May 28th, 1999

Jonathon G. Katz, Secretary

Securities and Exchange Commission

450 5th Street, NW

Washington, DC

20549-0609

 

Dear Sirs:

Re: SEC File No. S7-10-99

I am writing on behalf of Royal Mutual Funds Inc. ("RMFI"), a member of the Investment Funds Institute of Canada ("IFIC"), with respect to the new rules and amendments relating to the offer and sale of securities to Canadian tax-deferred retirement savings accounts proposed by the Securities and Exchange Commission (the "Commission") (the "proposed rules").

RMFI is the principal distributor and manager of Royal Mutual Funds, the second largest group of mutual funds in Canada. RMFI is registered as a mutual fund dealer in all Canadian jurisdictions. RMFI distributes units of its mutual funds only through branches of Royal Bank of Canada and Royal Trust Corporation of Canada, through affiliated companies appropriately registered with the Canadian securities regulators as dealers and through unrelated securities dealers in Canada.

I understand that IFIC will soon be submitting detailed comments respecting the proposed rules, RMFI is in agreement with IFICís comments and offers the following comments of its own:

  1. As a general comment, RMFI supports this initiative by the Commission. The proposed rules are, in the opinion of RMFI, very necessary and should be implemented as soon as possible.

2. With respect to the Commissionís request for comments about whether rule 237 should specifically permit persons relying on the rule to deliver updated joint prospectuses and other joint materials that concern both securities that are held in a participantís retirement account and securities that are not held in the account, RMFI would urge the Commission to structure the rule so that Canadian mutual funds may consolidate prospectuses and other materials to be sent to participants. RMFI and many mutual fund companies rely heavily on consolidated offering documents and it would be financially prohibitive for them to prepare and deliver individual versions of such documents. The net result of such a provision would most likely be to force RMFI and many mutual fund companies to continue to refuse trades from persons resident in the United States with whom they would otherwise be entitled to deal under the proposed rules.

 

3. In response to the Commissionís request for comments on the requirement that all offering materials prominently disclose that the securities are not registered with the Commission and may not be offered or sold in the United States unless registered or exempt from registration, RMFI suggests that the purpose of this requirement would be adequately served if such disclosure were to appear in prospectuses only and not in advertisements (which serve a very broad audience) and shareholder reports (which are delivered only to existing unitholders).

I hope this information is of assistance to you in finalizing and implementing these very worthwhile rules and amendments. Please do not hesitate to contact me should you have any questions.

Regards,

"Alison Gardner"

Alison E. Gardner, Counsel

Royal Bank of Canada

Corporate Services, Law Dept.

(416) 955-6797

AEG/tt