U.S. Bancorp, Minneapolis, has extended its contract and consolidated its mutual funds distribution with SEI Investments, Oaks, Pa.

The contract runs through 1999.

U.S. Bancorp merged with Portland, Ore.-based First Bank System in July. First Bank, which had $17.5 billion of assets in its First American Funds family, has used SEI as its distributor since 1992.

By comparison, U.S. Bancorp had $2.5 billion in its Qualivest family and used Bisys Funds Services of Columbus, Ohio, as its distributor.

The two fund families were combined at the end of November. A spokesman for U.S. Bancorp said the bank extended its contract with SEI because it had a long-standing relationship with the distributor.

Mark H. Samuels, executive vice president of SEI's proprietary funds group, said the company sees the U.S. Bancorp contract as an important win.

"It's simply a confirmation of the quality relationship we have with U.S. Bancorp and an endorsement of the breadth, depth, and quality of work we do," he said.

SEI administers and distributes funds for 19 bank fund complexes. At the end of the third quarter, it had $71.1 billion of bank fund assets under administration and distribution.

Bisys said it was not losing its relationship with U.S. Bancorp. Robert McMullan, executive vice president for Bisys Funds Services, said the company had negotiated a new service contract with U.S. Bancorp four months ago.

"We have a service arrangement with U.S. Bancorp to provide assistance with the funds group for marketing support," he said. "That relationship will run current through the SEI agreement, and this will be ongoing" to support IRA, wholesale, and retirement products.

"We did not lose a revenue relationship," Mr. McMullan added.

"The U.S. Bancorp Qualivest funds are being merged," he added. "There is no change in the relationship between First American and its distributor."

At the end of the third quarter, Bisys had more than $180 billion of bank fund assets under administration and distribution, making it the largest in the field.

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