Assets in Fidelity Investments' Portfolio Advisory Services wrap account increased 56% last year, when the Boston firm opened the account to mutual funds managed by other companies.

Assets in the wrap program reached $7 billion in 18,442 accounts by yearend, Fidelity said, and 7,000 new accounts were opened.

"The addition of non-Fidelity funds really helped us," said Andus Baker, a vice president.

Launched in 1989, the account had held only Fidelity funds until February 1998.

The mix of Fidelity and nonproprietary mutual funds varies by account, but generally 30% to 60% of the assets are in Fidelity funds, Mr. Baker said.

The redesign attracted customers who wanted to pull various mutual funds they own into one place, Mr. Baker said.

"A product like (Portfolio Advisory Services) is important to people with large rollover retirement assets," he said.

Each customer has a relationship with an individual account manager and accounts are reviewed by an investment management team every eight to 12 weeks. The program is marketed as "tax-sensitive" because the system used to manage the accounts flags securities where distributions could trigger higher taxes.

Fidelity ranked fifth among providers of mutual fund wrap accounts in 1997, the last year for which information is available from Cerulli Associates Inc. Mutual fund wraps have steadily gained popularity, holding $54 billion in 1997, compared with $7 billion in 1993, according to the Boston research firm.

Many mutual fund wrap programs, including those at several banking companies, started with proprietary funds and perhaps one outside fund family before expanding to include long lists of funds.

For instance, the country's largest mutual fund wrap program, Salomon Smith Barney's eight-year-old Track account, expanded in 1996 to include funds managed by other investment companies. Total assets in the Track account were $12.5 billion on Dec. 31.

Ultimately, however, the goal of the wrap manager is to "migrate" assets into proprietary funds and standardize accounts, rather than manage far- flung assets in customized accounts, which is expensive, said David B. Master, managing director of Optima Group Inc., a consulting firm in Fairfield, Conn.

That objective is typically shared by the client whose goal is to simplify how their money - drawn from a variety of sources - is managed.

"It's the difference between having an account and (having) a relationship," Mr. Master said. The account performs a similar function to that of the registered investment adviser's role, he said.

Fidelity charges 100 basis points on Portfolio Advisory Services accounts with the minimum $200,000 of assets. The fee decreases as assets in the account increase.

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