Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- mutual fund converted from closed-end fund -- relief sought to include closed-end fund performance data in sales communications for mutual fund -- fund managed in substantially the same manner before and after conversion -- any differences that would have material effect on performance to be disclosed in sales communications and in fund facts.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 15.6(d), 19.1.

October 24, 2013

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

HARVEST PORTFOLIOS GROUP INC.

(the Filer)

AND

HARVEST CANADIAN INCOME & GROWTH FUND

(the Fund)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the "Legislation") for an exemption relieving the Fund from the prohibitions in subsection 15.6(d) of National Instrument 81-102 -- Mutual Funds (NI 81-102) in order to show performance data of the Fund for the period prior to the Fund offering its securities under a simplified prospectus (the "Requested Relief").

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

(a) the Ontario Securities Commission is the principal regulator for this application, and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon in each of the provinces and territories of Canada, (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 herein.

Conversion means the conversion of the Fund from a closed-end investment fund to a mutual fund.

Conversion Date means the date upon which the Conversion was effected, being the close of business on or about June 20, 2012.

Representations

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

1. The Filer is a corporation governed by the laws of the Province of Ontario and is registered as a Portfolio Manager and Investment Fund Manager in Ontario. The Filer's head office is located in Oakville, Ontario.

2. The Filer acts as manager and trustee of the Fund.

3. The Fund was established as a closed-end investment fund under the laws of Ontario pursuant to a declaration of trust dated May 31, 2010, as amended (the "Declaration of Trust").

4. Neither the Filer nor the Fund is in default of securities legislation in any of the Jurisdictions.

5. Units of the Fund were first distributed pursuant to an initial public offering under a long form prospectus dated May 31, 2010 (the "Long Form Prospectus") and were listed and traded on the Toronto Stock Exchange (the "TSX").

6. In connection with the Conversion, the Filer filed a simplified prospectus (the ("Prospectus"), annual information form and fund facts dated June 20, 2012 under National Instrument 81-101 -- Mutual Fund Prospectus Disclosure with the securities regulatory authorities of the Jurisdictions. Pursuant to the Prospectus, the Fund offers Series A units, Series F units and Series R units (which are the pre-conversion units of the Fund and designated as Series R units upon Conversion) under continuous distribution. The Prospectus was renewed on June 20, 2013.

7. In connection with the Conversion, and in accordance with the Declaration of Trust and the Long Form Prospectus, the units of the Fund delisted from the TSX on or about June 7, 2012.

8. Since its inception, the Fund has complied with the investment restrictions contained in NI 81-102, except for the use of leverage as described in the Long Form Prospectus.

9. As of the Conversion Date:

(i) The Fund converted to an open-end mutual fund;

(ii) The units of the Fund were delisted from the TSX;

(iii) The Fund no longer uses leverage to pursue its investment objectives;

(iv) All outstanding units of the Fund were redesignated as front-end load Class R units; and

(v) The annual management fee for the Class R units increased from 1.65% to 2.25%, by increasing the amount of the quarterly servicing fee payable out of the management fee from 0.40% per annum to 1.00% per annum.

10. Following the Conversion, the investment practices of the Fund have continued to comply in all respects with the requirements of Part 2 of NI 81-102.

11. Post-Conversion, the Fund is managed in substantially the same manner as it was pre-Conversion, save and except for the use of leverage. Any changes between pre- and post-Conversion that could have a material effect on the performance of the Fund will be disclosed in sales communications and fund facts pertaining to the Fund.

12. The Fund's Series R fund facts will include information relating to the past performance of the Fund as set forth in Part I, Item 4 of Form 81-101F3 -- Contents of Fund Facts Document, which information will include pre-Conversion past performance.

13. Without the Requested Relief, sales communications pertaining to the Fund will only be permitted to include performance data for the period commencing after the Conversion Date, being the date on which the Fund commenced distributing securities as a mutual fund under the Prospectus.

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 Requested Relief is granted.

"Vera Nunes"
Manager, Investment Funds Branch
Ontario Securities Commission