Securities Law & Instruments


Mutual Reliance Review System for ExemptiveRelief Applications - closed-end investment trust exempt fromprospectus and registration requirements in connection withissuance of units to existing unit holders pursuant to distributionreinvestment plan whereby distributions of income are reinvestedin additional units of the trust, subject to certain conditions- first trade in additional units deemed a distribution unlessmade 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, Manitoba, Ontario,Quebec, Nova Scotia, New Brunswick, Prince Edward Island andNewfoundland and Labrador (the "Jurisdictions") hasreceived an application from Faircourt Income Split Trust (the"Trust") for a decision, pursuant to the securitieslegislation of the Jurisdictions (the "Legislation"),that the requirement contained in the Legislation to be registeredto trade in a security and to file and obtain a receipt fora preliminary and a final prospectus (the "Registrationand Prospectus Requirements") shall not apply to certaintrades of units of the Trust ("Units") pursuant toa distribution reinvestment plan (the "Plan");

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 a trust established underthe laws of the Province of Ontario and governed by a trustagreement dated February 14, 2003.

2. The Trust filed a (final) prospectus datedFebruary 14, 2003 (the "Prospectus") with the securitiesregulatory authorities in each of the Jurisdictions qualifyingfor distribution units of the Trust ("Units") andpreferred securities of the Trust ("Preferred Securities")and became a reporting issuer or the equivalent thereof inthe Jurisdictions on February 17, 2003 upon obtaining a receiptfor the Prospectus. As of the date hereof, the Trust is noton the list of defaulting reporting issuers maintained byany of the Jurisdictions.

3. The Trust is not considered to be a "mutualfund" as defined in the Legislation because the holdersof the Units (the "Unitholders") are not entitledto receive "on demand" an amount computed by referenceto the value of a proportionate interest in the whole or inpart of the net assets of the Trust as contemplated in thedefinition of "mutual fund" in the Legislation.Redemptions only occur once per year (January 31) at net assetvalue of the Trust ("Net Asset Value") per Unit.

4. The Units are listed and posted for tradingon the Toronto Stock Exchange (the "TSX") underthe symbol "FCI.UN".

5. The Preferred Securities are listed andposted for trading on the TSX under the symbol "FCI.PR.A".

6. The Preferred Securities were issued pursuantto an indenture entered into with CIBC Mellon Trust Company.Each Preferred Security is due December 31, 2012 and bearinterest from the date of issue at 7.5% per annum, which ispaid quarterly in arrears, commencing on March 31, 2003, onMarch 31, June 30, September 30 and December 31 of each year.

7. Each Unit represents an equal, undividedinterest in the net assets of the Trust. Each whole Unit isentitled to one vote at all meetings of Unitholders and isentitled to participate equally with all other Units withrespect to any and all distributions made by the Trust.

8. Faircourt Asset Management Inc. is themanager and the promoter of the Trust (the "Manager").

9. The Royal Trust Company is the trusteeof the Trust.

10. Acuity Investment Management Inc. (the"Investment Advisor") has been retained by the Trustand the Manager to provide investment advisory and portfoliomanagement services to the Trust.

11. The Trust intends to make monthly cashdistributions to Unitholders. The objectives of the Trustare to first pay the holders of Preferred Securities ("Securityholders")interest on the Preferred Securities in priority to any distributionson the Units, in the amount of $0.1875 per $10 principal amountper quarter, and second, provide the holders of the Units("Unitholders") with a stable stream of tax efficientmonthly cash distributions targeted to be approximately $0.1250per Unit per month. The Trust further intends to repay Securityholders,on December 31, 2012, in priority to any return of the originalsubscription price to Unitholders, the original subscriptionprice of the Preferred Securities and to return to Unitholders,on December 31, 2012, at least the original subscription priceof the Units.

12. The Trust intends to adopt the Plan sothat distributions will, if a Unitholder so elects, be automaticallyreinvested on such Unitholder's behalf in accordance withthe provisions of the agreement governing the operation ofthe Plan (the "DRIP Agreement") entered into bythe Manager, on behalf of the Trust, and CIBC Mellon TrustCompany, as plan agent (the "Plan Agent").

13. Non-residents of Canada within the meaningof the Income Tax Act (Canada) are not eligible toparticipate in the Plan.

14. Pursuant to the terms of the Plan, a Unitholdermay elect to become a participant in the Plan by notifyinga participant in CDS (the "CDS Participant") throughwhich the Unitholder holds his or her Units of the Unitholder'sintention to participate in the Plan. The CDS Participantshall, on behalf of the Unitholder, provide notice to theCDS (the "Participation Notice") of the Unitholder'sparticipation in the Plan no later than the close of businesson the business day which is two business days prior to thelast business day of each calendar month commencing with thelast day of the third month following the month in which theclosing of the initial public offering of the Units occurs(the "Record Date") in respect of the next expecteddistribution in which the Unitholder intends to participate,by delivering to CDS a completed authorization form in themanner prescribed by CDS from time to time. CDS shall, inturn, notify the Plan Agent no later than the close of businesson the business day immediately preceding such Record Dateof such Unitholder's participation in the Plan.

15. Distributions due to Unitholders who haveelected to participate in the Plan (the "Plan Participants")will automatically be reinvested on their behalf by the PlanAgent to purchase plan Units ("Plan Units") in accordancewith the following terms and conditions:

(a) if the market price (plus applicablecommissions and brokerage charges on a per Unit basis) onthe relevant distribution date is less than the Net AssetValue per Unit on the distribution date, the Plan Agentshall apply the distributions otherwise payable in cashby the Trust on the Units beneficially held by such PlanParticipants on such distribution date (the "Distributions")to purchase Plan Units in the market or from treasury asset out below;

(b) purchases of Plan Units described abovewill be made in the market by the Plan Agent during the20 trading day period following the distribution date andthe price paid for those Plan Units will not exceed 115%of the market price of the Units on the relevant distributiondate. On the expiry of such 20 day period, the unused part,if any, of the distributions will be used to purchase PlanUnits from the Trust at a purchase price equal to the higherof: (A) the Net Asset Value per Unit on the relevant distributiondate; and (B) 95% of the market price on the relevant distributiondate;

(c) if the market price (plus applicablecommissions and brokerage charges on a per Unit basis) onthe relevant distribution date is equal to or greater thanthe Net Asset Value per Unit on such distribution date,the Plan Agent shall apply the distributions to purchasePlan Units from the Trust through the issue of new Unitsat a purchase price equal to the higher of: (A) the NetAsset Value per Unit on the relevant distribution date;and (B) 95% of the market price on the relevant distributiondate; and

(d) if purchases of Plan Units in the marketwithin the 20 trading day period discussed above cannot,in the reasonable opinion of the Manager (based on informationprovided by the Plan Agent) be completed prior to the nextsucceeding Record Date such that all Plan Participants forthe current distribution would not be credited with theUnits prior to such Record Date, the Plan Agent may, notwithstandinganything else in the Agency Agreement, purchase Units fromthe Trust with the unused part of the distributions suchthat, on the next succeeding Record Date, all Plan Participantswill be credited with Units and no unused distributionsremain, such purchase price to be equal to the higher of:(A) the Net Asset Value per Unit on the relevant distributiondate; and (B) 95% of the market price on the relevant distributiondate.

16. The Plan Agent will purchase Plan Unitsonly in accordance with mechanics described in the Plan andaccordingly, there is no opportunity for a Plan Participantor the Plan Agent to speculate on Net Asset Value per Unit.

17. The Plan is open for participation byall Unitholders (other than non-residents of Canada), so thatsuch Unitholders can ensure protection against potential dilution,albeit insignificant, be electing to participate in the Plan.

18. The Trust will invest in securities withthe objective of providing Unitholders with a high level ofsustainable income (as described in the Prospectus) as wellas a cost-effective method of reducing the risk of investingin such securities through broad diversification. In addition,the Net Asset Value per Unit should be less volatile thatthan of a typical equity fund based on historical data. Asa result, the potential for significant changes in the NetAsset Value per Unit over short periods of time is moderate.

19. The amount of Distributions that may bereinvested in Plan Units issued from treasury is small relativeto the Unitholders' equity in the Trust. The potential fordilution arising from the issuance of Plan Units by the Trustat the Net Asset Value per Unit on a relevant distributiondate is not significant.

20. The Plan Agent will not issue certificatesrepresenting Plan Units.

21. No fractional Units will be issued underthe Plan. A cash adjustment for any fractional Units willbe paid by the Plan Agent to CDS on a monthly basis to becredited to the Plan Participant via the applicable CDS Participant.

22. A Plan Participant may terminate his orher participation in the Plan by written notice to the CDSParticipant through which the Plan Participant holds his orher Units. CDS will then inform the Plan Agent and thereafterdistributions on such Units held by such Unitholder will bepaid directly to such Plan Participant.

23. The Plan Agent's charges for administeringthe Plan will be paid by the Trust out of the assets of theTrust.

24. The Manager may terminate the Plan atany time in its sole discretion upon not less than 30 days'notice to the Plan Participants, via the applicable CDS Participant,and to the Plan Agent.

25. The Manager also reserves the right inits sole discretion to suspend the Plan at any time, in whichcase the Manager must give, or must cause to be given, writtennotice of the suspension to all Plan Participants via theapplicable CDS Participant.

26. The Manager may, in consultation withthe Plan Agent, adopt additional rules and regulations tofacilitate the administration of the Plan, which shall, onceadopted, be deemed to form part of the DRIP Agreement.

27. The Manager may also amend the Plan orthe DRIP Agreement at any time, in its sole discretion, providedthat: (i) if the amendment is material to Plan Participants,at least 30 days' notice thereof shall be given to Plan Participantsvia the applicable CDS Participant and to the Plan Agent;and (ii) if the amendment is not material to Plan Participants,notice thereof may be given to Plan Participants and to thePlan Agent after effecting the amendment. No material amendmentwill be effective until it has been approved by the TSX (ifrequired).

28. The Manager may, in its sole discretion,upon 90 days' written notice to the Plan Agent, and upon paymentto the Plan Agent of all outstanding fees payable hereunder,remove the Plan Agent of all outstanding fees payable hereunder,remove the Plan Agent and appoint any person or entity licensedto carry on business of a trustee in Ontario as the agentunder the Plan.

29. The distribution of the Plan Units bythe Trust pursuant to the Plan cannot be made in relianceon certain registration and prospectus exemptions containedin the Legislation as the Plan involves the reinvestment ofdistributable income distributed by the Trust and not thereinvestment of dividends or interest of the Trust.

30. The distribution of the Plan Units bythe Trust pursuant to the Plan cannot be made in relianceon registration and prospectus exemptions contained in theLegislation for distribution reinvestment plans of mutualfunds, as the Trust is not considered to be a "mutualfund" as defined in the Legislation because the Unitholdersare not entitled to receive on demand an amount computed byreference to the value of a proportionate interest in thewhole or in a portion of the net assets of the Trust.

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 trades of Plan Units by the Trustto Plan Participants pursuant to the Plan shall not be subjectto the Registration and Prospectus Requirements, provided that:

(a) at the time of the trade, the Trust isa reporting issuer or the equivalent under the Legislationand is not in default of any requirements of the Legislation;

(b) no sales charge is payable in respectof the distributions of Plan Units from treasury;

(c) the Trust has caused to be sent to theperson or company to whom the Plan Units are traded, not morethan 12 months before the trade, a statement describing:

(i) their right to elect to participatein the Plan on a monthly basis to receive Plan Units insteadof cash on the making of a distribution by the Trust andhow to terminate such participation; and

(ii) instructions on how to make the electionreferred to in (i);

(d) except in Québec, the first tradeor resale of Plan Units acquired pursuant to the Plan in aJurisdiction shall be deemed a distribution or primary distributionto the public under the Legislation, unless the conditionsset out in paragraphs 2 through 5 of subsection 2.6(3) ofMultilateral Instrument 45-102 are satisfied;

(e) in Québec, the first trade (alienation)of Plan Units acquired pursuant to the Plan in a Jurisdictionshall be deemed to be a distribution or primary distributionto the public unless:

(i) at the time of the first trade, theTrust is a reporting issuer in Québec and is notin default of any of the requirements of securities legislationin Québec;

(ii) no unusual effort is made to preparethe market or to create a demand for the Plan Units;

(iii) no extraordinary commission or otherconsideration is paid to a person or company other thanthe vendor of the Plan Units in respect of the first trade;and

(iv) the vendor of the Plan Units, if ina special relationship with the Trust, has no reasonablegrounds to believe that the Trust is default of any requirementof the securities legislation in Québec.

October 7, 2003.

"Wendell S. Wigle"
"H. Lorne Morphy"