May 28, 1999
Jonathan G. Katz
Securities and Exchange Commission
450 5th Street, NW
Dear Mr. Katz:
Re: File No. S7-10-99
Offer and Sale of Securities to Canadian Tax-Deferred Retirement Savings Accounts
AIC Limited is the manager of the AIC Funds. The AIC Funds currently includes AIC Advantage Fund, AIC Advantage Fund II, AIC American Advantage Fund, AIC World Advantage Fund, AIC Diversified Canada Fund, AIC Value Fund, AIC World Equity Fund, AIC Income Equity Fund, AIC American Income Equity Fund, and AIC Money Market Fund. Additional funds are proposed to be offered pursuant to the Preliminary Prospectus dated May 20, 1999 which has been filed with securities authorities in all provinces and territories of Canada.
The AIC Funds have investors who are currently, or in the future will be, detrimentally impacted by the existing registration requirements of U.S. securities laws which prohibit Canadian/U.S. Participants (as defined) from being able to purchase or exchange securities for their Canadian retirement accounts as needed to meet their changing investment goals. Accordingly, we strongly endorse the rules proposed by the U.S. Securities and Exchange Commission (the "SEC") in Release Nos. 33-7656, 34-41189 and IC-23745.
We understand that the Investment Funds Institute of Canada ("IFIC"), of which we are a member, will be submitting a comprehensive comment letter to the SEC on the proposed rules. We support IFICís comments regarding the proposed rules. We believe it is in the public interest to exempt from the registration requirements of the Securities Act offers of foreign securities to Canadian/U.S. Participants and sales to their retirement accounts. As such, we recommend that implementation of the proposed rules be expedited.
In addition to supporting IFICís submissions, we wish to take this opportunity to urge the SEC to amend the proposed rules to permit persons relying on the rules 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. As is the case with virtually all Canadian mutual fund families, the AIC Funds utilize consolidated offering documents. The requirement in the proposed rule that only updated written offering and informational material that concern securities already held in the Participantís retirement account be delivered to a Participant could have the unfortunate result of the rule becoming cost prohibitive.
We agree with the current drafting of the proposed rule which would permit Participants to exchange or re-allocate existing Canadian retirement account investments, as well as to make sales in connection with new investments made with additional contributions to the account. The Canadian tax system permits the carry forward of unused registered retirement savings plan contribution room. Therefore, an individual may, in limited circumstances, be able to make contributions to a registered plan in respect of unused contribution room based upon unused entitlements carried forward from previous years.
In closing, we commend the efforts of the SEC in bringing forward the proposed rule and look forward to its implementation.