Institute Submits Second Comment Letter on U.S. Mutual Fund Sales in Australia

Washington, DC, September 7, 1999 - On September 3, 1999, the Institute submitted a comment letter to the Australia Securities & Investment Commission (ASIC) on the standards under which U.S. mutual funds can obtain conditional relief from Australia's securities laws to facilitate the sale of their shares in Australia. The standards are set forth in a policy statement, ASIC Policy Statement 65: Foreign Collective Investment Schemes (PS 65), and the form on which funds apply for relief, Pro Forma 71: Foreign Collective Investment Schemes (PF 71).

PS 65 authorizes ASIC to grant conditional relief from certain procedural and disclosure aspects of Australian securities laws to foreign funds that meet the standards set forth in the policy. ASIC requested comment on PS 65 in two stages. Earlier this summer, ASIC clarified that it intends to continue to grant relief to U.S. mutual fund and unit investment trust applicants in accordance with PS 65 and requested comment on that approach. The Institute responded with a June 15 letter supporting the continued inclusion of registered U.S. mutual funds and unit investment trusts within the class of foreign funds eligible for relief under PS 65.

ASIC also requested general comment on PS 65 and PF 71. The Institute's second comment letter responds to this request, addressing five topics: (1) ASIC's treatment of U.S. business trusts; (2) the application of ASIC's "majority foreign" rule with respect to funds that use a specific class of shares for sale to Australian residents; (3) ASIC's procedures with respect to the suspension of redemptions by U.S. funds; (4) the role of the "local agent" required under PS 65 and PF 71; and (5) the application of ASIC's rule on stale prospectuses.