Blackrock Investments Canada Inc. et al.

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted from s. 13.5(2)(a) of NI 31-103, following the acquisition of the manager by another organization, to permit mutual funds to purchase securities of related entities on secondary market -- Relief also granted from s. 13.5(2)(b) of NI 31-103 to permit inter-fund trades and in specie transfers between public mutual funds, pooled funds and managed accounts -- Relief subject to conditions including IRC approval or client consent -- relief also subject to pricing and transparency conditions -- inter-fund trades will comply with conditions in s. 6.1(2) of NI 81-107.

Applicable Legislative Provisions

National Instrument 31-103 Registration Requirements and Exemptions, ss. 13.5, 15.1.

National Instrument 81-107 Independent Review Committee for Investment Funds, ss. 6.1, 6.2.

July 20, 2012

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

BLACKROCK INVESTMENTS CANADA INC. (BlackRock Investments),

BLACKROCK ASSET MANAGEMENT CANADA LIMITED (BlackRock Canada),

BLACKROCK INSTITUTIONAL TRUST COMPANY, N.A. (BTC), AND

BLACKROCK FINANCIAL MANAGEMENT, INC. (BFM)

(each, a Filer and, collectively, the Filers)

AND

IN THE MATTER OF

THE NI 81-102 FUNDS (as defined below) AND

THE POOLED FUNDS (as defined below)

DECISION

Background

The securities regulatory authority or regulator in Ontario received an application (the Application) on behalf of the Filers and on behalf of the existing mutual funds and future mutual funds of which BlackRock Investments is the investment fund manager to which National Instrument 81-102 -- Mutual Funds (NI 81-102) applies (each, an NI 81-102 Fund and, collectively, the NI 81-102 Funds) and on behalf of the existing mutual funds and future mutual funds of which BlackRock Canada is the investment fund manager and to which NI 81-102 does not apply (each, a BlackRock Canada Pooled Fund and, collectively, the BlackRock Canada Pooled Funds) and on behalf of the existing mutual funds and future mutual funds of which BlackRock Investments is the investment fund manager to which NI 81-102 does not apply (each a BlackRock Investments Pooled Fund and, collectively, the BlackRock Investments Pooled Funds) for a decision under section 15.1 of National Instrument 31-103 -- Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) providing relief from the following:

Transactions in Securities of Related Issuers

(a) from the requirement in section 13.5(2)(a) of NI 31-103 that prohibits a registered adviser from knowingly causing an investment portfolio managed by it, including an investment fund for which it acts as an adviser, from purchasing a security of an issuer (a Related Issuer) in which a responsible person or an associate of a responsible person (referred to as Access Persons) is a partner, officer or director unless this fact is disclosed to the client and the written consent of the client is obtained before the purchase, in order to permit

(i) an NI 81-102 Fund or a BlackRock Investments Pooled Fund to purchase certain non-exchange-traded debt securities of a Related Issuer in the secondary market; and

(ii) a BlackRock Investments Pooled Fund to purchase exchange-traded securities of a Related Issuer in the secondary market;

Transactions with Related Parties

(b) from the requirement in section 13.5(2)(b) of NI 31-103 that prohibits a registered adviser from knowingly causing an investment portfolio managed by it, including an investment fund for which it acts as an adviser, from purchasing or selling a security from or to the investment portfolio of any of the following:

(i) a responsible person;

(ii) an associate of a responsible person;

(iii) an investment fund for which a responsible person acts as an adviser;

in order to permit

(i) an NI 81-102 Fund to purchase securities from or sell securities to a BlackRock Investments Pooled Fund or a BlackRock Canada Pooled Fund (each a Pooled Fund and, collectively, the Pooled Funds) or a fully managed account managed by BlackRock Canada, BTC or BFM for a Canadian resident client (each, a Managed Account and, collectively, the Managed Accounts);

(ii) a Pooled Fund to purchase securities from or sell securities to another Pooled Fund, an NI 81-102 Fund or a Managed Account;

(iii) a Managed Account to purchase securities from or sell securities to a BlackRock Investments Pooled Fund or an NI 81-102 Fund;

(iv) a BlackRock Investments Pooled Fund and a Managed Account to engage in In Specie Transactions, as described below;

(v) a Pooled Fund and an NI 81-102 Fund to engage in In Specie Transactions; and

(vi) an NI 81-102 Fund and a Managed Account to engage in In Specie Transactions,

(collectively, the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:

(a) the Ontario Securities Commission is the principal regulator for the Application; and

(b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland & Labrador, Northwest Territories, Yukon and Nunavut (the Passport Jurisdictions).

Interpretation

Terms defined in MI 11-102, National Instrument 14-101 -- Definitions, NI 81-102 or National Instrument 81-107 -- Independent Review Committee for Investment Funds (NI 81-107) and NI 31-103 have the same meanings if used in this Decision, unless otherwise defined.

Representations

This Decision is based on the following facts represented by the Filers:

1. The head office of each of BlackRock Canada and BlackRock Investments is located in Toronto, Ontario. The head office of BTC is located in San Francisco, California. The head office of BFM is located in New York, New York.

2. BlackRock Canada is registered as a portfolio manager, investment fund manager and exempt market dealer in Ontario and in each of the Passport Jurisdictions (together, the Jurisdictions) and as a commodity trading manager in Ontario.

3. BlackRock Investments is registered as a portfolio manager, investment fund manager and exempt market dealer in Ontario.

4. BTC is relying on a combination of the international adviser exemption in NI 31-103 in all of the Jurisdictions and the sub-adviser exemption in (i) OSC Rule 35-502 in Ontario, (ii) a blanket order in Quebec and (iii) discretionary exemptive relief in the other provinces of Canada.

5. BFM is relying on a combination of the international adviser exemption in NI 31-103 in all of the provinces of Canada and the sub-adviser exemption in (i) OSC Rule 35-502 in Ontario, (ii) a blanket order in Quebec and (iii) discretionary exemptive relief in the other Jurisdictions.

6. BlackRock Investments is, or will be, the investment fund manager of each of the NI 81-102 Funds, each of which is, or will be, organized under the laws of Ontario or Alberta.

7. BlackRock Canada is, or will be, the investment fund manager of each of the BlackRock Canada Pooled Funds, each of which is, or will be, organized under the laws of Ontario.

8. BlackRock Investments is, or will be, the investment fund manager of each of the BlackRock Investments Pooled Funds, each of which is, or will be, organized under the laws of Ontario or Alberta.

9. Each of the NI 81-102 Funds is or will be a reporting issuer in each of the Jurisdictions and is or will be listed on the Toronto Stock Exchange.

10. Each of the NI 81-102 Funds is, or will be, subject to NI 81-102 and may also be subject to National Instrument 81-104 -- Commodity Pools.

11. None of the Pooled Funds are, or will be, a reporting issuer in any of the Jurisdictions except for certain BlackRock Investments Pooled Funds which will be reporting issuers in Quebec as a result of filing a non-offering prospectus in Quebec.

12. One or more of the NI 81-102 Funds and the Pooled Funds is, or will be, an index fund, the investment objective of which is to replicate the performance of an index.

13. BlackRock Investments is, or will be, the primary portfolio manager of each of the NI 81-102 Funds and the BlackRock Investments Pooled Funds; BlackRock Canada is, or will be, the primary portfolio manager of each of the BlackRock Canada Pooled Funds; and BlackRock Canada, BTC or BFM is, or will be, the primary portfolio manager of each of the Managed Accounts.

14. BTC or an affiliated or third party portfolio manager is, or may be, a sub-adviser of each of the NI 81-102 Funds of which BlackRock Investments is the primary portfolio manager, each of the Pooled Funds of which BlackRock Canada or BlackRock Investments is the primary portfolio manager and each of the Managed Accounts of which BlackRock Canada is the primary portfolio manager.

15. Each of BlackRock Canada, BlackRock Investments, BTC and BFM is currently, indirectly a wholly-owned subsidiary of BlackRock.

16. With respect to the ownership of BlackRock:

(i) the PNC Financial Services Group, Inc. (PNC) holds, indirectly through its holding in BlackRock, approximately 21.0% of the outstanding voting securities of BlackRock Canada, BlackRock Investments, BTC and BFM and approximately 21.7% of the outstanding securities of BlackRock Canada, BlackRock Investments, BTC and BFM; and

(ii) the public, BlackRock employees and other investors will hold, indirectly through their holdings in BlackRock, the remaining outstanding voting securities and outstanding securities of BlackRock Canada, BlackRock Investments, BTC and BFM.

17. On March 7, 2012, BlackRock completed the acquisition of a 100% interest in Claymore Investments, Inc. (the "Transaction"). As a result of the Transaction, Claymore Investments, Inc. ("Claymore") became an indirect, wholly-owned subsidiary of BlackRock. Following the Transaction, Claymore was continued under the laws of the province of Alberta and changed its name to BlackRock Investments Canada Inc.

18. Each of BlackRock and PNC is a reporting issuer in the United States, the equity securities of which are listed on the New York Stock Exchange.

19. None of the Filers, the NI 81-102 Funds or the Pooled Funds is in default of securities legislation in any of the Jurisdictions.

Transactions in Securities of Related Issuers

20. A director, officer or employee of BlackRock Investments, BlackRock Canada or BTC who is an Access Person may be a director or officer of BlackRock or another affiliate and a director, officer or employee of BlackRock or another affiliate who is an Access Person may be a director or officer of other issuers, including PNC which will result in BlackRock and such others being Related Issuers.

21. One or more directors of BlackRock may be a director or officer of other related entities including PNC. The directors and officers of such other issuers may be Access Persons as a result of the structure of the investment management activities of the Filers, BlackRock and its related entities, which will result in such other issuers being Related Issuers.

22. The securities of BlackRock, PNC or other Related Issuers may be included in an index which an NI 81-102 Fund or a BlackRock Investments Pooled Fund, which is an index fund, seeks to replicate.

23. BlackRock Investments may wish to invest the assets of the NI 81-102 Funds and the BlackRock Investments Pooled Funds in exchange-traded and non-exchange-traded securities of BlackRock, PNC or other Related Issuers in the secondary market.

24. The NI 81-102 Funds are permitted to invest in exchange-traded securities of Related Issuers in the secondary market pursuant to section 6.2 of NI 81-107.

25. The investment strategies of an NI 81-102 Fund or a BlackRock Investments Pooled Fund that relies on the Exemption Sought permit, or will permit, the NI 81-102 Fund or BlackRock Investments Pooled Fund to invest in the securities purchased, either as a principal strategy in achieving its investment objective or as a temporary strategy pending the purchase of other securities.

26. Some of the Related Issuers are, or may be, issuers of non-exchange-traded debt securities that have an "approved credit rating" within the meaning of NI 81-102. The Filers consider that the NI 81-102 Funds and the Pooled Funds should have access to such securities for the following reasons:

(a) there is currently and has been for several years a very limited supply of such securities; to limit the supply available to the NI 81-102 Funds and the Pooled Funds even further by removing debt issued by a Related Issuer puts the NI 81-102 Funds and the Pooled Funds at a competitive disadvantage and may increase the cost a fund pays for available securities;

(b) diversification is reduced to the extent that an NI 81-102 Fund or a Pooled Fund is limited with respect to investment opportunities; and

(c) to the extent that an NI 81-102 Fund or a Pooled Fund is trying to track or outperform a benchmark, it is important for the NI 81-102 Fund or the Pooled Fund to be able to purchase any securities included in the benchmark; debt securities of the Related Issuers may be included in a number of debt indices.

27. The Filers are seeking the Exemption Sought because securities of BlackRock, PNC or other Related Issuers that are exchange-traded may be appropriate for the Pooled Funds to invest in and debt securities of BlackRock, PNC or other Related Issuers that are non-exchange-traded may be appropriate for the NI 81-102 Funds or the Pooled Funds to invest in.

28. Each purchase of non-exchange-traded debt securities of a Related Issuer will occur in the secondary market and not under primary distributions or treasury offerings of a Related Issuer.

29. Each purchase of a non-exchange-traded debt security of a Related Issuer purchased by an NI 81-102 Fund or a Pooled Fund will have, at the time of the purchase, an "approved credit rating" by an "approved credit rating organization" within the meaning of those terms in NI 81-102.

30. If a purchase by an NI 81-102 Fund or a Pooled Fund of non-exchange-traded debt securities issued by a Related Issuer involves an inter-fund trade with another fund to which NI 81-107 applies, the provisions of section 6.1(2) of NI 81-107 will apply to such transaction.

Transactions with Related Parties

31. The Pooled Funds are associates of BlackRock Canada or BlackRock Investments.

32. BlackRock Investments may wish to cause an NI 81-102 Fund to purchase securities from or sell securities to an NI 81-102 Fund, a Pooled Fund or a Managed Account.

33. BlackRock Canada or BlackRock Investments may wish to cause a Pooled Fund to purchase securities from or sell securities to another Pooled Fund, an NI 81-102 Fund or a Managed Account.

34. BlackRock Canada, BlackRock Investments, BTC or BFM may wish to cause a Managed Account to purchase securities from or sell securities to an NI 81-102 Fund or a BlackRock Investments Pooled Fund.

35. The transactions in paragraphs 32 to 34 are referred to as Inter-Fund Trades.

36. Effecting Inter-Fund Trades has a number of benefits, including that such trades will (i) allow the Filers to manage asset classes more effectively and reduce transaction costs for both parties to the trades; (ii) reduce market impact costs which could be detrimental to both parties to the trade; (iii) allow the Filer to retain within its control blocks of securities that might otherwise need to be broken or re-assembled; and (iv) provide liquidity for securities that may trade in lower volumes with less frequency and at larger bid-ask spreads.

37. BlackRock Canada, BlackRock Investments, BTC or BFM may wish to or be required to deliver securities to an NI 81-102 Fund in respect of the purchase by a Pooled Fund or a Managed Account of units of an NI 81-102 Fund and may wish to or be required to receive securities from an NI 81-102 Fund in respect of a redemption of units of an NI 81-102 Fund by a Pooled Fund or a Managed Account. (Such transactions are referred to as In Specie Transactions.)

38. BlackRock Canada, BlackRock Investments, BFM or BTC may wish to or be required to cause a Managed Account to engage in In Specie Transactions with a BlackRock Investments Pooled Fund or an NI 81-102 Fund in respect of the purchase or redemption of units of a BlackRock Investments Pooled Fund or an NI 81-102 Fund by a Managed Account.

39. Effecting In Specie Transactions has a number of benefits, including that such trades ensure that (i) an NI 81-102 Fund or a Pooled Fund does not incur any transaction costs on the acquisition or disposition of securities in connection with the investment of proceeds resulting from an issue of units, or the delivery of proceeds resulting from a redemption of units as would be the case if the NI 81-102 Fund or the Pooled Fund received and delivered cash proceeds; (ii) the party that is purchasing or redeeming units of an NI 81-102 Fund or a Pooled Fund does not have to dispose of securities it holds, thereby incurring transaction costs in order to acquire units, if it holds securities acceptable to the NI 81-102 Fund or the Pooled Fund, and can redeem its holding of units and receive securities without incurring transaction costs; and (iii) if there are transaction costs associated with the acquisition or disposition of securities, they are incurred by the party purchasing or redeeming units of an NI 81-102 Fund or a Pooled Fund and not by the other unitholders of the NI 81-102 Fund or the Pooled Fund.

40. BlackRock Canada and BlackRock Investments cannot rely on the exemption under section 6.1(4) of NI 81-107 in connection with the purchase and sale of securities between NI 81-102 Funds and/or Pooled Funds unless the parties are both NI 81-102 Funds. An exemption for the purchase and sale of securities involving the Pooled Funds or Managed Accounts is not provided for in section 6.1(4) of NI 81-107. The purchase and sale of securities involving only NI 81-102 Funds will be conducted in accordance with the exemption codified under section 6.1(4) of NI 81-107.

41. BlackRock Investments has established, or will establish, an independent review committee (IRC) in respect of each NI 81-102 Fund in accordance with the requirements of NI 81-107.

42. BlackRock Canada or BlackRock Investments has established, or will establish, an IRC (the members of which may also be members of the IRC of the NI 81-102 Funds) in respect of the Pooled Funds which rely on the Exemption Sought.

43. The IRC of the Pooled Funds is, or will be, composed by BlackRock Canada or BlackRock Investments in accordance with section 3.7 of NI 81-107 and is, or will be, expected to comply with the standard of care set out in section 3.9 of NI 81-107.

44. The mandate of the IRC of a Pooled Fund will include:

(i) approving purchases and sales of securities between the Pooled Fund and another Pooled Fund, an NI 81-102 Fund or a Managed Account;

(ii) approving purchases of securities issued by a Related Issuer; and

(iii) approving In Specie Transactions with a Managed Account, an NI 81-102 Fund or another Pooled Fund;

on behalf of the Pooled Fund.

45. The IRC of the Pooled Funds will not provide any of the approvals referred to in paragraph 44 unless it has made the determination set out in section 5.2(2) of NI 81-107.

46. Purchases and sales of securities involving an NI 81-102 Fund will be referred to the IRC of the NI 81-102 Fund under section 5.2(1) of NI 81-107 for approval on behalf of the NI 81-102 Fund.

47. If the IRC of an NI 81-102 Fund or a Pooled Fund becomes aware of an instance where BlackRock Canada or BlackRock Investments, as investment fund manager of the NI 81-102 Fund or Pooled Fund, did not comply with the terms of the relief, or a condition imposed by the IRC in its approval, the IRC of the NI 81-102 Fund or the Pooled Fund will, as soon as practicable, notify in writing the securities regulatory authority or regulator in the Jurisdiction under which the NI 81-102 Fund or Pooled Fund is organized.

48. The investment management agreement or other documentation in respect of a Managed Account will contain the authorization of the client for BlackRock Canada, BTC or BFM to purchase securities from or sell securities to an NI 81-102 Fund or a BlackRock Investments Pooled Fund and engage in In Specie Transactions with an NI 81-102 Fund or a BlackRock Investments Pooled Fund.

49. BlackRock Canada, BlackRock Investments and BTC cannot rely on the exemption under section 6.1(4) of NI 81-107 unless the parties are both NI 81-102 Funds.

50. BlackRock Canada and BlackRock Investments issues a conflict disclosure document to clients setting out the relationship of the NI 81-102 Funds and the Pooled Funds to such Filer. In addition, clients of Managed Accounts specifically authorize the Filer to invest in securities of the NI 81-102 Funds and the Pooled Funds pursuant to the terms of their investment management agreements or other documentation.

51. BlackRock Investments and BTC cannot rely on the exemption under section 6.2(2) of NI 81-107 in respect of purchases of securities of a Related Issuer by the BlackRock Investments Pooled Funds because that exemption does not apply to the BlackRock Investments Pooled Funds.

52. The only cost which will be incurred by a Managed Account or by a NI 81-102 Fund or Pooled Fund for an In Specie Transaction will be a nominal administrative charge levied by the custodian of the Managed Account or NI 81-102 Fund or Pooled Fund in recording the trades and/or any transfer costs charged by a dealer in transferring the securities in specie (the Transfer Charge). Normal transaction costs will be incurred in acquiring the securities prior to their delivery in specie or in disposing of the securities after a redemption in specie.

53. The Filers have determined that it would be in the best interests of the NI 81-102 Funds, the Pooled Funds, and the Managed Accounts to receive the Exemption Sought.

Decision

The principal regulator is satisfied that the Decision meets the test set out in the Legislation for the principal regulator to make the Decision.

The Decision of the principal regulator is that the Exemptions Sought is granted on the following conditions:

(a) In respect of the relief from section 13.5(2)(a) of NI 31-103:

(i) In respect of the purchase by an NI 81-102 Fund or a BlackRock Investments Pooled Fund of non-exchange-traded debt securities of a Related Issuer in the secondary market:

(A) the purchase or holding is consistent with, or is necessary to meet, the investment objective of the NI 81-102 Fund or the BlackRock Investments Pooled Fund;

(B) the applicable IRC of the NI 81-102 Fund or the BlackRock Investments Pooled Fund has approved the transaction in accordance with section 5.2(2) of NI 81-107;

(C) BlackRock Investments complies with section 5.1 of NI 81-107 and BlackRock Investments and the applicable IRC of the NI 81-102 Fund or the BlackRock Investments Pooled Fund comply with section 5.4 of NI 81-107 for any standing instructions the applicable IRC provides in connection with the transaction;

(D) the price payable for the security is not more than the ask price of the security;

(E) the ask price of the security is determined as follows:

(1) if the purchase occurs on a marketplace, the price payable is determined in accordance with the requirements of that marketplace; or

(2) if the purchase does not occur on a marketplace,

A. the NI 81-102 Fund or the BlackRock Investments Pooled Fund may pay the price for the security at which an independent, arm's-length seller is willing to sell the security, or

B. if the NI 81-102 Fund or the BlackRock Investments Pooled Fund does not purchase the security from an independent, arm's-length seller, consistent with Commentary 7 of section 6.1 of NI 81-107, the NI 81-102 Fund or the BlackRock Investments Pooled Fund must pay the price quoted publicly by an independent marketplace or obtain, immediately before the purchase, at least one quote from an independent, arm's-length purchaser or seller and not pay more than that quote;

(F) the transaction complies with any applicable "market integrity requirements" as defined in NI 81-107; and

(G) no later than the time the fund files its annual financial statements, in the case of an NI 81-102 Fund, and no later than the 90th day after the end of each financial year, in the case of a BlackRock Investments Pooled Fund, BlackRock Investments files with the securities regulatory authority or regulator the particulars of any such investments; and

(ii) in respect of the purchase by a BlackRock Investments Pooled Fund of exchange-traded securities of a Related Issuer in the secondary market:

(A) the purchase or holding is consistent with, or is necessary to meet, the investment objective of the BlackRock Investments Pooled Fund;

(B) the IRC of the BlackRock Investments Pooled Fund has approved the transaction in accordance with section 5.2(2) of NI 81-107;

(C) the purchase is made on an exchange on which the securities are listed and traded; and

(D) no later than the 90th day after the end of each financial year, BlackRock Investments files with the securities regulatory authority or regulator the particulars of any such investments.

(b) In respect of the relief from section 13.5(2)(b) of NI 31-103:

(i) in respect of the purchase by an NI 81-102 Fund of securities from or the sale by an NI 81-102 Fund of securities to a Pooled Fund or a Managed Account:

(A) the IRC of the NI 81-102 Fund has approved the transaction on behalf of the NI 81-102 Fund in accordance with the terms of subsection 5.2(2) of NI 81-107;

(B) if the transaction is with a Pooled Fund, the IRC of the Pooled Fund has approved the transaction on behalf of the Pooled Fund in accordance with the terms of subsection 5.2(2) of NI 81-107;

(C) if the transaction is with a Managed Account, the investment management agreement or other documentation in respect of the Managed Account authorizes the transaction; and

(D) the transaction complies with paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107;

(ii) in respect of the purchase by a Pooled Fund of securities from or the sale by a Pooled Fund of securities to a Pooled Fund, an NI 81-102 Fund or a Managed Account:

(A) the IRC of the Pooled Fund has approved the transaction on behalf of the Pooled Fund in accordance with the terms of subsection 5.2(2) of NI 81-107;

(B) if the transaction is with another Pooled Fund, the IRC of the other Pooled Fund has approved the transaction on behalf of the other Pooled Fund in accordance with the terms of subsection 5.2(2) of NI 81-107;

(C) if the transaction is with an NI 81-102 Fund, the IRC of the NI 81-102 Fund has approved the transaction on behalf of the NI 81-102 Fund in accordance with the terms of subsection 5.2(2) of NI 81-107;

(D) if the transaction is with a Managed Account, the investment management agreement or other documentation in respect of the Managed Account authorizes the transaction; and

(E) the transaction complies with paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107;

(iii) in respect of the purchase by a Managed Account of securities from or the sale by a Managed Account of securities to an NI 81-102 Fund or a BlackRock Investments Pooled Fund:

(A) the investment management agreement or other documentation in respect of the Managed Account authorizes the transaction;

(B) if the transaction is with an NI 81-102 Fund, the IRC of the NI 81-102 Fund has approved the transaction on behalf of the NI 81-102 Fund in accordance with the terms of subsection 5.2(2) of NI 81-107;

(C) if the transaction is with a BlackRock Investments Pooled Fund, the IRC of the BlackRock Investments Pooled Fund has approved the transaction on behalf of the BlackRock Investments Pooled Fund in accordance with the terms of subsection 5.2(2) of NI 81-107; and

(D) the transaction complies with paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107;

(iv) in respect of In Specie Transactions:

(A) in the case of an In Specie Transaction between (x) an NI 81-102 Fund or a BlackRock Investments Pooled Fund and (y) a Managed Account:

(1) if the transaction is the purchase of units of an NI 81-102 Fund or a BlackRock Investments Pooled Fund by a Managed Account:

A. the applicable IRC of the NI 81-102 Fund or BlackRock Investments Pooled Fund has approved the transaction in accordance with section 5.2(2) of NI 81-107;

B. BlackRock Investments and the applicable IRC of the NI 81-102 Fund or BlackRock Investments Pooled Fund comply with section 5.4 of NI 81-107 for any standing instructions the applicable IRC provides in connection with the transaction;

C. BlackRock Canada, BTC or BFM obtains the prior written consent of the relevant Managed Account client before it engages in any In Specie Transactions in connection with the purchase of units;

D. the NI 81-102 Fund or BlackRock Investments Pooled Fund would at the time of payment be permitted to purchase those securities;

E. the securities are acceptable to the portfolio adviser of the NI 81-102 Fund or the BlackRock Investments Pooled Fund, and consistent with the investment objective of the NI 81-102 Fund or the BlackRock Investments Pooled Fund;

F. the value of the securities is at least equal to the issue price of the securities of the NI 81-102 Fund or the BlackRock Investments Pooled Fund for which they are payment, valued as if the securities were portfolio assets of that NI 81-102 Fund or the BlackRock Investments Pooled Fund;

G. the account statement next prepared for the Managed Account will include a note describing the securities delivered to the NI 81-102 Fund or the BlackRock Investments Pooled Fund and the value assigned to such securities; and

H. the NI 81-102 Fund or the BlackRock Investments Pooled Fund will keep written records of an In Specie Transaction in a financial year of the NI 81-102 Fund or the BlackRock Investments Pooled Fund, reflecting details of the securities delivered to the NI 81-102 Fund or the BlackRock Investments Pooled Fund and the value assigned to such securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place.

(2) if the transaction is the redemption of units of an NI 81-102 Fund or a BlackRock Investments Pooled Fund by a Managed Account:

A. the applicable IRC of the NI 81-102 Fund or BlackRock Investments Pooled Fund has approved the transaction in accordance with section 5.2(2) of NI 81-107;

B. BlackRock Investments and the applicable IRC of the NI 81-102 Fund or BlackRock Investments Pooled Fund comply with section 5.4 of NI 81-107 for any standing instructions the applicable IRC provides in connection with the transaction;

C. BlackRock Canada, BTC or BFM obtains the prior written consent of the relevant Managed Account client before it engages in any In Specie Transactions in connection with the redemption of units of the NI 81-102 Fund or the BlackRock Investments Pooled Fund;

D. the securities are acceptable to the portfolio adviser of the Managed Account, and are consistent with the Managed Account's investment objective;

E. the value of the securities is equal to the amount at which those securities were valued in calculating the net asset value per unit used to establish the redemption price of the NI 81-102 Fund or the BlackRock Investments Pooled Fund;

F. the holder of the Managed Account has not provided notice to terminate its Managed Account;

G. the account statement next prepared for the Managed Account will include a note describing the securities delivered to the Managed Account and the value assigned to such securities; and

H. the NI 81-102 Fund or the BlackRock Investments Pooled Fund will keep written records of an In Specie Transaction in a financial year of the NI 81-102 Fund or the BlackRock Investments Pooled Fund, reflecting details of the securities delivered by the NI 81-102 Fund or the BlackRock Investments Pooled Fund and the value assigned to such securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place; and

(3) BlackRock Investments does not receive any compensation in respect of any sale or redemption of units of an NI 81-102 Fund or a BlackRock Investments Pooled Fund and, in respect of any delivery of securities further to an In Specie Transaction, the only charge paid by the Managed Account or the NI 81-102 Fund or the BlackRock Investments Pooled Fund is the Transfer Charge; and

(B) in the case of an In Specie Transaction between an NI 81-102 Fund and a Pooled Fund:

(1) if the transaction is the purchase of units of an NI 81-102 Fund by a Pooled Fund:

A. the IRC of the NI 81-102 Fund has approved In Specie Transactions on behalf of the NI 81-102 Fund in accordance with the terms of subsection 5.2(2) of NI 81-107;

B. the NI 81-102 Fund would at the time of payment be permitted to purchase those securities;

C. the securities are acceptable to the portfolio adviser of the NI 81-102 Fund, and consistent with the investment objective of the NI 81-102 Fund;

D. the value of the securities is at least equal to the issue price of the units of the NI 81-102 Fund for which they are payment, valued as if the securities were portfolio assets of that NI 81-102 Fund; and

E. each of the NI 81-102 Fund and the Pooled Fund will keep written records of an In Specie Transaction in a financial year of the NI 81-102 Fund, reflecting details of the securities delivered to the NI 81-102 Fund or the Pooled Fund, and the value assigned to such securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place;

(2) if the transaction is the redemption of units of an NI 81-102 Fund by a Pooled Fund:

A. the IRC of the NI 81-102 Fund has approved In Specie Transactions on behalf of the NI 81-102 Fund in accordance with the terms of subsection 5.2(2) of NI 81-107;

B. the securities are acceptable to the portfolio adviser of the Pooled Fund, and consistent with the investment objective of the Pooled Fund;

C. the value of the securities is equal to the amount at which those securities were valued in calculating the net asset value per unit used to establish the redemption price of the NI 81-102 Fund; and

D. each of the NI 81-102 Fund and the Pooled Fund will keep written records of an In Specie Transaction in a financial year of the NI 81-102 Fund or the Pooled Fund, reflecting details of the securities delivered by the NI 81-102 Fund and the value assigned to such securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place; and

(3) BlackRock Investments does not receive any compensation in respect of any sale or redemption of units of an NI 81-102 Fund and, in respect of any delivery of securities further to an In Specie Transaction, the only charge paid by the Pooled Fund or the NI 81-102 Fund is the Transfer Charge.

"Darren McKall"
Manager, Investment Funds
Ontario Securities Commission