I.G Investment Management Ltd.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief granted to permit mutual funds to invest in underlying US ETFs that may hold more than 10% of their net asset value in securities of U.S. money market funds -- relief subject to conditions.

Applicable Legislative Provisions

National Instrument 81-102 Investment Funds, ss. 2.5(2)(b) and 19.1.

June 3, 2022

IN THE MATTER OF THE SECURITIES LEGISLATION OF MANITOBA AND ONTARIO AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF I.G. INVESTMENT MANAGEMENT LTD. (IGIM)

DECISION

Background

The securities regulatory authority or regulator in each of Manitoba and Ontario (the Decision Makers) have received an application from IGIM on behalf of IG U.S. Taxpayer Portfolio -- Global Fixed Income Balanced (the Initial Top Fund and any additional existing mutual funds or those mutual funds established in the future of which IGIM is the manager, and Blackrock (as defined below) is the sub-advisor (the Additional Top Funds and together with the Initial Top Fund, the Top Funds and individually a Top Fund) for a decision under the securities legislation of Manitoba and Ontario (the Legislation) for relief from paragraph 2.5(2)(b) of National Instrument 81-102 Investment Funds (NI 81-102) in order to permit the Top Funds to purchase and hold shares of one or more U.S. iShares ETFs (as defined below) that may hold more than 10% of its net asset value (NAV) in securities of U.S. Money Market Funds (as defined below) (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Manitoba Securities Commission is the principal regulator for the application;

(b) IGIM has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, Yukon Territory and Nunavut (together with Manitoba and Ontario, the Jurisdictions); and

(c) The decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in NI 81-102 have the same meaning in this Application as in NI 81-102, unless otherwise defined. Certain other defined terms have the meanings given to them above and below.

Representations

This decision is based on the following facts represented by IGIM:

IGIM

1. IGIM is a corporation continued under the laws of Ontario. It is the trustee, portfolio advisor and manager of the Top Funds. IGIM's head office is in Winnipeg, Manitoba.

2. IGIM is registered as a Portfolio Manager and an Investment Fund Manager in Manitoba, Ontario and Quebec and as an Investment Fund Manager in Newfoundland and Labrador.

3. IGIM and the Top Funds of which it is the investment manager are not in default of any of the requirements of securities legislation in any of the Jurisdictions.

The Top Funds

4. Each Top Fund is, or once established will be, a mutual fund subject to NI 81-102.

5. Each Top Fund has, or will have, IGIM as its trustee, portfolio adviser, and manager, as applicable.

6. Each Top Fund distributes, or will distribute, its securities under a prospectus prepared in accordance with National Instrument 81-101 Mutual Fund Prospectus Disclosure..

7. Each Top Fund is, or will be a reporting issuer in each of the Jurisdictions.

8. The investment objective of the Initial Top Fund will be to provide investors with a globally diversified portfolio solution focused on providing long-term capital stability and income.

9. In order to achieve its investment objective, the Initial Top Fund will primarily invest in U.S. domiciled exchange-traded funds managed by Blackrock Fund Advisors (BFA) (the U.S. iShares ETF).

10. In order to achieve its investment objective, each Top Fund will purchase and hold up to 100% of its NAV in securities of one or more U.S. iShares ETFs.

11. BlackRock Asset Management Canada Limited (Blackrock) is, or will be, the sub-advisor for each of the Top Funds.

U.S. iShares ETFs

12. Each U.S. iShares ETF is a U.S. domiciled exchange-traded fund managed by BFA an indirect wholly owned subsidiary of BlackRock, Inc. and an affiliate of Blackrock.

13. BFA is regulated as an investment advisor by the U.S. Securities and Exchange Commission (the SEC).

14. Each U.S. iShares ETF is subject to the U.S. Investment Company Act of 1940, as amended (the U.S. Investment Company Act) and is an "investment fund" within the meaning of applicable Canadian securities legislation.

15. The shares of each U.S. iShares ETF are or will be offered pursuant to a prospectus filed with the SEC.

16. The shares of each U.S. iShares ETF are or will be listed on a stock exchange in the U.S.

17. The investment strategies of each U.S. iShares ETF permit it to invest its assets in high quality, liquid short-term instruments, including securities of other investment funds.

18. Pursuant to the U.S. Investment Company Act, each U.S. iShares ETF may from time to time hold more than 10% of its NAV in securities of U.S. registered money market funds advised by BFA or an affiliate (each, a U.S. Money Market Fund).

19. Each U.S. iShares ETF may hold securities of U.S. Money Market Funds, namely: (a) BlackRock Cash Funds: Institutional (BR Institutional), a series of BlackRock Funds III and (b) BlackRock Cash Funds: Treasury (BR Treasury), a series of BlackRock Funds III or of one or more other U.S. Money Market Funds managed by BFA or an affiliate.

BR Institutional

20. BR Institutional is a series of BlackRock Funds III, a statutory trust existing under the laws of the State of Delaware. BR Institutional is considered to be, and invests its assets in accordance with, the maturity, credit and liquidity requirements of, a U.S. money market fund under Rule 2a-7 of the U.S. Investment Company Act.

21. The investment objective of BR Institutional is to seek a high level of income consistent with liquidity and preservation of capital.

22. BR Institutional seeks to achieve its investment objective by investing all of its assets in the Money Market Master Portfolio, a series of Master Investment Portfolio (the Master I Portfolio), a statutory trust existing under the laws of the State of Delaware and registered under the U.S. Investment Company Act as an open-ended management investment company. BFA is the investment advisor to the Master I Portfolio. BR Institutional, through its investment in the Master I Portfolio, invests in high quality, short-term money market instruments that, at the time of investment, have remaining maturities of 397 calendar days or less from the date of acquisition. BR Institutional's portfolio maintains a dollar-weighted average maturity of 60 days or less and a dollar-weighted average life of 120 days or less. Under normal circumstances, BR Institutional expects to invest at least 95% of its assets in any combination of investments, which may include certificates of deposit, high-quality debt obligations, such as corporate debt and certain asset-backed securities, certain obligations of U.S. and foreign banks, certain repurchase agreements and certain obligations of the U.S. Government, its agencies and instrumentalities (including government-sponsored enterprises).

BR Treasury

23. BR Treasury is a series of BlackRock Funds III. BR Treasury is considered to be, and invests its assets in accordance with the maturity, credit and liquidity requirements of, a U.S. "government money market fund" under Rule 2a-7 of the U.S. Investment Company Act. The investment objective of BR Treasury is to seek current income as is consistent with liquidity and stability of principal.

24. BR Treasury seeks to achieve its investment objective by investing all of its assets in the Treasury Money Market Master Portfolio, a series of Master Investment Portfolio (the Master T Portfolio), a statutory trust existing under the laws of the State of Delaware and registered under the U.S. Investment Company Act as an open-ended management investment company. BFA is the investment advisor to the Master T Portfolio. BR Treasury, through its investment in the Master T Portfolio, invests at least 99.5% of its total assets in cash, U.S. Treasury bills, notes and other direct obligations of the U.S. Treasury, and repurchase agreements secured by such obligations or cash. BR Treasury invests in securities maturing in 397 days or less (with certain exceptions) and the portfolio has a dollar-weighted average maturity of 60 days or less and a dollar-weighted average life of 120 days or less.

U.S. Money Market Funds

25. U.S. Money Market Funds are subject to the investment restrictions prescribed under Rule 2a-7 of the U.S. Investment Company Act, and other rules of the U.S. Securities and Exchange Commission, including certain restrictions relating to portfolio quality, maturity, diversification and liquidity.

26. The investment restrictions prescribed by Rule 2a-7 of the U.S. Investment Company Act are substantively similar to the requirements for "money market fund[s]" under NI 81-102, subject to certain non-material differences including:

(a) as outlined above, the portfolio of a U.S. Money Market Fund must maintain a dollar-weighted average portfolio maturity appropriate to its investment objective provided that the fund must not: (i) acquire any instrument with a remaining maturity of greater than 397 calendar days or (ii) maintain a dollar-weighted average portfolio maturity that (A) exceeds 60 calendar days or (B) exceeds 120 calendar days (determined without reference to the exceptions in (i) above regarding interest rate readjustments;

(b) the advisor to a U.S. Money Market Fund must determine that any investment by the fund creates a minimal credit risk for the fund; and

(c) the U.S. Money Market Fund(s), in which a U.S. iShares ETF will invest, must not have less than: (i) 10% of its assets invested in cash, direct obligations of the U.S. Government, government securities under certain conditions or securities that will mature within one business day and (ii) 30% of its assets invested in cash, direct obligations of the U.S. Government, government securities under certain conditions or securities that will mature in five business days.

27. IGIM believes that any risks associated with an indirect investment in a U.S. Money Market Fund compared to a Canadian money market fund are mitigated by the fact that the U.S. Money Market Fund is subject to the U.S. Investment Company Act and oversight by the SEC and any loss that could result from an investment in a U.S. Money Market Fund by a U.S. iShares ETF will be limited to the amount invested by the U.S. iShares ETF in such U.S. Money Market Fund.

Reasons for Exemption Sought

28. Each Top Fund would be permitted to invest in shares of a U.S. iShares ETF pursuant to section 2.5(2) of NI 81-102 in reliance on the exceptions provided for in:

(a) subsection 2.5(3)(a) as the shares of the U.S. iShares ETFs meet the definition of "index participation units" under NI 81-102;

(b) subsection 2.5(5) of NI 81-102 as each Top Fund will purchase shares of a U.S. iShares ETF in the secondary market; and

(c) subsection 2.5(4)(b)(i) of NI 81-102, but for the fact that a U.S. iShares ETF may, from time to time, purchase or hold more than 10% of its NAV in one or more U.S. Money Market Funds, which as outlined in representation 24, may not meet all of the investment restrictions prescribed in section 2.18 of NI 81-102 and the securities of which do not qualify as "index participation units".

29. The U.S. Money Market Funds in which the U.S. iShares ETFs may invest are subject to the investment restrictions prescribed under Rule 2a-7 of the U.S. Investment Company Act, which are substantially similar to the investment restrictions applicable to a money market fund under NI 81-102.

30. Additionally, IGIM submits that the exception in Section 2.5(4)(b)(ii) would permit a Top Fund to purchase and hold securities of a U.S. iShares ETF if such U.S. iShares ETF held more than 10% of its NAV in securities of other U.S. iShares ETFs, provided the securities of each underlying U.S. iShares ETF met the definition of "index participation units" under NI 81-102. However, since the bottom tier of the proposed structure is one or more U.S. Money Market Funds the securities of which do not qualify as "index participation units" (rather than a U.S. iShares ETF that issues "index participation units"), the exception to the 10% limit in Section 2.5(2)(b) of NI 81-102 is not available. IGIM submits that this may produce an unintended result given the eligible U.S. iShares ETFs and U.S. Money Market Funds are regulated under the U.S. Investment Company Act and the U.S. Money Market Funds are generally required by the applicable U.S. Investment Company Act regulations to have a more conservative investment strategy than many U.S. iShares ETFs that would be eligible for the aforementioned exception.

31. The U.S. Money Market Funds in which the U.S. iShares ETFs may invest will be subject to the oversight of the SEC.

32. There will be no duplication of management fees or incentive fees for the same service as a result of an investment by a Top Fund in a U.S. iShares ETF.

33. The amount of loss that could result from an investment by a Top Fund in a U.S. iShares ETF will be limited to the amount invested by the Top Fund in the U.S. iShares ETF.

34. The investment by a Top Fund in a U.S. iShares ETF will be made in accordance with the fundamental investment objectives of the Top Fund.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision. The decision of the Decision Makers under the Legislation is that the Requested Relief is granted, provided that:

(a) the investment by a Top Fund in securities of a U.S. iShares ETF is in accordance with the fundamental investment objectives of the Top Fund.

(b) the U.S. iShares ETF is an exchange-traded fund subject to the U.S. Investment Company Act in good standing with the SEC.

(c) the U.S. iShares ETF will not, at the time securities of the U.S. iShares ETF are acquired by a Top Fund, hold more than 10% of its NAV in securities of any other investment funds other than securities of one or more U.S. Money Market Funds or investment funds that issue index participation units.

(d) the prospectus of each Top Fund discloses, or will disclose, in the next renewal of its prospectus following the date of this decision, in the investment strategy section, the fact that the Top Fund has obtained the Exemption Sought to permit the Fund to purchase and hold shares of a U.S. iShares ETF that may hold more than 10% of its NAV in securities of one or more U.S. Money Market Funds.