Capital Gains Income Streams Corporation - ss. 74(1)

UPON the application of Capital Gains Income STREAMS Corporation (the "Company") to the Ontario Securities Commission (the "Commission") for

(i) a ruling, pursuant to subsection 74(1) of the Act, that the writing of certain over-the-counter covered call options (the "OTC Covered Call Options") by the Company is not subject to section 25 or section 53 of the Act, and

(ii) an exemption, pursuant to subsection 59(1) of Schedule 1 to the Regulation ("Schedule 1"), from the requirement to pay the fees required by subsection 28(2) of Schedule 1 in respect of any OTC Covered Call Option written by the Company pursuant to this ruling;

AND UPON considering the application and the recommendation of staff of the Commision;

AND UPON the Company having represented to the Commission as follows:

1. The Company is a mutual fund corporation incorporated under the laws of Ontario. Quadravest Inc. is the Company's "manager", as such term is defined in subsection 1.1 of National Instrument 81-102 ("NI 81-102")

2. The Company is a "mutual fund", as such term is defined in subsection 1(1) of the Act.

3. In connection with the Company's public offering (the "Offering") of equity dividend shares (the "Equity Dividend Shares") and capital yield shares (the "Capital Yield Shares"), the Company filed a preliminary prospectus dated January 12, 2001 (the "Preliminary Prospectus") with the Commission and with the securities regulatory authority in each of the other provinces of Canada under SEDAR Project No. 325272.

4. Quadravest Capital Management Inc. ("Quadravest") will act as the Company's "portfolio adviser", as such term is defined in subsection 1.1 of NI 81-102. Quadravest is registered under the Act as an adviser in the categories of "investment counsel" and "portfolio manager", and as a dealer in the category of "mutual fund dealer".

5. The Company's investment objectives with respect to the Equity Dividend Shares are:

a. to provide the holders thereof with fixed, cumulative monthly cash dividends of a specified amount per share targeted to yield a specified percentage per annum, as will be disclosed in the Company's (final) prospectus (the "Prospectus"), and to pay such dividends as capital gains dividends, and

b. to pay such holders, on or about December 1, 2013 (the "Termination Date"), $15.00 for each Equity Dividend Share held on the Termination Date.

6. The Company's investment objectives with respect to the Capital Yield Shares are:

a. to provide the holders thereof with

i. regular monthly cash dividends targeted to yield a specified percentage per annum, as will be disclosed in the Prospectus, and to pay such dividends as capital gains dividends, and

ii. a special cash dividend on the last day of November in each year equal to an amount calculated in the manner described in the Preliminary Prospectus and will be described in the Prospectus and, to the extent possible, to pay such dividends as capital gains dividends,

b. to pay such holders, on or about the Termination Date, $25.00 for each Capital Yield Share held on the Termination Date, and

c. to pay such holders, on or about the Termination Date, a pro-rata share of the balance, if any, of the Managed Portfolio (as defined in paragraph 8 below)after paying the holders of Equity Dividend Shares $15.00 per share.

7. The Company will use a specified percentage, as will be disclosed in the Prospectus, of the gross proceeds of the Offering to acquire certain equity securities (the "Capital Repayment Portfolio"). To achieve its capital repayment objective, the Company will enter into a forward sale and purchase agreement pursuant to which the Counterparty will agree to pay to the Company, on the Termination Date, $25.00 for each Capital Yield Share outstanding on the Termination Date, in exchange for the delivery to the Counterparty of the securities held in the Capital Repayment Portfolio.

8. To achieve its dividend and capital appreciation objectives, the Company will use the proceeds of the Offering, net of expenses and the amount used to acquire the Capital Repayment Portfolio, to invest in a diversified portfolio (the "Managed Portfolio") of securities consisting principally of common shares issued by corporations included in the S&P/TSE 60 Index or the Standard & Poor's 500 Composite Stock Price Index (the "S&P Index"). Quadravest will actively manage the Managed Portfolio.

9. From time to time, the Company will write covered call options in respect of all or part of the securities held in the Managed Portfolio. Such call options may either be exchange-traded options or over-the-counter options ("OTC Options").

10. The writing of covered call options by the Company will be managed by Quadravest in a manner consistent with the investment objectives of the Company. The individual securities in the Managed Portfolio that are subject to call options, and the terms of such call options, will vary from time to time based on Quadravest's assessment of the markets.

11. One of the restrictions on the Company's investment activities, as disclosed in the Preliminary Prospectus and will be disclosed in the Prospectus, prohibits the Company from selling securities held in the Managed Portfolio that are subject to an outstanding call option.

12. OTC Covered Call Options will be written by the Company only in respect of securities held in the Managed Portfolio. At no time will the Company write OTC Options for the purpose or as a means of raising new capital.

13. The purchasers of OTC Covered Call Options written by the Company will generally be the major Canadian financial institutions described in Appendix "A" attached to this ruling and exemption.

AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;

IT IS RULED, pursuant to subsection 74(1) of the Act, that the writing of OTC Covered Call Options by the Company, as contemplated by this Ruling, is not subject to sections 25 and 53 of the Act provided that,

(a) the portfolio adviser advising the Company with respect to such activity is registered as an adviser under the Act, and meets the proficiency requirements in Ontario for advising with respect to options,

(b) each purchaser of an OTC Covered Call Option written by the Company is a person or company described in Appendix "A" to this ruling and exemption, and

(c) a receipt for the Prospectus of the Company is or has been issued by the Director under the Act;

AND PURSUANT to section 59 of Schedule 1, the Company is hereby exempted from the fees that would otherwise be payable pursuant to subsection 28(2) of Schedule 1, in connection with the OTC Covered Call Options written by the Company in reliance upon the above ruling.

February 23, 2001.

J.A. Geller, Theresa McLeod

APPENDIX "A"

QUALIFIED PARTIES

Interpretation

(1) The terms "subsidiary" and "holding body corporate" used in paragraphs (w), (x) and (y) of subsection (3) of this Appendix have the same meaning as they have in the Business Corporations Act (Ontario).

(2) All requirements contained in this Appendix that are based on the amounts shown on the balance sheet of an entity apply to the consolidated balance sheet of the entity.

Qualified Parties Acting as Principal

(3) The following are qualified parties for all OTC derivatives transactions, if acting as principal:

Banks

(a) a bank listed in Schedule I, II or III to the Bank Act (Canada);

(b) the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada);

(c) a bank subject to the regulatory regime of a country that is a member of the Basel Accord, or that has adopted the banking and supervisory rules set out in the Basel Accord, if the bank has a minimum paid up capital and surplus, as shown on its last audited balance sheet, in excess of $25 million or its equivalent in another currency;

Credit Unions and Caisses Populaires

(d) a credit union central, federation of caisses populaires, credit union or regional caisse populaire, located, in each case, in Canada;

Loan and Trust Companies

(e) a loan corporation or trust corporation registered under the Loan and Trust Corporations Act or under the Trust and Loan Companies Act (Canada), or under comparable legislation in any other province or territory of Canada;

(f) a loan company or trust company subject to the regulatory regime of a country that is a member of the Basel Accord, or that has adopted the banking and supervisory rules set out in the Basel Accord, if the loan company or trust company has a minimum paid up capital and surplus, as shown on its last audited balance sheet, in excess of $25 million or its equivalent in another currency;

Insurance Companies

(g) an insurance company licensed to do business in Canada or a province or territory of Canada;

(h) an insurance company subject to the regulatory regime of a country that is a member of the Basel Accord, or that has adopted the banking and supervisory rules set out in the Basel Accord, if the insurance company has a minimum paid up capital and surplus, as shown on its last audited balance sheet, in excess of $25 million or its equivalent in another currency;

Sophisticated Entities

(i) a person or company that, together with its affiliates, (i) has entered into one or more transactions involving OTC derivatives with counterparties that are not its affiliates, if (A) the transactions had a total gross dollar value of or equivalent to at least $1 billion in notional principal amount; and (B) any of the contracts relating to one of these transactions was outstanding on any day during the previous 15-month period, or (ii) had total gross marked-to-market positions of or equivalent to at least $100 million aggregated across counterparties, with counterparties that are not its affiliates in one or more transactions involving OTC derivatives on any day during the previous 15-month period;

Individuals

(j) an individual who, either alone or jointly with the individual's spouse, has a net worth of at least $5 million, or its equivalent in another currency, excluding the value of his or her principal residence;

Governments/Agencies

(k) Her Majesty in right of Canada or any province or territory of Canada and each crown corporation, instrumentality and agency of a Canadian federal, provincial or territorial government;

(l) a national government of a country that is a member of the Basel Accord, or that has adopted the banking and supervisory rules of the Basel Accord, and each instrumentality and agency of that government or corporation wholly-owned by that government;

Municipalities

(m) any Canadian municipality with a population in excess of 50,000 and any Canadian provincial or territorial capital city;

Corporations and other Entities

(n) a company, partnership, unincorporated association or organization or trust, other than an entity referred to in paragraph (a), (b), (c), (d), (e), (f), (g) or (h), with total revenue or assets in excess of $25 million or its equivalent in another currency, as shown on its last financial statement, to be audited only if otherwise required;

Pension Plan or Fund

(o) a pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada) or a provincial pension commission, if the pension fund has total net assets, as shown on its last audited balance sheet, in excess of $25 million, provided that, in determining net assets, the liability of a fund for future pension payments shall not be included;

Mutual Funds and Investment Funds

(p) a mutual fund or non-redeemable investment fund if each investor in the fund is a qualified party;

(q) a mutual fund that distributes its securities in Ontario, if the portfolio manager of the fund is registered as an adviser, other than a securities adviser, under the Act or securities legislation elsewhere in Canada;

(r) a non-redeemable investment fund that distributes its securities in Ontario, if the portfolio manager of the fund is registered as an adviser, other than a securities adviser, under the Act or securities legislation elsewhere in Canada;

Brokers/Investment Dealers

(s) a person or company registered under the Act or securities legislation elsewhere in Canada as a broker or an investment dealer or both;

(t) a person or company registered under the Act as an international dealer if the person or company has total assets, as shown on its last audited balance sheet, in excess of $25 million or its equivalent in another currency;

Futures Commission Merchants

(u) a person or company registered under the Commodity Futures Act (Ontario) as a dealer in the category of futures commission merchant, or in an equivalent capacity elsewhere in Canada;

Charities

(v) a registered charity under the Income Tax Act (Canada) with assets not used directly in charitable activities or administration, as shown on its last audited balance sheet, of at least $5 million or its equivalent in another currency;

Affiliates

(w) a wholly-owned subsidiary of any of the organizations described in paragraph (a), (b), (c), (d), (e), (f), (g), (h), (j), (n), (o), (s), (t) or (u);

(x) a holding body corporate of which any of the organizations described in paragraph (w) is a wholly-owned subsidiary;

(y) a wholly-owned subsidiary of a holding body corporate described in paragraph (x);

(z) a firm, partnership, joint venture or other form of unincorporated association in which one or more of the organizations described in paragraph (w), (x) or (y) have a direct or indirect controlling interest; and

Guaranteed Party

(aa) a party whose obligations in respect of the OTC derivatives transaction for which the determination is made is fully guaranteed by another qualified party.

Qualified Party Not Acting as Principal

(4) The following are qualified parties, in respect of all OTC derivative transactions:

Managed Accounts

1. Accounts of a person, company, pension fund or pooled fund trust that are fully managed by a portfolio manager or financial intermediary referred to in paragraphs (3)(a), (d), (e), (g), (s), (t), (u) or (w) above, or a broker or investment dealer acting as a trustee or agent for the person, company, pension fund or pooled fund trust under section 148 of the Regulation.

Subsequent Failure to Qualify

(5) A party is a qualified party for the purpose of any OTC derivatives transaction if it, he or she is a qualified party at the time it, he or she enters into the transaction.