Ontario Securities Commission Investor Alert - January 2005
(revised January 2006)

Final income trust policy recommends clearer disclosure for investors

Toronto – The Canadian Securities Administrators (CSA) recently published additional guidance that enhances the information available about income trusts. Income trusts are sophisticated investments. Before you invest, make sure you read and understand the prospectus and other disclosure documents describing the trust and the securities (or units), and that you are comfortable with the risks related to the investment.

What is an income trust?
An income trust offers units to the public. The money that the trust raises is used to purchase the common shares and debt of a business. As the business generates income, the combination of the trust's equity and debt holdings in the business allows the income to flow from the business through to investors essentially tax-free in the form of distributions. "Distributable cash" is the term used to describe the amount of cash that management determines to be available for distribution by the business to investors. This amount is discretionary and may exceed the net income earned in the underlying business.

Risk and Return
Income trusts are not conservative or fixed-income investments. They are equity-like investments that carry varying degrees of risk. Income trust distributions are not assured, and depend almost entirely on the financial performance of the underlying business. Just like any security, the quality of income trust investments can vary. Before you invest, make sure you look at a range of factors such as any business risks specific to the industry involved, and the management structure that is in place.

What's new?
The guidance issued by the CSA is in the form of a policy. The policy suggests ways in which issuers could improve their disclosure about what cash will be paid out to unitholders, and about the risk factors associated with investing in an income trust. In a related development, new legislation in Ontario limits the liability of income trust unitholders for acts committed by the trust or trustees.

What should I consider before I invest?
You can access the income trust's public disclosure documents on the SEDAR website at www.sedar.com. You can also check news services for any press releases or other public information.

Base your investment decisions on the research you've gathered from credible, knowledgeable and diverse sources. Contact the Ontario Securities Commission toll free at 1-877-785-1555 for further information. You can learn more about investment topics on-line at www.InvestorED.ca. See the article Ins and Outs of Income Trusts for more information on this subject.