Mellon Bank Corp., seeking to boost sales of its proprietary mutual funds, has become the first bank to offer products through Fidelity Investment's popular fundsNetwork program.

The program, which Fidelity launched last July, allows retail investors to choose among hundreds of no-load mutual funds and track their holdings on consolidated monthly statements. The funds can be purchased by telephone or at any of Fidelity's 77 investor centers.

In its first nine months, the program pulled in $5 billion of assets, a spokeswoman for the Boston-based mutual fund giant said. That's equal to about 10% of Fidelity's asset growth between July 1993 and April 1994.

As the only bank whose funds are offered through the Funds-Network program, Mellon is hoping to share in that growth.

Also Offered Through Schwab

"It's a very efficient means to help us expand our distribution," said Richard Healy, senior vice president of marketing for Mellon's mutual funds, the Laurel Funds.

The funds, with $3.7 billion in assets, are also offered through Schwab's One Source program, Fidelity's rival in no-transaction-fee mutual fund assets.

In addition, the Dreyfus Funds, the $67 billion-asset fund family that Mellon is slated to acquire this summer, are offered through the Funds-Network.

And the Evergreen Funds, which First Union Corp. is about to acquire, are also available on FundsNetwork.

Trust Money Restructured

Banks managed more than $218 billion in mutual fund assets as of March 31, according to Lipper Analytical Services, Summit, N.J.

But while they have made a big splash by launching funds, most banks have simply restructured trust monies. They haven't been as successful as rival fund managers is attracting fresh assets.

Eli Neusner, a consultant with Cerulli Associates in Boston, said Mellon's decision to link up with Fidelity gives the bank a great shot at boosting its propetary fund volume.

Fidelity should be able to "really deliver assets to the Laurel

Funds Group," Mr. Neusner said.

One reason is that Fidelity is putting considerable marketing and advertising muscle behind the FundsNetwork program.

"Smaller fund companies without a high degree of name recognition can't spend dollars on marketing the way Fidelity can," a Fidelity spokeswoman said.

The program has been a solid hit with investors, who are "increasingly conscious of costs and fees," the spokeswoman added.

Mr. Neusner said it is a tribute to Mellon that its funds are being made available through FundsNetwork.

Other No-Load Managers

"It recognizes them as a ligitimate investment manager, and it says that their funds are equal to those of all these established fun managers," he said.

However, Mr. Healy of the Laurel Funds noted that very few banks manage no-load mutual funds for retail customers. Others that do so include Fleet Financial Group, Providence, R.I., and Liberty National Bancorp., Louisville, Ky.

All 23 stock and bond portfolios in the Laurel Funds lineup will be offered under the Fidelity program, Mr. Healy said. Mellon also manages several money market funds, but none are offered through FundsNetwork.

Currently, only four Laurel Funds are offered through the Schwab program, but Mellon is negotiating with Schwab to expand the selection.

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