Securities Law & Instruments


Mutual Reliance Review System for ExemptiveRelief Applications - open-end investment trust exempt fromprospectus and registration requirements in connection withthe sale of units repurchased from existing unit holders pursuantto market purchase program - first trade in repurchased unitsdeemed a distribution unless made in compliance with MI 45-102.

Applicable Ontario Statutory Provisions

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

Multilateral Instrument Cited

Multilateral Instrument 45-102 Resale of Securities(2001), 24 OSCB 5522.















WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Alberta, Saskatchewan, Ontario, Nova Scotia,New Brunswick, Prince Edward Island, Newfoundland and Yukon(the "Jurisdictions") has received an applicationfrom PATHFINDER Income Fund (the "Trust") fora decision, pursuant to the securities legislation of the Jurisdictions(the "Legislation"), that the requirement containedin the Legislation to be registered to trade in a security andto file and obtain a receipt for a preliminary prospectus anda final prospectus (the "Registration and Prospectus Requirements")shall not apply to the distribution of units of the Trust (the"Units") which have been repurchased by the Trustpursuant to either the mandatory or discretionary market purchaseprogram of the Trust nor to the resale of such Units which havebeen distributed by the Trust;

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this application;

AND WHEREAS, unless otherwise defined,the terms herein have the meaning set out in National Instrument14-101 Definitions or in Québec Commission Notice 14-101;

AND WHEREAS THE TRUST has representedto the Decision Makers that:

1. The Trust is an unincorporated closed-endinvestment trust established under the laws of the Provinceof Ontario by a declaration of trust dated as of September25, 2002 (the "Declaration of Trust").

2. The Trust is not considered to be a "mutualfund" as defined in the Legislation because the holdersof Units ("Unitholders") are not entitled to receiveon demand an amount computed by reference to the value ofa proportionate interest in the whole or in part of the netassets of the Trust as contemplated in the definition of "mutualfund" in the Legislation.

3. The Trust became a reporting issuer orthe equivalent thereof in the Jurisdictions on September 26,2002 upon obtaining a receipt for its final prospectus datedSeptember 25, 2002 (the "Prospectus"). As of thedate hereof, the Trust is not in default of any requirementsunder the Legislation.

4. Each Unit represents an equal, undividedinterest in the net assets of the Trust and is redeemableat net asset value of the Trust ("Net Asset Value")per Unit on November 30 of each year commencing in 2003.

5. Each whole Unit is entitled to one voteat all meetings of Unitholders and is entitled to participateequally with all other Units with respect to any and all distributionsmade by the Trust.

6. Middlefield PATHFINDER Management Limited(the "Manager"), which was incorporated pursuantto the Business Corporations Act (Ontario) on July31, 2002, is the manager and the trustee of the Trust.

7. The Units are listed and posted for tradingon the Toronto Stock Exchange (the "TSX") underthe trading symbol "PAZ.UN". As December 19, 2002,15,254,600 Units were issued and outstanding.

8. In order to enhance liquidity and to providemarket support for the Units, pursuant to the Declarationof Trust and the terms and conditions that attach to the Units,the Trust shall, subject to compliance with any applicableregulatory requirements, be obligated to purchase (the "MandatoryPurchase Program") any Units offered in the market ona business day at the then prevailing market price if, atany time after the closing of the Trust's initial public offeringpursuant to the Prospectus, the price at which Units are thenoffered for sale is less than 95% of the Net Asset Value perUnit determined as at the close of business in Toronto, Ontarioon the immediately preceding business day, provided that:

(a) the maximum number of Units that theTrust shall purchase in any three month period (commencingwith the three month period that begins on the first dayof the month following the month in which the closing ofthe Trust's initial public offering occurs) will be 2.50%of the number of Units outstanding at the beginning of eachsuch three month period; and

(b) the Trust shall not be required to purchaseUnits pursuant to the Mandatory Purchase Program if:

(i) in the opinion of the Manager, theTrust lacks the cash, debt capacity or resources in generalto make such purchases; or

(ii) in the opinion of the Manager, themaking of any such purchases by the Trust would adverselyaffect the ongoing activities of the Trust or the remainingUnitholders.

9. In addition, the Declaration of Trust providesthat the Trust, subject to applicable regulatory requirementsand limitations, shall have the right, but not the obligation,exercisable in its sole discretion, at any time, to purchaseoutstanding Units in the market at then prevailing marketprices (the "Discretionary Purchase Program" and,together with the Mandatory Purchase Program, the "Programs").Such discretionary purchases may be made through the facilitiesand under the rules of any exchange or market on which theTrust Units are listed (including the TSX) or as otherwisepermitted by applicable securities laws.

10. Purchases of Units made by the Trust underthe Programs (such Units shall be referred to as "RepurchasedUnits") are exempt from the issuer bid requirements ofthe Legislation pursuant to exemptions contained therein.

11. The Trust desires to, and the Declarationof Trust provides that the Trust shall, have the ability tosell through one or more securities dealers Repurchased Units,in lieu of cancelling such Repurchased Units and subject toobtaining all necessary regulatory approvals.

12. In order to effect sales of RepurchasedUnits by the Trust, the Trust intends to sell, in its solediscretion and at its option, any Repurchased Units purchasedby it under the Programs primarily through one or more securitiesdealers and through the facilities of the TSX (or such otherexchange on which the Units are then listed).

13. Repurchased Units which the Trust doesnot sell within seven months of the purchase of such RepurchasedUnits will be cancelled.

14. Prospective Purchasers who subsequentlyacquire Repurchased Units will have equal access to all ofthe continuous disclosure documents of the Trust, which willbe filed on SEDAR, commencing with the Prospectus.

15. Legislation in some of the Jurisdictionsprovides that a trade by or on behalf of an issuer in previouslyissued securities of that issuer that have been purchasedby that issuer is a distribution subject to the Registrationand Prospectus Requirements.

16. Legislation in some of the Jurisdictionsprovides that the first trade in Repurchased Units acquiredby a purchaser will be a distribution subject to the Registrationand Prospectus Requirements unless such first trade is madein reliance on an exemption therefrom.

17. The Prospectus disclosed that the Trustmay repurchase Units under the Mandatory Purchase Programand the Discretionary Purchase Program and that, subject toreceiving all necessary regulatory approvals, the Trust mayarrange for one or more dealers to find purchasers for anyRepurchased Units.

AND WHEREAS under the System, this MRRSDecision Document evidences the decision of each of the DecisionMakers (collectively, the "Decision");

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Makers with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers pursuantto the Legislation is that the trades of Repurchased Units pursuantto the Programs shall not be subject to the Registration andProspectus Requirements of the Legislation provided that:

(a) the Repurchased Units are sold by theTrust through the facilities of and in accordance with theregulations and policies of the TSX or the market on whichthe Units are then listed;

(b) the Trust complies with the insidertrading restrictions imposed by securities legislation withrespect to the trades of Repurchased Units;

(c) the Trust complies with the conditionsof paragraphs 1 through 5 of subsection 2.8(2) of MultilateralInstrument 45-102 with respect to the sale of the RepurchasedUnits; and

(d) the resale of Repurchased Units acquiredby a purchaser from the Trust pursuant to the Programs ina Jurisdiction shall be deemed a distribution or primarydistribution to the public under the Legislation unlessthe conditions of paragraphs 2 through 5 of subsection 2.6(3)of Multilateral Instrument 45-102 are satisfied.

February 17, 2003.

"Robert W. Korthals"                   "RobertL. Shirriff"