In reversal, Fidelity says new Magellan manager to leave other fund

Fidelity Investments is giving two of its sector managers bigger roles. But in doing so, the fund firm is pulling one of the managers off a top-performing fund — despite an earlier assertion by Fidelity that he would remain the manager. Dan Kelley, portfolio manager of the $102 million Fidelity Select Construction & Housing Fund (FSHOX), has taken over the $1 billion Fidelity Trend Fund from Jeffrey Feingold. Mr. Feingold was named manager of the $15 billion Fidelity Magellan Fund (FMAGX) in September and is having his other portfolio manager duties cut so he can focus solely on Magellan, said Sophie Launay, spokeswoman at Fidelity. The move is an about-face from what Fidelity promised Trend Fund shareholders when it announced that Mr. Feingold would be replacing Harry Lange at Magellan. At the time, the fund firm said Mr. Feingold would stay on at Trend Fund. “Trend fund shareholders are the losers here,” said Christopher Davis, mutual fund analyst at Morningstar Inc. Under Mr. Feingold's direction, the Fidelity Trend Fund's three-year annualized returns have beaten 90% of its peers. Mr. Kelley's sole experience as a portfolio manager has been with the construction and housing sector fund. “It's a big leap to go from managing a sector fund to a diversified large-cap-growth fund,” Mr. Davis said. “Dan is an individual who is passionate about investing, capable of expanding his scope and ready for this role,” said Sophie Launay, spokeswoman at Fidelity. “We're confident shareholders of the Fidelity Trend Fund will benefit from his experience and knowledge.” Fidelity this week also announced that Vincent Montemaggiore, portfolio manager of the $366 million Fidelity Select Banking Fund (FRSBX), will be taking over as portfolio manager of the $1.9 billion Fidelity Overseas Fund (FOSFX). Ian Hart, who managed the fund since 2006, had five year annualized returns that rank in the bottom 25% of the foreign large-cap-blend fund category. While this fund change was likely performance-driven, Mr. Davis is still skeptical that running a banking sector fund is adequate preparation for a diversified international fund. “We believe the fundamental skill set exhibited by Vince, including his strong analytic abilities, keen business acumen and focus on risk management, are easily migrated to a more diversified mandate,” Ms. Launay said.