U.K. Decision Concerning Websites Operated by U.S. Mutual Funds

Washington, DC, May 28, 1998 - Today the United Kingdom Financial Services Authority (FSA) issued guidance intended to clarify its position on World Wide Web sites operated by U.S. mutual funds. The Investment Company Institute believes that the FSA has taken an important step toward reducing uncertainty over the application of foreign securities regulations to the communication of investment information. The clarification was requested in November 1997 by the Institute, the national association of the U.S. mutual fund industry.

U.S. mutual funds have pioneered the use of the World Wide Web to enhance communication with investors and to make a variety of information more readily available to investors. However, uncertainty created by foreign regulators' assertions of jurisdiction over material posted by mutual funds on their websites-whether or not a fund actually does business in a particular country-unnecessarily threatens those communications efforts to the detriment of investors.

U.S. mutual funds that aren't directing their sales to the United Kingdom want to be able to operate their websites without being subject to enforcement actions in the U.K. merely because their websites are accessible in the U.K. While today's action by the FSA does not remove all uncertainty under U.K. law, it is an important step in assuring that U.K. securities regulation will be applied in a way that distinguishes between those situations that present investor protection concerns and those situations that do not.

The Investment Company Institute will continue to work with the U.K. FSA and securities regulators in other countries in an effort to ensure that regulation does not discourage the use of the web by funds and fund investors.