In an announcement on Friday, the manager of IA Clarington funds and IA Clarington target click funds has proposed changes to its method of charging operating expenses.

The proposed changes will result in lower managing expense ratios (MER) for all funds and provide clarity and predictability surrounding fees.

Toronto-based IA Clarington Investment Inc. is proposing to pay the operating expenses of each fund other than the fund costs (currently payable by each fund) in exchange for the payment by the fund of an annual fixed rate administration fee, which, up to December 31, 2015, will be subject to a transitional adjustment payment. Similar fixed rate administration fee proposals have been approved by investors at a number of large Canadian mutual fund companies.

If the administration fee proposal is implemented, the operating expenses payable by IA Clarington will include, but will not be limited to, audit fees, fund accounting costs, transfer agency and recordkeeping costs, custodian costs, administration costs and trustee services relating to registered tax plans, costs of printing and disseminating prospectuses, annual information forms, fund facts and continuous disclosure materials, legal fees, bank charges, investor communication costs, and regulatory filing fees.

Each fund currently pays all of its own operating expenses, which comprise a portion of the MER of the fund. The fund costs, which will continue to be payable by each fund, are all taxes (including HST, capital taxes, income taxes, withholding taxes), borrowing and interest costs, fees for directors of Clarington Sector Fund Inc. (for corporate class funds), securityholder meetings costs as permitted, the fees and expenses of the Independent Review Committee of the funds, the cost of compliance with any new or changed governmental and regulatory requirements imposed on or after the proposed June 20, 2013 implementation date.

IA Clarington referred the proposal to the funds’ Independent Review Committee, which acts in an advisory capacity representing the interests of the funds. The Independent Review Committee has reviewed the proposal and determined that, if implemented, it would achieve a fair and reasonable result for the funds.

A special meeting of investors will be held on or about June 19, 2013 to consider the proposed changes.