edward Island and Nova Scotia (collectively, the "DecisionMakers"), on behalf of the Company, for a variation ofan exemption letter dated June 10, 1997 (the "ExemptionLetter"), which granted the Company relief from certainprovisions of National Policy Statement 39 Mutual Funds ("NP39"). The Exemption Letter grants to the Company the reliefrequested subject to three conditions. Condition (b) (the "Condition")to the Exemption Letter provides that: "no securities lendingwill be permitted without the Director's prior consent;".

You represent that, given the fact that mutualfunds are now permitted to engage in securities lending subjectto certain conditions set out in National Instrument 81-102Mutual Funds ("NI 81-102"), the Company now wishesto engage in securities lending to the extent permitted by NI81-102. Accordingly, the Application requests that the ExemptionLetter be varied by the deletion of the Condition from the ExemptionLetter.

This letter confirms that, based on the informationand representations made in the Application and for the purposesdescribed in the Application, the Decision Makers hereby varythe Exemption Letter such that the Condition is deleted fromthe Exemption Letter.

Yours truly,

"Paul A. Dempsey"
Paul A. Dempsey
Manager, Investment Funds
Capital Markets
(416) 593-8091