FUND WATCH


Fidelity Blue Chip Growth: Uninspiring

Large, growing companies are poised to step into the spotlight, but we're not sure this fund will shine.




Editor's note: This is part of a continuing series of articles looking at the 20 biggest no-load stock funds.

The prospects for blue chip stocks are bright, but the outlook for Fidelity Blue Chip Growth is hazy. The fund, which invests in large, fast-growing companies, has ranked in the bottom 30% of its peer group in each of the past four calendar years. Over the past decade, it gained 6% annualized, matching the average large-company growth fund, but lagging the S&P 500-stock index by an average of nearly three percentage points a year.

And now the fund has a new manager. After more than a decade at the helm, manager John McDowell retired in November. His co-manager, Brian Hanson, also left, to concentrate on other funds. Enter Jennifer Uhrig, who previously skippered Fidelity Advisor Equity Growth, a load fund with a mission similar to that of Blue Chip Growth. During her nine-year tenure, Equity Growth performed roughly in line with its peers. But while Blue Chip Growth has been stuck in a rut because McDowell and Hanson clung tightly to an out-of-favor style, Uhrig was able to invest in some medium-sized companies at Equity Growth.

In her nearly three months on the job, Uhrig has guided Blue Chip Growth to a 3% gain. That's still a percentage point behind the S&P 500. The fund's top holdings represent a who's who of, well, blue-chip names. They include Johnson & Johnson, Microsoft, Apple and Wal-Mart. Nearly 10% of the fund's assets were recently in pharmaceuticals, including Merck, Wyeth and Schering-Plough. Altogether, health and technology stocks account for half of assets.

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Given Uhrig's uninspiring track record, we see no compelling reasons to stick with Blue Chip. Current shareholders should SELL this fund.

FUND FACTS

Fidelity Blue Chip Growth (FBGRX)

Assets: $20.1 billion
Managers (year started): Jennifer Uhrig (2006)

Return (vs. S&P 500)*:
One year: 4.0% (13.3%)
Three years annualized: 4.9% (10.1%)
Five years annualized: 2.5% (7.0%)
Ten years annualized: 5.6% (8.4%)

Expense ratio: 0.63%
Portfolio turnover: 48%
Minimum investment: $2,500
Phone: 800-544-8544
Web site: www.fidelity.com

*Returns through January 30
Fund Fact sources: Standard & Poor's, Morningstar

View updated data for this fund and compare the performance of the 20 biggest no-load stock funds.

Go to A Close Look at the 20 Biggest No-Load Stock Funds.






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