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July 1 (Bloomberg) -- Fidelity Investments, the money manager that operates the largest online brokerage, told investors outside the U.S. they can’t buy mutual funds after July 31.

Boston-based Fidelity informed about 60,000 customers, or about 0.3 percent of account holders, of the change in a letter, Stephen Austin, a spokesman, said today in a telephone interview. The clients won’t be forced to sell existing holdings and will still be allowed to reinvest dividends in their funds.

The announcement reflects “a continually evolving global regulatory environment and is not in response to any specific issue, regulatory or otherwise,” Austin said.

Fidelity applies varying restrictions on overseas clients depending on their country of residency. Most overseas clients opened accounts while living in the U.S. before moving abroad, Austin said. The ban on making new investments into mutual funds applies to Fidelity and non-Fidelity funds, he said.

U.S. law doesn’t prohibit the sale of U.S. mutual funds overseas, according to John Baker, a partner at the law firm Stradley Ronon Stevens & Young in Washington. Restrictions depend on the local laws of the foreign country, he said. It’s illegal for foreign-registered funds to sell their shares publicly in the U.S., he said.

Contents of the client letter were reported earlier today in the Wall Street Journal.

Fidelity had $1.95 trillion in assets under management as of April 30, according to the firm’s website. Its brokerage unit served 19.6 million accounts as of March 31.

To contact the reporter on this story: Christopher Condon in Boston at

To contact the editors responsible for this story: Christian Baumgaertel at Josh Friedman

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