Fidelity Replaces Two Managers Following Poor Fund Performance

Fidelity Investments replaced managers for two of its global bond funds following below-average investment performance in 1995.

Fidelity said Monday it removed Scott Kuldell as manager of its Short-Term World Bond Fund and Jonathan Kelly as manager of its Global Bond Fund. Both were offered other jobs at the firm.

Fidelity named Charles Morrison, 35, and Luc Huyghebaert, 34, to co-manage the Short-Term World Bond Fund, and Christine Thompson, 37, and Ian Spreadbury, 41, to oversee the Global Bond Fund.

The moves by the nation’s biggest fund group demonstrate how important it is for managers to generate at least average returns, said Sheldon Jacobs, editor of No-Load Fund Investors, a newsletter that tracks the $2.9 trillion fund industry.

“The people who perform are promoted and those that don’t perform don’t get promoted,” Jacobs said. “That’s how it’s always worked at Fidelity, and for that matter the world.”

The manager changes weren’t “performance related,” said Robyn Tice, Fidelity’s spokesman. The company decided to assign two managers to the funds in order to “provide a very effective way to manage these funds by allowing each manager to focus on a specific area of expertise,” she said.

“In both situations, one manager will focus on U.S. bonds and the other will focus on foreign bonds,” Tice said.

The $118.5 million Fidelity Short-Term World Bond Fund rose 7.79 percent last year, or 11.25 percentage points less than the Salomon Brothers World Government Bond Index. The $189.9 million Fidelity Global Bond Fund advanced 6.66 percent, or 12.38 percentage points less than the Salomon index, according to Fidelity’s monthly fund guide.

Fidelity Global Bond Fund declined 16.31 percent in 1994 as major bond markets throughout the world fell. The fund’s losses were exacerbated when its investments in emerging markets plunged after Mexico’s peso devaluation in December of that year, according to the research group Morningstar Inc.

Kuldell, 30, started managing the Short-Term World Bond Fund in March 1994, and Kelly, 32, was named to oversee the Global Bond Fund in October 1993.

Kelly will continue to manage non-U.S. bond investments for Fidelity Advisor Strategic Income Fund and is also an international bond analyst in the firm’s fixed-income research department, Fidelity said.

Kuldell will take a new job in the quantitative portfolio analysis part of Fidelity’s fixed-income research department, the company said.