IA Clarington Investments Inc. et al.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- approval of mutual fund mergers -- approval required because certain mergers do not meet the criteria for pre-approved reorganizations and transfers in NI 81-102 -- continuing fund has different investment objectives than terminating fund -- mergers not a "qualifying exchange" or a tax-deferred transaction under the Income Tax Act (Canada) -- securityholders of terminating funds are provided with timely and adequate disclosure regarding the mergers.

Applicable Legislative Provisions

National Instrument 81-102 Investment Funds, ss. 5.5(1)(b) and 5.7(1)(b).

[TRANSLATION]

August 18, 2021

IN THE MATTER OF THE SECURITIES LEGISLATION OF QUÉBEC AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF IA CLARINGTON INVESTMENTS INC. (the Filer) AND DISTINCTION BALANCED CLASS DISTINCTION BOLD CLASS DISTINCTION CONSERVATIVE CLASS DISTINCTION GROWTH CLASS DISTINCTION PRUDENT CLASS IA CLARINGTON CANADIAN BALANCED CLASS IA CLARINGTON CANADIAN CONSERVATIVE EQUITY CLASS IA CLARINGTON CANADIAN CONSERVATIVE EQUITY FUND IA CLARINGTON FOCUSED BALANCED CLASS IA CLARINGTON GLOBAL OPPORTUNITIES CLASS IA CLARINGTON REAL RETURN BOND FUND IA CLARINGTON STRATEGIC U.S. GROWTH & INCOME FUND IA CLARINGTON GLOBAL BOND FUND (each a Terminating Fund, and collectively, the Terminating Funds)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Makers) has received an application from the Filer on behalf of the Terminating Funds for a decision under the securities legislation of the Jurisdictions (the Legislation) approving the proposed mergers (each a Merger, and collectively the Mergers) of each of the Terminating Funds into the Continuing Funds (as defined below) pursuant to paragraph 5.5(1)(b) of Regulation 81-102 respecting Investment Funds, CQLR, c. V-1.1, r. 39, (Regulation 81-102) (the Mergers Approval).

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

(a) the Autorité des marchés financiers is the principal regulator for this application;

(b) the Filer has provided notice that section 4.7 (1) of Regulation 11-102 respecting Passport System, CQLR, c. V-1.1, r. 1, (Regulation 11-102) is intended to be relied upon in the provinces and territories of Canada other than 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 Regulation 14-101 respecting Definitions, CQLR, c. V-1.1, r. 3, Regulation 11-102, Regulation 81-101 respecting Mutual Funds Prospectus Disclosure, CQLR, c.V-1.1, r. 38, (Regulation 81-101) and Regulation 81-102 have the same meaning if used in this decision, unless otherwise defined.

CSFI means Clarington Sector Fund Inc.;

Continuing Fund or Continuing Funds means individually or collectively, IA Wealth Balanced Portfolio, IA Wealth High Growth Portfolio, IA Wealth Moderate Portfolio, IA Wealth Growth Portfolio, IA Clarington Strategic Income Fund, IA Clarington Dividend Growth Class, IA Clarington Loomis Global Multisector Bond Fund, IA Clarington Loomis Global Equity Opportunities Fund, IA Wealth Core Bond Pool;

Fund or Funds means, individually or collectively, the Terminating Funds and the Continuing Funds;

Income Tax Act means the Income Tax Act (Canada), R.S.C. 1985, c. 1 (5^th Supp.);

Terminating Fund or Terminating Funds means individually or collectively, Distinction Balanced Class, Distinction Bold Class, Distinction Conservative Class, Distinction Prudent Class, Distinction Growth Class, IA Clarington Canadian Balanced Class, IA Clarington Focused Balanced Class, IA Clarington Strategic U.S. Growth & Income Fund, IA Clarington Canadian Conservative Equity Class, IA Clarington Canadian Conservative Equity Fund, IA Clarington Global Bond Fund, IA Clarington Global Opportunities Class, IA Clarington Real Return Bond Fund; and

U.S. Strategic Growth Merger means the merger of IA Clarington U.S. Strategic Growth & Income Fund into IA Clarington Strategic Income Fund.

Representations

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

The Filer and the Funds

1. The Filer is a corporation amalgamated under the laws of Canada. The Filer's head office is in Québec City, Québec.

2. The Filer is registered as an investment fund manager in Québec, Ontario, Newfoundland and Labrador, as an exempt market dealer in Québec and Ontario, and as a portfolio manager in all of the provinces of Canada.

3. The Filer acts as the manager of the Funds.

4. Each Fund is a mutual fund created under the laws of the Province of Ontario and is subject to the provisions of Regulation 81-102.

5. Each of Distinction Balanced Class, Distinction Bold Class, Distinction Conservative Class, Distinction Growth Class, Distinction Prudent Class, IA Clarington Canadian Balanced Class, IA Clarington Focused Balanced Class, IA Clarington Canadian Conservative Equity Class, IA Clarington Dividend Growth Class and IA Clarington Global Opportunities Class is an open-ended mutual fund class of CSFI.

6. Each of IA Clarington Canadian Conservative Equity Fund, IA Clarington Global Bond Fund, IA Clarington Loomis Global Equity Opportunities Fund, IA Clarington Loomis Global Multisector Bond Fund, IA Clarington Real Return Bond Fund, IA Clarington Strategic Income Fund, IA Clarington Strategic U.S. Growth & Income Fund, IA Wealth Balanced Portfolio, IA Wealth Core Bond Pool, IA Wealth Growth Portfolio, IA Wealth High Growth Portfolio and IA Wealth Moderate Portfolio is an open-ended mutual fund trust governed by a declaration of trust.

7. Neither the Filer nor the Funds are in default of securities legislation in any of the Jurisdictions.

8. Each Fund is a reporting issuer or the equivalent in each of the Jurisdictions and is subject to the requirements of Regulation 81-101 and Regulation 81-102.

9. Each Fund currently distributes its securities in all Jurisdictions pursuant to a simplified prospectus and annual information form dated June 15, 2021.

Reasons for Mergers Approval

10. Regulatory approval of the Mergers is required because none of the Mergers satisfy all of the criteria for pre-approved reorganizations and transfers set forth in section 5.6 of Regulation 81-02; in particular, no Merger other than the U.S. Strategic Growth Merger, will be a "qualifying exchange" within the meaning of section 132.2 of the Income Tax Act or a tax-deferred transaction under subsection 85(1), 85.1(1), 86(1) or 87(1) of the Income Tax Act. With respect to the U.S. Strategic Growth Merger, the fundamental investment objective of the Continuing Fund may not be considered substantially similar to that of the Terminating Fund.

11. Other than the criteria described in paragraph 10 above, each Merger meets all of the other criteria for pre-approved reorganizations and transfers under section 5.6 of Regulation 81-102.

The Proposed Mergers

12. The Filer intends to merge each Terminating Fund into the Continuing Fund as shown in the table below:

Terminating Funds	Continuing Funds
Distinction Balanced Class	IA Wealth Balanced Portfolio
Distinction Bold Class	IA Wealth High Growth Portfolio
Distinction Conservative Class Distinction Prudent Class	IA Wealth Moderate Portfolio
Distinction Growth Class	IA Wealth Growth Portfolio
IA Clarington Canadian Balanced Class	IA Clarington Strategic Income Fund
IA Clarington Focused Balanced Class
IA Clarington Strategic U.S. Growth & Income Fund
IA Clarington Canadian Conservative Equity Class	IA Clarington Dividend Growth Class
IA Clarington Canadian Conservative Equity Fund
IA Clarington Global Bond Fund	IA Clarington Loomis Global Multisector Bond Fund
IA Clarington Global Opportunities Class	IA Clarington Loomis Global Equity Opportunities Fund
IA Clarington Real Return Bond Fund	IA Wealth Core Bond Pool

13. The proposed Mergers were announced in the following documents, each of which has been filed on the System for Electronic Document Analysis and Retrieval (SEDAR):

(a) a press release dated April 12, 2021;

(b) a material change report dated April 13, 2021; and

(c) an amendment to the simplified prospectus for each of the Funds dated April 13, 2021,

14. Securityholders of the Terminating Funds approved the Mergers at meetings held on August 9, 2021 and August 16, 2021 (the Meetings).

15. In accordance with section 5.3 of Regulation 81-107 respecting Independent Review Committee for Investment Funds, CQLR, c. V-1.1, r. 43, the Filer presented the terms of the proposed Mergers to the Independent Review Committee of the Funds (the IRC) for its recommendation during a meeting of the IRC held on April 8, 2021. The IRC provided its positive recommendation regarding the proposed Mergers on the basis that the Mergers, if implemented, would achieve a fair and reasonable result for the Funds.

16. The Filer has concluded that the Mergers are not material changes to the Continuing Fund, and accordingly, there is no intention to convene a meeting of securityholders of the Continuing Fund to approve the Mergers pursuant to paragraph 5.1(1)(g) of Regulation 81-102.

17. By way of order dated September 8, 2016, the Filer was granted relief (the Notice-and-Access Relief) from the requirement set out in paragraph 12.2(2)(a) of Regulation 81-106 Investment Fund Continuous Disclosure (CQLR, c. V-1.1, r. 42) to send printed management information circulars to securityholders while proxies are being solicited and, subject to certain conditions, instead allows a notice-and-access document to be sent to such securityholders.

18. Pursuant to the requirements of the Notice-and-Access Relief, a Notice-and-Access document and applicable proxies in connection with the Meetings, along with the fund facts of the applicable series of the Continuing Fund, were mailed to securityholders of the Terminating Funds on July 8, 2021 and were filed via SEDAR on the same day. The management information circular (the Circular), which the notice-and-access document provides a link to, were also filed via SEDAR at the same time.

19. It is intended that the Mergers will occur after the close of business on or about August 27, 2021 (the Effective Date). The Filer therefore anticipates that each securityholder of a Terminating Fund will become a securityholder of the Continuing Fund after the close of business on the Effective Date. Following the Mergers, the Continuing Funds will continue as publicly offered open-end mutual funds and each Terminating Fund will be wound-up within 30 days following the Merger.

Merger Steps

20. The Mergers of Terminating Trust Funds into a Continuing Trust Funds will be structured as follows:

Terminating Trust Funds	Continuing Trust Funds
IA Clarington Global Bond Fund	IA Clarington Loomis Global Multisector Bond Fund
IA Clarington Real Return Bond Fund	IA Wealth Core Bond Pool
IA Clarington Strategic U.S. Growth & Income Fund	IA Clarington Strategic Income Fund

(a) Prior to the Merger, if required, each Terminating Trust Fund will sell any securities in its portfolio that do not meet the investment objective and investment strategies of the Continuing Trust Fund. As a result, each Terminating Trust Fund may temporarily hold cash or money market instruments and may not be fully invested in accordance with its investment objective for a brief period of time prior to the Merger being effected.

(b) The value of each Terminating Trust Fund's investment portfolio and other assets will be determined at the close of business on the Effective Date of the Merger in accordance with the constating documents of the Terminating Trust Fund.

(c) Each Terminating Trust Fund may declare, pay directly or automatically reinvest a distribution to its securityholders of net realized capital gains and net income, if any, to ensure that it will not be subject to tax for its current taxation year.

(d) The Continuing Fund will acquire all of the portfolio assets and assume any liabilities of the Terminating Fund in consideration for an amount equal to the net asset value of the portfolio assets that the Continuing Fund is acquiring from the Terminating Fund (the "Purchase Price").

(e) The Continuing Fund will satisfy the Purchase Price by issuing to the Terminating Fund the number of units of the Continuing Fund that have an aggregate net asset value equal to the Purchase Price, and the units of the Continuing Fund will be issued at the net asset value per unit of the applicable series as of the close of business on the business day prior to the Effective Date of the Merger.

(f) Immediately thereafter, units of the Continuing Trust Fund received by each Terminating Trust Fund will be distributed to securityholders of the Terminating Trust Fund in exchange for their units in the Terminating Trust Fund on a dollar-for-dollar and series-by-series basis.

(g) Each Terminating Trust Fund will be wound-up within 30 days following the Merger.

21. The Merger of a Terminating Corporate Fund into a Continuing Corporate Fund will be structured as follows:

Terminating Corporate Fund	Continuing Corporate Fund
IA Clarington Canadian Conservative Equity Class	IA Clarington Dividend Growth Class

(a) Prior to the Merger, if required, CSFI will sell any securities in the portfolio of the Terminating Corporate Fund that do not meet the investment objective and investment strategies of the Continuing Corporate Fund. As a result, the portfolio of the Terminating Corporate Fund may temporarily hold cash or money market instruments and may not be fully invested in accordance with its investment objective for a brief period of time prior to the Merger being effected.

(b) The value of the Terminating Corporate Fund's investment portfolio and other assets will be determined at the close of business on the Effective Date of the Merger in accordance with the constating documents of the Terminating Corporate Fund.

(c) CSFI may declare, pay directly or automatically reinvest ordinary dividends or net realized capital gains dividends to securityholders of the Terminating Corporate Fund.

(d) The Terminating Corporate Fund will transfer all its assets and liabilities to the Continuing Corporate Fund for an amount equal to the net asset value of assets transferred.

(e) The articles of amalgamation of CSFI will be amended so that all of the issued and outstanding securities of the Terminating Corporate Fund will be exchanged for securities of the Continuing Corporate Fund on a dollar-for-dollar and series-by-series basis, so that the securityholders of the Terminating Corporate Fund become securityholders of the Continuing Corporate Fund and so that the securities of the Terminating Corporate Funds are cancelled.

(f) The Terminating Corporate Fund will be wound-up within 30 days following the Merger.

22. Mergers of Terminating Corporate Funds into Continuing Trust Funds will be structured as follows:

Terminating Corporate Funds	Continuing Trust Funds
Distinction Balanced Class	IA Wealth Balanced Portfolio
Distinction Bold Class	IA Wealth High Growth Portfolio
Distinction Conservative Class	IA Wealth Moderate Portfolio
Distinction Prudent Class
Distinction Growth Class	IA Wealth Growth Portfolio
IA Clarington Canadian Balanced Class	IA Clarington Strategic Income Fund
IA Clarington Focused Balanced Class
IA Clarington Global Opportunities Class	IA Clarington Loomis Global Equity Opportunities Fund

(a) Prior to the Merger, if required, CSFI will sell any securities in the portfolio of each Terminating Corporate Fund that do not meet the investment objective and investment strategies of the Continuing Trust Fund. As a result, the portfolio of each Terminating Corporate Fund may temporarily hold cash or money market instruments and may not be fully invested in accordance with its investment objective for a brief period of time prior to the Merger begin effected.

(b) The value of each Terminating Corporate Fund's investment portfolio and other assets will be determined at the close of business on the Effective Date of the Merger in accordance with the constating documents of the Terminating Corporate Fund.

(c) CSFI may declare, pay directly or automatically reinvest ordinary dividends or net realized capital gains dividends to securityholders of any Terminating Corporate Fund.

(d) The Continuing Trust Fund will acquire all of the portfolio assets and assume any liabilities of the applicable Terminating Corporate Fund in consideration for an amount equal to the net asset value of the portfolio assets of the Terminating Corporate Fund (the Purchase Price).

(e) The Continuing Trust Fund will satisfy the Purchase Price by issuing to CSFI the number of units of the Continuing Trust Fund that have an aggregate net asset value equal to the Purchase Price, and the units of the Continuing Trust Fund will be issued at the net asset value per unit of the applicable series as of the close of business on the business day prior to the Effective Date of the Merger.

(f) Immediately thereafter, all of the securities of each Terminating Corporate Fund will be redeemed and the redemption price therefor will be paid by delivering the applicable number of units of the Continuing Trust Fund to the securityholders of the Terminating Corporate Fund based on the number of such securities of the Terminating Corporate Fund then held.

(g) Each Terminating Corporate Fund will be wound-up within 30 days following the Merger.

23. The Merger of a Terminating Trust Fund into a Continuing Corporate Fund will be structured as follows:

Terminating Trust Fund	Continuing Corporate Fund
IA Clarington Canadian Conservative Equity Fund	IA Clarington Dividend Growth Class

(a) Prior to the Merger, if required, the Terminating Trust Fund will sell any securities in its portfolio that do not meet the investment objective and investment strategies of the Continuing Corporate Fund. As a result, the Terminating Trust Fund may temporarily hold cash or money market instruments and may not be fully invested in accordance with its investment objective for a brief period of time prior to the Merger being effected.

(b) The value of the Terminating Trust Fund's investment portfolio and other assets will be determined at the close of business on the Effective Date of the Merger in accordance with the constating documents of the Terminating Trust Fund.

(c) The Terminating Trust Fund may declare, pay directly or automatically reinvest a distribution to its securityholders of net realized capital gains and net income, if any, to ensure that it will not be subject to tax for its current taxation year.

(d) The Terminating Trust Fund will transfer all of its assets and liabilities to the Continuing Corporate Fund for an amount equal to the net value of assets transferred. In return, the Continuing Corporate Fund will issue to the Terminating Trust Fund securities of the Continuing Corporate Fund having a net asset value equal to the value of the assets transferred by the Terminating Trust Fund to the Continuing Corporate Fund.

(e) Immediately thereafter, securities of the Continuing Corporate Fund received by the Terminating Trust Fund will be distributed to securityholders of the Terminating Trust Fund in exchange for their securities in the Terminating Trust Fund on a dollar-for-dollar and series-by-series basis.

(f) The Terminating Trust Fund will be wound-up within 30 days following the Merger.

Other Considerations

24. The tax implications of the Mergers as well as the differences between the investment objectives and other features of the Terminating Funds and the Continuing Funds and the IRC's recommendation of the Mergers are described in the Circular, so that securityholders could make an informed decision before voting on whether to approve the applicable Merger. The Circular also describes the various ways in which securityholders could obtain a copy of the simplified prospectus, annual information form and fund facts for the Continuing Funds and the most recent interim and annual financial statements and management reports of fund performance.

25. Securityholders of each Terminating Fund will continue to have the right to redeem securities of the Terminating Fund at any time up to the close of business on the business day prior to the Effective Date. Following each Merger, all optional plans (including pre-authorized purchase programs, automatic withdrawal plans, systematic switch programs and automatic rebalancing services) which were established with respect to the Terminating Fund will be re-established in comparable plans with respect to the Continuing Fund unless securityholders advise otherwise.

26. The Filer will pay for the costs of the Merger. These costs consist mainly of brokerage charges associated with the merger-related trades that occur both before and after the Effective Date and proxy solicitation, printing, mailing and regulatory fees. The Funds will bear none of the costs and expenses associated with the transaction.

27. No sales charges, redemption fees or commissions will be payable by securityholders of the Funds in connection with the Mergers.

28. The investment portfolio and other assets of each Terminating Fund to be acquired by the Continuing Fund in order to effect the Mergers are currently, or will be, acceptable on or prior to the Effective Date, to the portfolio manager(s) of the Continuing Fund and are, or will be, consistent with the investment objective of the Continuing Fund.

Benefits of the Mergers

29. In the opinion of the Filer, the Mergers will be beneficial to securityholders of the Funds for the following reasons:

(a) the Mergers will eliminate similar fund offerings, which is expected to result in a more simplified product line-up that is easier for investors to understand;

(b) generally, the historical performance of the Continuing Funds have been better than that of the applicable Terminating Fund;

(c) generally, the Continuing Funds have a portfolio of greater value, allowing for increased portfolio diversification opportunities and a smaller proportion of assets set aside to fund redemptions. The ability to improve diversification may lead to potentially increased returns and a reduction of risk; and

(d) the combined management fee and administration fee with respect to each series of the Continuing Funds will be the same as, or lower than, the combined management fee and administration fee of the corresponding series of each Terminating Fund.

30. The Mergers Approval is not detrimental to the protection of investors.

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 Mergers Approval is granted.