Fidelity Investments is making a play for more business from foreign banks in the United States.

The Boston-based funds giant is providing non-U.S. customers of these banks with access to offshore funds managed by a British affiliate, Fidelity International Ltd.

The products include a broad range of country-specific funds and offer substantial tax advantages to investors.

Fidelity already offers its domestically managed funds to foreign banks in the United States.

Modest Expectations

By broadening its offerings, Fidelity hopes to win spots on the banks' crucial lists of "preferred products."

But Fidelity does not expect the new offering to spur a stampede by the banks.

"We're just signing them up one cow at a time," said Nishan G. Vartabedian, executive vice president of Fidelity's bank services division.

Certainly, foreign banks are showing increased interest in mutual funds.

As one sign of this, France's Societe Generate, Spain's Banco Santander, and some others have been launching their own funds in the United States.

By making offshore funds available in this country, Fidelity could potentially double its business with nonresident aliens, Mr. Vartabedian said.

Under the new program, non-U.S. citizens can find out about offshore funds through foreign bank branches based in the States. If they choose to invest, an order is sent via electronic mail to Luxembourg, where the Fidelity foreign funds are registered.

Offshore funds are not subject to U.S. withholding taxes, a decided advantage to nonresident investors.

The decision to promote its Luxembourg line of mutual funds in the States was partially prompted by the "short listing" trend. As banks limit the number of mutual fund families they promote, mutual fund companies are trying to make their offerings more attractive.

"It's another value added," Mr. Vartabedian said. Fidelity is offering something "that very few investment advisers can provide," he explained.

Seen Providing an Edge

"Clearly more companies are looking at this," said Avi Nachmany, partner at Strategic Insight, a New York consulting firm that advises banks.

"To the extent that banks have a lot of high-net-worth customers that might benefit from this," easing their ability to invest without paying U.S. withholding tax could help Fidelity win spots on short lists, Mr. Nachmany agreed.

In addition to the tax advantage, "in Luxembourg they have a broader range of mutual funds available," said Joseph Even, a first vice president and manager of the investment products department at Bank Hapoalim in New York.

The bank, which is headquartered in Tel Aviv, already sells Fidelity's domestic products to nonresident customers worldwide, Mr. Even said. Now it intends to add Fidelity's offshore offerings to give customers access to more country-specific funds, he said.

Fidelity offers just two country-specific funds domestically: Canada and Japan. Its offshore offerings, by contrast, include 18 country-specific and major market funds, spanning the globe from France to Malaysia. Fidelity international also has 23 currency funds, all rated AAA by Moody's.

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