Fidelity delays money-fund deadline to 5 p.m.

In a bid to appeal to institutional investors such as banks and their big clients, Fidelity Investments is stretching the daily deadline for investments in one of its money market funds.

The new investment deadline of 5 p.m. eastern time is expected to have special appeal to banks' corporate trust customers, who often receive cash disbursements too late to meet the standard 3 p.m. investment deadline on other institutional money market funds.

The aim is to enable users to keep cash invested, thereby earning higher returns.

Banks that offer Fidelity's U.S. Treasury II Portfolio could highlight their ability to set a later investment deadline as a benefit of banking with them, said Eric Schoen, director of cash management products at Boston-based Fidelity Investments Institutional Services Co.

A number of "very prominent superregional and money center banks" use the fund to satisfy their clients' cash management needs, Mr. Schoen said, although he declined to specify which ones.

The change "is a big deal because for a lot of investors, the later the deadline, the better off they are," said Timothy F. Jackson, vice president and mutual fund product manager at Chicago-based Continental Bank Corp.

"For big clients, it is an ideal way to move money," he said.

Banks Seen Likely Customers

In fact, Mr. Schoen said, banks would be more likely to use it for their institutional customers than for themselves.

For example, bank customers who receive municipal bond proceeds at 4 p.m. typically want to invest the excess cash.

One alternative would be to put the money in overnight bank deposits, but they typically pay lower yields than Fidelity's treasury portfolio would, Mr. Schoen said.

Fidelity's institutional services unit markets investment products to customers through 950 banks, 2,000 broker-dealers, and 32 insurance companies. The division had more than $60 billion of assets at yearned, compared with the company's total assets of $324 billion.

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