Fidelity to Roll Out Four New Funds

Do you know where your fund manager is? If you buy one of the four new Fidelity funds, you will at least know what style box to find him or her in.

The Boston fund giant filed papers with the Securities and Exchange Commission to offer four more actively managed funds: Structured Large Cap Value, Structured Midcap Value, Structured Large Cap Growth, and Structured Midcap Growth. It appears that these funds will commence operations in September, and all will be managed in accordance with tightly defined investment-style characteristics.

Robert Macdonald will manage Structured Large Cap Value and Structured Midcap Value. The former fund will use the "Russell 1000 Value Index as a guide in structuring the fund and selecting its investments," according to the filing. Meanwhile, the Russell Midcap Value index will serve as the benchmark for Structured Midcap Value. Macdonald works on the institutional side of Fidelity's business, and is not currently the manager of an open-end mutual fund.

Jeff Kerrigan will run Structured Large Cap Growth, whose bogy is the Russell 1000 Growth index, and Structured Midcap Growth, which will attempt to beat the Russell Midcap Growth index. Like Macdonald, Kerrigan is an institutional manager who does not presently run a mutual fund.

All four funds are no-load offerings with expense ratios capped at no more than 1.2%, according to the filing, and each offering carries a performance-based fee that will vary depending on how the funds perform relative to their benchmarks. Each has a minimum investment of $2,500 for taxable accounts, though one may open an Individual Retirement Account with as little as $500. Each fund also will carry a short-term redemption fee of 0.75% on shares held for fewer than 30 days.

In recent years, many financial advisors and investors have demanded greater style consistency from their funds, and these funds appear to offer that stability. Fidelity has sometimes come under fire when its funds have revised their investment strategies. In early 2000, for example, Karen Firestone and Bettina Doulton replaced the value-oriented George Vanderheiden at Fidelity Destiny I (FDESX) and Fidelity Advisor Growth Opportunities (FAGOX), respectively. Both Firestone and Doulton immediately ramped up the funds' exposure to then-high-flying technology stocks, which subsequently crashed. However, there have been fewer complaints about Fidelity funds that have made successful sector bets, including Contrafund (FCNTX).

Fidelity already offers a number of style-specific funds in the no-load arena, ranging from Small Cap Stock (FSLCX) to Equity-Income (FEQIX). However, it appears that Fidelity's new funds will operate using even more tightly defined investment-style parameters.

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