Digital World Trust

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 and 59(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 ofDigital World Trust (the "Trust"), to the Ontario Securities Commission (the "Commission")for:

(i) a ruling pursuant to subsection 74(1) of the Act that the writing of certainover-the-counter covered call options and cash covered put options(collectively, the "OTC Options") by the Trust is not subject to sections 25and 53 of the Act; and

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

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

AND UPON Mulvihill having represented to the Commission as follows:

1. The Trust is an investment trust that will be established under the laws of theProvince of Ontario pursuant to a trust agreement entered into between Mulvihill,as manager, and The Royal Trust Company, as trustee.

2. The authorized capital of the Trust will consist of an unlimited number oftransferable, redeemable trust units (the "Units").

3. By virtue of the redemption features attaching to the Units, the Trust is considereda "mutual fund" within the meaning of the Act and other applicable legislation.

4. The Trust is not a reporting issuer under the Act but has filed a preliminaryprospectus dated December 23, 1999 and will file a (final) prospectus (the"Prospectus") with the Commission and with the securities regulatory authority ineach of the other Provinces of Canada with respect to proposed offering of Units.

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

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

7. The Trust intends to invest the net proceeds it realizes from the offering primarilyin a diversified portfolio (the "Portfolio") of equity securities, including AmericanDepository Receipts ("ADRs"), of "digitally based" companies. Such companiesmust (a) be listed on a major North American stock exchange or quoted onNASDAQ, (b) have a market capitalization in excess of US$5.0 billion and (c)operate within the sectors of Telecommunication Services; TelecommunicationEquipment Suppliers; Enabling Hardware and Software; or Related DigitalCommerce, Services and Products.

8. The Trust will, from time to time, write covered call options in respect of all or partof the securities in its Portfolio. The investment criteria of the Trust prohibits thesale of equity securities subject to an outstanding call option, and therefore the calloptions will be covered at all times.

9. The Trust may, from time to time, hold a portion of its assets in "cash equivalents"(as that term is defined in the Prospectus). The Trust may utilize such cashequivalents to provide cover in respect of the writing of cash covered put options.Such cash covered put options will only be written in respect of securities in whichthe Trust is permitted to invest.

10. The purchasers of OTC Options written by the Trust will generally be majorCanadian financial institutions and all purchasers of OTC Options will be personsor entities described in Schedule 1 to this ruling.

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

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

IT IS RULED, pursuant to subsection 74(1) of the Act, that the writing of OTCOptions by the Trust, as contemplated by paragraphs 8 and 9 of this ruling, shall not besubject to sections 25 and 53 of the Act provided that:

(a) the portfolio adviser advising the Trust with respect to such activities isregistered as an adviser under the Act and meets the proficiencyrequirements for advising with respect to options in the principal jurisdictionin Canada in which the portfolio adviser carries on its business;

(b) each purchaser of an OTC Option written by the Trust is a person or entitydescribed in Schedule 1 to this ruling; and

(c) 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 Trust is herebyexempted from the fees which would otherwise be payable pursuant to Section 28 ofSchedule 1 to the Regulation in connection with any OTC Options written by the Trust inreliance on the above ruling.

February 4^th, 2000.

"Howard I. Wetston"     "R. Stephen Paddon"

APPENDIX A

QUALIFIED PARTIES

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 have in the BusinessCorporations Act (Ontario).

(2) All requirements contained in this Appendix that are based on the amounts shownon 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 asprincipal:

Banks

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

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

(c) A bank subject to the regulatory regime of a country that is a member of the BasleAccord if the bank has a minimum paid up capital and surplus, as shown on its last auditedbalance sheet, in excess of $100 million or its equivalent in another currency.

Credit Unions and Caisses Populaires

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

Loan and Trust Companies

(e) A loan corporation or trust corporation registered under the Loan and TrustCorporations Act (Ontario) or under the Trust and Loan Companies Act (Canada), or undercomparable legislation in any other province or territory of Canada.

(f) A loan company or trust company subject to the regulatory regime of a country thatis a member of the Basle Accord if the loan company or trust company has a minimum paidup capital and surplus, as shown on its last audited balance sheet, in excess of $100million or its equivalent in another currency.

Insurance Companies

(g) An insurance company licensed to do business in Canada or a province or territoryof Canada if the insurance company has a minimum paid up capital and surplus, as shownon its last audited balance sheet, in excess of $100 million or its equivalent in anothercurrency.

(h) An insurance company subject to the regulatory regime of a country that is amember of the Basle Accord if the insurance company has a minimum paid up capital andsurplus, as shown on its last audited balance sheet, in excess of $100 million or itsequivalent in another currency.

Sophisticated Entities

(i) A person or company that

(i) has entered into one or more transactions involving OTC derivatives withcounterparties that are not its affiliates, if

(A) the transactions had a total gross dollar value of or equivalent to atleast $1 billion in notional principal amount; and

(B) any of the contracts relating to one of these transactions wasoutstanding on any day during the previous 15-month period, or

(ii) had total gross marked-to-market positions of or equivalent to at least $100million aggregated across counterparties, with counterparties that are not its affiliates inone or more transactions involving 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 in anothercurrency, 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 eachcrown corporation, instrumentality and agency of a Canadian federal, provincial orterritorial government.

(l) A national government of a country that is a member of the Basle Accord and eachinstrumentality and agency of that government or corporation wholly-owned by thatgovernment.

Municipalities

(m) Any Canadian municipality with a population in excess of 50,000 and any Canadianprovincial

or territorial capital city.

Corporations and other Entities

(n) A company, partnership, unincorporated association or organization or trust, otherthan 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, in excess of $100 million or its equivalent inanother currency.

Pension Plan or Fund

(o) A pension fund that is regulated by either the Office of the Superintendent ofFinancial Institutions (Canada) or a provincial pension commission, if the pension fund hastotal net assets, as shown on its last audited balance sheet, in excess of $100 million,provided that, in determining net assets, the liability of a fund for future pension paymentsshall not be included.

Mutual Funds and Investment Funds

(p) A mutual fund or non-redeemable investment fund if each investor in the fund is aqualified party.

(q) A mutual fund if the management company of the fund is registered under the Actor securities legislation elsewhere in Canada as an adviser, other than a securitiesadviser.

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

Brokers/Investment Dealers

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

(t) A person or company registered under the Act as an international dealer if theperson or company has total assets, as shown on its last audited balance sheet, in excessof $100 million or its equivalent in another currency.

Futures Commission Merchants

(u) A person or company registered under the CFA as a dealer in the category offutures commission merchant, or in an equivalent capacity elsewhere in Canada.

Charities

(v) A registered charity under the Income Tax Act (Canada) with assets not useddirectly in charitable activities or administration, as shown on its last audited balancesheet, 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), (n), (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 inwhich one or more of the organizations described in paragraph (w), (x) or (y) have a director indirect controlling interest.

Guaranteed Party

(aa) A party whose obligations in respect of the OTC derivatives transaction for whichthe 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 fullymanaged by a portfolio manager or financial intermediary referred to in paragraphs (a), (d),(e), (g), (s), (t) or (u) of paragraph (2) or a broker or investment dealer acting as a trusteeor agent for the person, company, pension fund or pooled fund trust under section 148 ofthe 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.