Premium Global Income Fund

Headnote

Subsection 74(1) - Exemption from sections 25 and 53 of the Act in connection with thewriting of certain over-the-counter covered call options and cash-covered put optionsby the issuer, subject to certain conditions.

Section 59, Schedule 1 - Issuer exempt from section 28 of Schedule 1 of theRegulation in connection with the writing of certain over-the-counter covered calloptions and cash-covered put options

Statutes Cited

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

Regulations Cited

Regulation made under the Securities Act, R.R.O. 1990, Reg. 1015, as am., ss. 28 and59(1) of Schedule 1.

National Instrument Cited

National Instrument 81-102 Mutual Funds (2000), 23 OSCB 59 (Supp.).

UPON the application of Mulvihill Fund Services Inc. ("Mulvihill"), as manager ofPremium Global Income Fund (the "Fund") to the Ontario Securities Commission (the"Commission") for a ruling:

(i) pursuant to subsection 74(1) of the Act that the writing of certain over-the-counter covered call options and cash covered put options (collectively, the"OTC Options") by the Fund are not subject to sections 25 and 53 of the Act; and

(ii) pursuant to subsection 59(1) of Schedule 1 of the Regulation for an exemptionfrom the fees required to be paid under section 28 of Schedule 1 of theRegulation in connection with the writing of certain OTC Options by the Fund;

AND UPON considering the application and the recommendation of the staff ofthe Commission;

AND UPON Mulvihill having represented to the Commission as follows:

1. The Fund is a mutual fund trust that will be established under the laws of theProvince of Ontario pursuant to a declaration of trust entered into by Mulvihill, astrustee and manager.

2. The Fund will be authorized to issue an unlimited number of units (the "Units").

3. The Fund will comply with all applicable provisions of National Instrument 81-102.

4. The Fund has filed a preliminary simplified prospectus (the "PreliminaryProspectus") and preliminary annual information form (the "Preliminary AIF")dated December 8, 1999 with the securities regulatory authorities in eachprovince and territory other than Quebec.

5. Mulvihill Capital Management Inc. ("MCM") will act as investment manager of theFund.

6. MCM is registered under the Act in the categories of investment counsel andportfolio manager, mutual fund dealer and limited market dealer.

7. The Fund intends to invest its assets in a diversified portfolio (the "Portfolio")consisting principally of common shares issued by corporations selected fromthe TSE 300 Index and from the Standard & Poor's 500 Index and AmericanDepository Receipts ("ADRs") of the top 200 international corporations, selectedon the basis of market capitalization, whose ADRs are trading on the New YorkStock Exchange or NASDAQ.

8. The Fund will, from time to time, write covered call options in respect of all orpart of the securities in its Portfolio.

9. The Fund may, from time to time, hold a portion of its assets in "cashequivalents" as that term is defined in National Instrument 81-102. The Fundmay utilize such cash equivalents to provide cover in respect of the writing ofcash covered put options. Such cash covered put options will only be written inrespect of securities in which the Fund is permitted to invest.

10. The purchasers of OTC Options written by the Fund will generally be majorCanadian financial institutions and all purchasers of OTC Options will bepersons or entities described in Appendix A to this ruling.

11. The writing of the OTC Options by the Fund will not be used as a means for theFund to raise new capital.

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

IT IS RULED, pursuant to subsection 74(1) of the Act, that the writing of OTCOptions by the Fund, as contemplated by paragraphs 7 and 8 of this ruling, shall not besubject to sections 25 and 53 of the Act provided that:

(i) the portfolio adviser advising the Fund with respect to such activities isregistered as an adviser under the Act and meets the proficiency requirementsfor advising with respect to options in the principal jurisdiction in Canada inwhich the portfolio adviser carries on its business;

(ii) each purchaser of an OTC Option written by the Fund is a person or entitydescribed in Appendix A to this ruling; and

(iii) a receipt for the Prospectus has been issued by the Director under the Act;

AND PURSUANT to section 59 of Schedule 1 to the Regulation the Fund ishereby exempted from the fees which would otherwise be payable pursuant to Section28 of Schedule 1 to the Regulation in connection with any OTC Options written by suchTrust in reliance on the above ruling.

February 11^th, 2000.

"J. A. Geller" "R. Stephen Paddon"

Interpretation

1. The terms "subsidiary" and "holding body corporate" used in paragraphs (w), (x)and (y) of subsection (2) of this Appendix have the same meaning as they havein the Business Corporations Act.

Qualified Parties Acting as Principal

2. The following are qualified parties for all OTC derivatives transactions, if actingas principal:

Banks

(a) A bank listed in Schedule I or II to the Bank Act (Canada).

(b) The Business Development Bank of Canada incorporated under theBusiness Development Bank of Canada Act (Canada).

(c) A bank subject to the regulatory regime of a country that is a member ofthe Basle Accord if the bank has a minimum paid up capital and surplus,as shown on its last audited balance sheet, in excess of $150 million or itsequivalent in another currency.

Credit Unions and Caisses Populaires

(d) A credit union central, federation of caisses populaires, credit union orregional caisse populaire, located, in each case, in Canada.

Loan and Trust Companies

(e) A loan corporation or trust corporation registered under the Loan andTrust Corporations Act or under the Trust and Loan Companies Act(Canada), or under comparable legislation in any other province orterritory of Canada.

(f) A loan company or trust company subject to the regulatory regime of acountry that is a member of the Basle Accord if the loan company or trustcompany has a minimum paid up capital and surplus, as shown on its lastaudited balance sheet, in excess of $150 million or its equivalent inanother currency.

Insurance Companies

(g) An insurance company licensed to do business in Canada or a provinceor territory of Canada if the insurance company has a minimum paid upcapital and surplus, as shown on its last audited balance sheet, in excessof $150 million or its equivalent in another currency.

(h) An insurance company subject to the regulatory regime of a country thatis a member of the Basle Accord if the insurance company has a minimumpaid up capital and surplus, as shown on its last audited balance sheet, inexcess of $150 million or its equivalent in another currency.

Sophisticated Entities

(i) A person or company that

(i) has entered into one or more transactions involving OTCderivatives with counterparties that are not its affiliates, if

(A) the transactions had a total gross dollar value of orequivalent to at least $1 billion in notional principal amount;and

(B) any of the contracts relating to one of these transactionswas outstanding on any day during the previous 15-monthperiod, or

(ii) had total gross marked-to-market positions of or equivalent to atleast $100 million aggregated across counterparties, withcounterparties that are not its affiliates in one or more transactionsinvolving OTC derivatives on any day during the previous15-month period.

Individuals

(j) An individual who has a net worth of at least $5 million, or its equivalent inanother 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 andeach crown corporation, instrumentality and agency of a Canadianfederal, provincial or territorial government.

(l) A national government of a country that is a member of the Basle Accordand each instrumentality and agency of that government or corporationwholly-owned by that government.

Municipalities

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

Corporations and other Entities

(n) A company, partnership, unincorporated association or organization ortrust, other than an entity referred to in paragraph (a), (b), (c), (d), (e), (f),(g) or (h), with total assets, as shown on its last audited balance sheet, inexcess of $100 million or its equivalent in another currency.

Pension Plan or Fund

(o) A pension fund that is regulated by either the Office of the Superintendentof Financial Institutions (Canada) or a provincial pension commission, ifthe pension fund has total net assets, as shown on its last auditedbalance sheet, in excess of $100 million, provided that, in determining netassets, the liability of a fund for future pension payments shall not beincluded.

Mutual Funds and Investment Funds

(p) A mutual fund or non-redeemable investment fund if each investor in thefund is a qualified party.

(q) A mutual fund if the management company of the fund is registered underthe Act or securities legislation elsewhere in Canada as an adviser, otherthan a securities adviser.

(r) A non-redeemable investment fund if the person responsible for providinginvestment advice to the fund is registered under the Act or securitieslegislation elsewhere in Canada as an adviser, other than a securitiesadviser.

Brokers/Investment Dealers

(s) A person or company registered under the Act or securities legislationelsewhere in Canada as a broker or an investment dealer or both.

(t) A person or company registered under the Act as an international dealerif the person or company has total assets, as shown on its last auditedbalance sheet, in excess of $100 million or its equivalent in anothercurrency.

Futures Commission Merchants

(u) A person or company registered under the CFA as a dealer in thecategory of futures commission merchant, or in an equivalent capacityelsewhere in Canada.

Charities

(v) A registered charity under the Income Tax Act (Canada) with assets notused directly in charitable activities or administration, as shown on its lastaudited balance sheet, of at least $5 million or its equivalent in anothercurrency.

Affiliates

(w) A wholly-owned subsidiary of any of the organizations described inparagraph (a), (b), (c), (d), (e), (f), (g), (h), (n), (s), (t) or (u).

(x) A holding body corporate of which any of the organizations described inparagraph (w) is a wholly-owned subsidiary.

(y) A wholly-owned subsidiary of a holding body corporate described inparagraph (x).

(z) A firm, partnership, joint venture or other form of unincorporatedassociation in which one or more of the organizations described inparagraph (w), (x) or (y) have a direct or indirect controlling interest.

Guaranteed Party

(aa) A party whose obligations in respect of the OTC derivatives transactionfor which the determination is made is fully guaranteed by anotherqualified party.

Qualified Party Not Acting as Principal

3. 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 fullymanaged by a portfolio manager or financial intermediary referred to inparagraphs (a), (d), (e), (g), (s), (t) or (u) of paragraph (2) or a broker orinvestment dealer acting as a trustee or agent for the person, company, pensionfund or pooled fund trust under section 148 of the Regulation.

Subsequent Failure to Qualify

4. A party is a qualified party for the purpose of any OTC derivatives transaction ifit, he or she is a qualified party at the time it, he or she enters into thetransaction.