MAXIN Income Fund - MRRS Decision

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications -- closed-ended investment trust exemptfrom prospectus and registration requirements in connectionwith the sale of units repurchased from existing unit holderspursuant to market purchase program - first trade in repurchasedunits deemed a distribution unless made in compliance with MI45-102.

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.

IN THE MATTER OF

SECURITIES LEGISLATION OF

BRITISH COLUMBIA, ALBERTA,SASKATCHEWAN,

ONTARIO, NOVA SCOTIA, NEWBRUNSWICK,

PRINCE EDWARD ISLAND, NEWFOUNDLANDAND LABRADOR

AND YUKON

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

MAXIN INCOME FUND

MRRS DECISION DOCUMENT

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 MAXIN Income Fund (the "Trust") for adecision, 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 the mandatory market purchase program, the discretionarymarket purchase program, or by way of redemption of Units atthe request of holders thereof, nor to the resale of such repurchasedUnits (the "Repurchased Units") which have been distributedby 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;

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 March 28,2003 (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 March 28, 2003upon obtaining a receipt for its final prospectus dated March28, 2003 (the "Prospectus").

4. Each Unit represents an equal, undividedbeneficial interest in the net assets of the Trust and isredeemable at net asset value of the Trust ("Net AssetValue") per Unit on November 30^th of eachcalendar year.

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 MAXIN Management Limited (the"Manager"), which was incorporated pursuant to theBusiness Corporations Act (Ontario) on January 29,2003, 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 "MXZ.UN". As at April 15, 2003,8,000,000 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 prevailing market prices(the "Discretionary Purchase Program"). Suchdiscretionary 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. Pursuant to the Declaration of Trust andsubject to the Trust's right to suspend redemptions, Unitsmay be surrendered for redemption (the "RedemptionProgram" and, together with the Mandatory PurchaseProgram and Discretionary Purchase Program, the "Programs")by a Unitholder at any time in the month of November of eachyear to the Trust's registrar and transfer agent, and eachUnit properly surrendered for redemption by a Unitholder notlater than 5:00 p.m. (Toronto time) on the fifth businessday prior to November 30^th of such year (the "RedemptionValuation Date") will, subject to an investment dealerfinding purchasers for Units properly surrendered for redemptionupon the authorization of the Unitholder and at the directionof the Trust, be redeemed by the Trust pursuant to the RedemptionProgram for a price (the "Redemption Price")equal to the Net Asset Value of the Trust divided by the numberof Units then outstanding determined as of the applicableRedemption Valuation Date.

11. A Unitholder who has surrendered Unitsfor redemption will be paid the Redemption Price for suchUnits by the tenth business day following the Redemption ValuationDate.

12. Purchases of Units made by the Trust underthe Programs are exempt from the issuer bid requirements ofthe Legislation pursuant to exemptions contained therein.

13. 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.

14. 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).

15. Repurchased Units which the Trust doesnot sell within ten months of the purchase of such RepurchasedUnits will be cancelled by the Trust.

16. 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.

17. 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.

18. Legislation in some of the Jurisdictionsprovides that the first trade or resale of Repurchased Unitsacquired by a purchaser will be a distribution subject tothe Registration and Prospectus Requirements unless such firsttrade is made in reliance on an exemption therefrom.

19. The Prospectus disclosed that the Trustmay repurchase and redeem, as the case may be, Units underthe Mandatory Purchase Program, the Discretionary PurchaseProgram and the Redemption Program and that, subject to receivingall necessary regulatory approvals, the Trust may arrangefor one or more dealers to find purchasers for any Units repurchasedor redeemed by 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 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 insider tradingrestrictions imposed by securities legislation with respectto 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, other than the requirement to file interim financialstatements for the period ended March 31, 2003 in the Provinceof British Columbia in respect of complying with the requirementcontained in subsection 2.8(2)5 of Multilateral Instrument45-102; and

(d) the first trade or resale of RepurchasedUnits acquired by a purchaser from the Trust in a Jurisdictionshall be deemed a distribution or primary distribution tothe public under the Legislation unless the conditions ofparagraphs 2 through 5 of subsection 2.6(3) of MultilateralInstrument 45-102 are satisfied, other than the requirementto file interim financial statements for the period endedMarch 31, 2003 in the Province of British Columbia in respectof complying with the requirement contained in subsection2.6(3)5 of Multilateral Instrument 45-102.

July 2, 2003.