February 28, 2020

IN THE MATTER OF

THE SECURITIES LEGISLATION OF ONTARIO

(the Jurisdiction)

and

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS

IN MULTIPLE JURISDICTIONS

and

IN THE MATTER OF

AGF INVESTMENTS INC.

(the Filer)

and

THE TERMINATING FUNDS (as defined below)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Terminating Funds for a decision under the securities legislation of the Jurisdiction (the Legislation) approving the proposed mergers (each, a Merger and collectively, the Mergers) of each of the Terminating Funds into the applicable Continuing Funds (as defined below) pursuant to paragraph 5.5(1)(b) of National Instrument 81-102 Investment Funds (NI 81-102) (the Approval Sought).

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

1. the Ontario Securities Commission is the principal regulator for this application; and

2. the Filer has provided notice that paragraph 4.7(1)(c) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in all of the provinces and territories of Canada other than the Jurisdiction (together with the Jurisdiction, the Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined. The following additional terms have the following meanings:

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

Continuing Fund or Continuing Funds means, individually or collectively, AGF Total Return Bond Fund, AGF Strategic Income Fund, AGF Global Strategic Balanced Fund, AGF Elements Yield Portfolio and AGF Emerging Markets Class; and

Terminating Fund or Terminating Funds means, individually or collectively, AGF Global Bond Fund, AGF Tactical Income Fund, AGF Emerging Markets Balanced Fund, AGF Income Focus Fund and AGF Asian Growth Class.

Representations

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

The Filer

3. The Filer is a corporation amalgamated under the laws of the province of Ontario, with its head office located in Toronto, Ontario.

4. The Filer is the manager of the AGF Funds and is the trustee of the Trust Funds (as defined below).

5. The Filer is registered in the categories of (a) exempt market dealer in Alberta, British Columbia, Manitoba, Ontario, Quebec and Saskatchewan, (b) portfolio manager in each of the provinces and territories of Canada, (c) investment fund manager in Alberta, British Columbia, Newfoundland and Labrador, Ontario and Quebec, (d) a mutual fund dealer in British Columbia, Ontario and Quebec and (e) a commodity trading manager in Ontario.

The AGF Funds

6. The AGF Funds are open-ended mutual funds for purposes of NI 81-102, established as a series of shares of a mutual fund corporation (in the case of AGF Asian Growth Class and AGF Emerging Markets Class) (each a Corporate Class) or a trust under the laws of the province of Ontario (each a Trust Fund).

7. Each of the AGF Funds is a reporting issuer under applicable securities legislation in each of the Jurisdictions.

8. None of the Filer or the AGF Funds is in default of securities legislation in any of the Jurisdictions.

9. Securities of the AGF Funds are currently qualified for sale in each of the Jurisdictions under a simplified prospectus, annual information form and fund facts dated April 18, 2019, as amended by Amendment No. 1 dated May 14, 2019, Amendment No. 2 dated July 26, 2019 and Amendment No. 3 dated December 13, 2019, as they may be further amended (the Offering Documents).

10. Each of the AGF Funds follows the standard investment restrictions and practices established under NI 81-102, or an exemption therefrom.

11. Each Continuing Fund has the same valuation procedure and fee structure as the corresponding Terminating Fund.

12. Although the investment objectives of the Terminating Funds may not be considered by a reasonable person to be substantially similar to the investment objectives of the Continuing Funds, in the Filer’s view, the investment objectives and strategies are similar and each Terminating Fund has a similar investment mandate as the corresponding Continuing Fund and would generally attract the same or similar type of investor with a similar risk-return profile. The investment objectives of the Terminating Funds and the Continuing Funds are as follows:

Terminating Fund

Investment Objective

Continuing Fund

Investment Objective

AGF Global Bond Fund

The fund’s objective is to provide interest income and capital appreciation. It invests primarily in investment grade debt securities of governments, corporations and other issuers around the world.

AGF Total Return Bond Fund

The fund’s objective is to provide interest income and capital appreciation by investing in debt securities of governments and other issuers around the world.

AGF Tactical Income Fund

The fund's investment objective is to seek a balance of current income and long-term capital appreciation by investing primarily in a diversified portfolio of dividend-paying and distribution-paying Canadian equity and income securities including income trusts, common and preferred shares and corporate debt.

AGF Strategic Income Fund

The fund’s objective is to provide high long-term total investment returns with moderate risk through a combination of long-term capital growth and current income. It invests primarily in a mix of common and preferred shares of Canadian companies, Canadian federal and provincial bonds, high quality corporate bonds and money market instruments.

AGF Emerging Markets Balanced Fund

The fund’s objective is to provide above-average long-term total return. It invests primarily in a mix of emerging market equity and fixed income (via mutual funds and/or underlying holdings), as well as cash and cash equivalents.

AGF Global Strategic Balanced Fund

The fund’s objective is to provide superior returns with moderate risk through a combination of capital appreciation and interest income. The Fund uses an asset allocation approach. It invests primarily in a mix of shares of companies in countries and industries that are expected to have superior growth, bonds and short-term money market instruments.

AGF Income Focus Fund

The fund’s objective is to provide income by investing primarily in fixed income securities and dividend paying equity securities.

AGF Elements Yield Portfolio

The portfolio’s objective is to achieve high current income by investing primarily in a diversified mix of income, bond and equity funds that may include exposure to income trusts, royalty trusts and REITs.

AGF Asian Growth Class

The fund’s objective is to provide long-term capital growth. It invests primarily in shares of companies that are located or active mainly in Asia or the Pacific Rim Region and are principally traded on Asian stock exchanges.

AGF Emerging Markets Class

The fund’s objective is to provide superior capital growth. It invests primarily in shares of companies that are located or active mainly in emerging market countries.

Reason for Approval Sought

13. Regulatory approval of the Mergers is required because each Merger does not satisfy all the criteria for pre-approved reorganizations and transfers set out in section 5.6 of NI 81-102. In particular:

(a) the fundamental investment objectives of the Continuing Funds may be considered not to be “substantially similar” to the fundamental investment objectives of the corresponding Terminating Fund; and

(b) neither of the Taxable Mergers (as defined below) will be completed as a “qualifying exchange” within the meaning of section 132.2 of the Income Tax Act (Canada) (the Tax Act) or a tax-deferred transaction under subsection 85(1), 85.1(1), 86(1) or 87(1) of the Tax Act.

14. Except as described above, the proposed Mergers will otherwise comply with all the other criteria for pre-approved reorganizations and transfers set out in section 5.6 of NI 81-102.

The Proposed Mergers

15. The Filer intends to reorganize the AGF Funds as follows:

(a) AGF Global Bond Fund will merge into AGF Total Return Bond Fund;

(b) AGF Tactical Income Fund will merge into AGF Strategic Income Fund;

(c) AGF Emerging Markets Balanced Fund will merge into AGF Global Strategic Balanced Fund

(d) AGF Income Focus Fund will merge into AGF Elements Yield Portfolio; and

(e) AGF Asian Growth Class will merge into AGF Emerging Markets Class.

16. The proposed Mergers of (i) AGF Emerging Markets Balanced Fund into AGF Global Strategic Balanced Fund and (ii) AGF Asian Growth Class into AGF Emerging Markets Class will each be effected on a taxable basis (each such Terminating Fund being a Taxable Terminating Fund and each such Continuing Fund being a Taxable Continuing Fund; and each such Merger being a Taxable Merger).

17. The proposed Mergers of (i) AGF Global Bond Fund into AGF Total Return Bond Fund, (ii) AGF Tactical Income Fund into AGF Strategic Income Fund, and (iii) AGF Income Focus Fund into AGF Elements Yield Portfolio will each be effected as a tax-deferred “qualifying exchange” within the meaning of section 132.2 of the Tax Act.

18. Securityholders of each series of a Terminating Fund will receive the same series of securities of the corresponding Continuing Fund as they currently own.

19. The Mergers were announced in a press release on February 19, 2020. A corresponding material change report and an amendment to each Terminating Fund’s Offering Documents were also filed via SEDAR on February 19, 2020.

20. As required by National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107), the Filer presented the terms of each Merger to the IRC of the applicable AGF Fund for its review. The IRC determined that each Merger, if implemented, will achieve a fair and reasonable result for each of the Terminating Funds and Continuing Funds.

21. The Filer is convening special meetings (the Meetings) of the securityholders of each Terminating Fund in order to seek the approval of the securityholders of the relevant series of each Terminating Fund to complete the Mergers, as required by paragraph 5.1(1)(f) of NI 81-102. The Meetings will be held on or about April 15, 2020.

22. The Filer anticipates that none of the Mergers will constitute a material change to the corresponding Continuing Fund as of the Effective Date (as defined below), and, accordingly, there is no intention to convene a meeting of securityholders of any of the Continuing Funds to approve the Mergers pursuant to paragraph 5.1(1)(g) of NI 81-102.

23. Each of the Terminating Funds and the Continuing Funds currently are and are expected to continue to be either a “mutual fund trust” or a class of a “mutual fund corporation” for purposes of the Tax Act. Accordingly, securities of the AGF Funds currently are and are expected to continue to be "qualified investments" under the Tax Act for registered retirement savings plans, registered retirement income funds, deferred profit sharing plans, registered education savings plans, registered disability savings plans and tax free savings accounts.

24. By way of order dated November 4, 2016, the Filer was granted relief (the Notice-and-Access Relief) from the requirement set out in paragraph 12.2(2)(a) of National Instrument 81-106 Investment Fund Continuous Disclosure to send a printed management information circular to securityholders while proxies are being solicited, and, subject to certain conditions, instead allows a notice-and-access document (as described in the Notice-and-Access Relief) to be sent to such securityholders. In accordance with the Filer’s standard of care owed to the Terminating Funds pursuant to securities legislation, the Filer will only use the notice-and-access procedure for a particular meeting where it has concluded it is appropriate and consistent with the purposes of notice-and-access (as described in Companion Policy 54-101CP Communication with Beneficial Owners of Securities of a Reporting Issuer) to do so, also taking into account the purpose of the meeting and whether the Terminating Funds would obtain a better participation rate by sending the management information circular with the other proxy-related materials.

25. 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 most recent fund facts of the relevant series of each Continuing Fund, will be mailed to securityholders of the applicable Terminating Fund on or about March 13, 2020. The notice-and-access document, template form of proxy and the management information circular in respect of the Mergers (the Circular), which the notice-and-access document will provide a link to, will also be filed via SEDAR at the same time.

26. If all required approvals for the Mergers are obtained, it is intended that the Mergers will occur on or about May 15, 2020, or such other date as determined by the Filer (the Effective Date), but in any event no later than December 31, 2020. The Filer therefore anticipates that each securityholder of a Terminating Fund will become a securityholder of the corresponding Continuing Fund after the close of business on the Effective Date. As it is currently anticipated that there will be no holders of any other series of Units of the Terminating Funds following the implementation of the Mergers, each of the Terminating Funds will be wound-up as soon as reasonably practicable following the Mergers.

27. The tax implications of the Mergers as well as the differences between the investment objectives and other features of each Terminating Fund and the corresponding Continuing Fund and the IRC’s determination for each Merger, will be set out in the Circular, so that securityholders may make an informed decision before voting on whether to approve the Mergers. The Circular will also describe the various ways in which securityholders can obtain a copy of the prospectus of the applicable Continuing Fund and its most recent annual information form, interim and annual financial statements and management reports of fund performance.

28. As of January 7, 2020, the Filer anticipates that substantial sales of securities of the Terminating Funds will not be needed in relation to the Mergers and the Filer does not anticipate that there will be a material amount of net capital gains that will be realized by a Terminating Fund as a result of the expected sales of the portfolio assets of a Terminating Fund. The actual amount of net realized capital gains (or capital losses) may be different between the date of the analysis and the Effective Date due to changes in the value of securities held by a Terminating Fund.

29. In respect of the Merger of AGF Emerging Markets Balanced Fund into AGF Global Strategic Balanced Fund, the Filer anticipates that the transfer of the assets of the Taxable Terminating Fund to the corresponding Taxable Continuing Fund at their current market value will not give rise to material adverse income tax consequences for the Taxable Terminating Fund. The Taxable Continuing Fund has significant unutilized loss carry-forwards that would be lost if the Merger was completed on a tax-deferred basis under the Tax Act. Therefore, the Merger will be effected on a taxable basis so that the unutilized loss carry-forwards are preserved in the Taxable Continuing Fund.

30. In respect of the Merger of AGF Asian Growth Class into AGF Emerging Markets Class, the Merger will be implemented on a taxable basis because a tax-deferred alternative is not possible under the Tax Act. The assets and liabilities of AGF Asian Growth Class will be reallocated to AGF Emerging Markets Class. The reallocation will not be a taxable transaction for AGF Asian Growth Class.

31. All costs and expenses associated with the Mergers, including the costs of the Meetings, will be borne by the Filer and will not be charged to any of the Terminating Funds or Continuing Funds. No commission or other fee will be charged to securityholders on the issue or exchange of securities of the Terminating Funds and Continuing Funds, or otherwise in connection with the Mergers.

32. No sales charges will be payable by securityholders of the Terminating Funds in connection with the Mergers.

33. The investment portfolio and other assets of each Terminating Fund to be acquired by the applicable Continuing Fund in order to effect each Merger are currently, or will be on or prior to the Effective Date, acceptable to the portfolio manager of the Continuing Fund and are, or will be, consistent with the investment objectives of the Continuing Fund.

34. Securityholders of each Terminating Fund will continue to have the right to redeem their securities of the Terminating Fund until the business day immediately prior to the Effective Date. If securityholders of the Terminating Fund approve the Merger at the Meetings, the securityholders of the Terminating Fund who do not wish to participate in the Mergers will have the opportunity to redeem their securities prior to the Effective Date.

Steps of the Merger

35. In respect of each Terminating Fund that is a Trust Fund, the specific steps the Filer intends to take in order to effect the Merger are as follows:

(a) Prior to the Effective Date, each Terminating Fund will distribute to its securityholders sufficient net income and net realized capital gains, if any, so that the Terminating Fund will not be subject to tax under Part I of the Tax Act for the taxation year that includes the Effective Date;

(b) The Filer will determine the value of the Terminating Fund’s portfolio and other assets at the close of business on the Effective Date, in accordance with the Terminating Fund’s declaration of trust;

(c) On the Effective Date, the Terminating Fund will transfer its assets (after reserving sufficient assets to satisfy its estimated liabilities, if any, as of the Effective Date) to the Continuing Fund in exchange for securities of the Continuing Fund having an aggregate net asset value equal to the aggregate value of the assets transferred by the Terminating Fund. The Terminating Fund’s securities will be issued at the applicable series net asset value per security of the Continuing Fund determined as of the close of business on the Effective Date; and

(d) Immediately thereafter, the Terminating Fund will redeem the securities of the Terminating Fund at their applicable series net asset value and pay such redemption amount to the securityholders of the Terminating Fund by transferring securities of an equivalent series of the Continuing Fund to each securityholder of the Terminating Fund in an amount equal to the redemption proceeds realized from the Terminating Fund;

(e) Subsequent to the completion of the Mergers, the Filer will wind up and terminate the Terminating Funds as soon as reasonably practicable, and the Terminating Funds will cease, or apply to cease, to be reporting issuers;

(f) The Filer will cancel any outstanding unit certificates (if applicable) of the Terminating Funds.

36. In respect of the one Terminating Fund that is a Corporate Class, the specific steps the Filer intends to take in order to effect the Merger are as follows:

(a) On the Effective Date, the Filer will re-allocate the assets and liabilities allocated to the Terminating Fund to the Continuing Fund;

(b) On the Effective Date, the Filer will convert the securities of each series of the Terminating Fund for securities of the relevant series of the Continuing Fund having a net asset value thereof, so that securityholders of the Terminating Fund shall become direct securityholders of the Continuing Fund holding the identical series of securities;

(c) Subsequent to the completion of the Merger, the Filer will effectively terminate the Terminating Fund by ceasing to utilize and offer the Terminating Fund; and

(d) The Filer will cancel any outstanding share certificates (if applicable) of the Terminating Fund.

Benefits of the Merger

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

(a) The Mergers will result in a more streamlined and simplified product line-up that is easier for investors to understand.

(b) The Mergers will eliminate similar fund offerings, thereby reducing the administrative and regulatory costs of operating the Terminating Funds and the Continuing Funds as separate funds.

(c) Each Continuing Fund, as a result of its greater size, may benefit from its larger profile in the market and better economies of scale.

(d) Except in respect of the Merger of AGF Emerging Markets Balanced Fund into AGF Global Strategic Balanced Fund, each Continuing Fund has either the same or lower risk rating than its corresponding Terminating Fund. Accordingly, in the Filer’s view, each Continuing Fund (other than AGF Global Strategic Balanced Fund) has the potential to provide a better risk adjusted return profile than the corresponding Terminating Fund.

(e) With the exception of the MF Series of AGF Tactical Income Fund and all series of AGF Income Focus Fund, securityholders of the other Terminating Funds will receive securities of the Continuing Funds that have a combined management fee and administration fee, if applicable, that is either the same or lower than the combined management fee and administration fee, if applicable, charged in respect of the corresponding series of securities of the applicable Terminating Fund.

(f) With the exception of AGF Tactical Income Fund and AGF Income Focus Fund, securityholders of each other Terminating Fund will receive securities of the corresponding series of the Continuing Fund that have a management expense ratio (MER) that is either the same as or lower than the MER of the corresponding Terminating Fund (for the 12 months ended September 30, 2019).

38. For the reasons set forth above, in the opinion of the Filer, it will not be prejudicial to the public interest to grant the Approval 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 under the Legislation is that the Approval Sought is granted, provided that the Filer obtains the prior approval of the securityholders of the Terminating Funds for the proposed Mergers at the Meetings, or any adjournment thereof.

“Neeti Varma”_

Neeti Varma, Manager

Investment Funds and Structured Products Branch

Ontario Securities Commission

Application #2020/0060