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Fidelity Magellan Commingled Pool

en-US A new leader with plenty of experience on other funds. In February 2019, Fidelity announced that longtime manager Jeff Feingold would relinquish his role on this strategy and retire from the firm at year-end. Sammy Simnegar was named comanager on Feb. 22, 2019, and after a gradual transition during which Simnegar took more and more responsibility for constructing the portfolio, Simnegar officially took over as sole manager at the start of 2020.

Simnegar has plenty of management experience. Since 2008, he's adeptly run Fidelity International Capital Appreciation FIVFX, a broad-based foreign-stock fund, and from 2012 to October 2019 he also ran Fidelity Emerging Markets FEMKX, also with much success. Although this is the first time Simnegar has managed a U.S.-focused fund, he isn't new to U.S. stocks. He joined Fidelity in 1998 to cover real estate, hotels, and telecom and focused on U.S. regional banks from 2001 to 2003 before shifting to emerging-markets stocks, which he covered until taking the helm of Fidelity International Capital Appreciation. He's consistently held 15%-25% of that strategy's assets in U.S. stocks and says he has always studied other U.S. companies, in order to properly evaluate the prospects of foreign rivals. He works with a variety of analysts from Fidelity's extensive global team. The fund receives an Above Average People rating. A new look. Sammy Simnegar has made substantial changes to this portfolio since taking over the responsibility for it toward the latter part of 2019. (He officially became sole manager at the start of 2020, when Jeff Feingold retired from Fidelity.) Simnegar's approach is unusual. For companies in the S&P 500 that he likes, he'll own them all at the same overweight above the index weighting, targeting 50 to 80 basis points. But when a firm in the index doesn't meet his standards, he won't own it at all. Thus, it's not surprising to see many of the stocks that populated Feingold's portfolios gone from the most recent versions. Simnegar says that, in particular, many energy and financials names got the boot; in his view, they don't have sufficiently sustainable growth prospects. Among the S&P 500's more prominent stocks, also missing--besides the big banks--are consumer-products and healthcare heavyweights Johnson & Johnson JNJ, Procter & Gamble PG, Merck MRK, and Pfizer PFE. Neither Coca-Cola KO nor PepsiCo PEP make the cut, either. But Simnegar isn't totally contrarian: At the top of this portfolio lie the popular tech and Internet giants Microsoft MSFT, Apple AAPL, Amazon.com AMZN, Alphabet GOOG, and Facebook FB, all overweighted from their already-hefty index weightings. He likes several real-estate firms, too. Index-based, but not index-tracking. Sammy Simnegar has an unusual approach. When he likes companies in the S&P 500, he'll overweight every one of them by roughly 50 to 80 basis points. (He rebalances weekly to maintain the overweightings.) If Simnegar doesn't like a company, he won't own it at all, even if it is a major index component, except when one or two at the top have huge index weights. In those cases he's willing to own a half-weight.

He looks for high-quality growth firms, especially those poised to benefit from "mega-trends," such as digitization and increasing middle-class consumption. He focuses on return on equity and free cash flow and wants firms with rising earnings per share, dominant positions in their field, and strong balance sheets. He pays attention to valuation but will pay market prices or above for firms he considers stellar choices. Simnegar says he does not expect to own many non-U.S. stocks here despite his experience running international-stock funds.

This strategy has worked well at Fidelity International Capital Appreciation FIVFX and Fidelity Emerging Markets FEMKX, but it's the first time he has applied it to a U.S. equity fund. It requires exceptional ability to execute, tweak, and stick with during rough spots. It's unlikely other managers could easily adopt it successfully. Thus, the fund gets an Average Process rating. Core A new manager, with a new strategy. Fidelity Magellan's experienced, successful manager and reasonable costs earn it a Morningstar Analyst Rating of Bronze for both share classes, even though the new manager's approach has not before been applied to a U.S.-focused fund.

Much has changed here. Sammy Simnegar, who became this fund's comanager in February 2019, took over as sole manager when Jeff Feingold retired at the end of 2019. (There was a gradual transition, and the late-2019 portfolios were essentially Simnegar's.) This marks the first time he has managed a U.S.-focused portfolio, but he has run foreign-stock mandate Fidelity International Capital Appreciation FIVFX since 2008 and Fidelity Emerging Markets FEMKX from 2012 until last year. His record is impressive. International Capital Appreciation, which he still runs, sits in the top decile of the foreign large-growth Morningstar Category for the 10-year period through Feb. 12, 2020. On the emerging-markets strategy, he started relinquishing control in February of 2019 as he transitioned off it: From Oct. 15, 2012, through Jan. 31, 2019, that fund achieved a 5.3% annualized return, far ahead of the MSCI Emerging Markets Index and the diversified emerging-markets category average.

This has become a quite different fund under Simnegar's direction. Simnegar uses an unusual approach. When he likes companies that are in the S&P 500, he overweights all of them by roughly the same amount, about 50 to 80 basis points. When he finds a company unappealing, he won't own it at all (with rare exceptions at the very top). He has sold many of Feingold's stocks, especially in the energy and financials sectors, while adding communications firms. It's the same process SImnegar has used with such success at his foreign funds, and while there's no guarantee it will produce the same results here, it's reassuring that he has always owned a substantial chunk of U.S. stocks in those funds. Thus, this strategy has solid prospects. 2146 2146 Robby Greengold, CFA Robby Greengold, CFA Fidelity earns an Above Average Parent rating because of its ability to stay ahead of its competition.

The firm's successful stock-picking mutual funds fueled its rise to prominence, and it has adapted well to investor preferences that have shifted markedly over the past two decades. Index funds and ETFs have garnered most of the industry's flows as money has gushed from actively managed products--Fidelity's included. Yet overall, the asset management division has continued to achieve positive organic growth by introducing or maintaining aggressive pricing on its own suite of passively managed funds and expanding its menu of client-demanded investment structures, such as managed accounts and collective investment trusts. These moves are made possible by the firm's strong distribution network, scale, established brand, and willingness to tolerate losses on some products in pursuit of broader strategic objectives.

Fidelity continues to invest heavily in its active managers' analytical and technological resources. It is home to a handful of the industry's most talented equity managers and boasts a topnotch fixed-income division. Across asset-class teams, elevated levels of turnover within its leadership ranks bear watching. Overall, though, the firm has served fundholders well through its competitive capabilities and costs. Competitive on several fronts. 2020-01-13T10:52:00 2020-01-13T16:52:00Z Although this fund's past performance isn't relevant, the manager's history is. When a new manager takes over a strategy and makes a major shift in approach, the strategy's past performance becomes much less relevant to its future prospects. That's the situation here. Longtime manager Jeff Feingold retired at the end of 2019. Sammy Simnegar, who had been named comanager on Feb. 22, 2019, officially took over as sole manager at the start of 2020 and has changed its approach.

But there's a history to examine. Since 2008, Simnegar has run Fidelity International Capital Appreciation FIVFX, and from 2012 to October 2019 he also ran Fidelity Emerging Markets FEMKX. Although those are foreign-focused funds--he has never before managed a U.S.-focused fund--his record is relevant because he's using a similar strategy here, and he owned many U.S. stocks in those funds. It's an impressive record. Fidelity International Capital Appreciation, which he still runs, is in the 4th percentile of the foreign large-growth category for the 10-year period through Feb. 12, 2020. On the emerging-markets fund, he started relinquishing control in February of 2019: From Oct. 15, 2012, through Jan. 31, 2019, that fund achieved a 5.3% annualized return, far ahead of the MSCI Emerging Markets Index and the diversified emerging-markets category average, which posted gains of 3.2% and 2.5%, respectively. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's second-cheapest quintile. Based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Bronze. FOUSA00CGP A new manager, with a new strategy. Fidelity Magellan's experienced, successful manager and reasonable costs earn it a Morningstar Analyst Rating of Bronze for both share classes, even though the new manager's approach has not before been applied to a U.S.-focused fund.

Much has changed here. Sammy Simnegar, who became this fund's comanager in February 2019, took over as sole manager when Jeff Feingold retired at the end of 2019. (There was a gradual transition, and the late-2019 portfolios were essentially Simnegar's.) This marks the first time he has managed a U.S.-focused portfolio, but he has run foreign-stock mandate Fidelity International Capital Appreciation FIVFX since 2008 and Fidelity Emerging Markets FEMKX from 2012 until last year. His record is impressive. International Capital Appreciation, which he still runs, sits in the top decile of the foreign large-growth Morningstar Category for the 10-year period through Feb. 12, 2020. On the emerging-markets strategy, he started relinquishing control in February of 2019 as he transitioned off it: From Oct. 15, 2012, through Jan. 31, 2019, that fund achieved a 5.3% annualized return, far ahead of the MSCI Emerging Markets Index and the diversified emerging-markets category average.

This has become a quite different fund under Simnegar's direction. Simnegar uses an unusual approach. When he likes companies that are in the S&P 500, he overweights all of them by roughly the same amount, about 50 to 80 basis points. When he finds a company unappealing, he won't own it at all (with rare exceptions at the very top). He has sold many of Feingold's stocks, especially in the energy and financials sectors, while adding communications firms. It's the same process SImnegar has used with such success at his foreign funds, and while there's no guarantee it will produce the same results here, it's reassuring that he has always owned a substantial chunk of U.S. stocks in those funds. Thus, this strategy has solid prospects. 2146 2146 Robby Greengold, CFA Robby Greengold, CFA Fidelity earns an Above Average Parent rating because of its ability to stay ahead of its competition.

The firm's successful stock-picking mutual funds fueled its rise to prominence, and it has adapted well to investor preferences that have shifted markedly over the past two decades. Index funds and ETFs have garnered most of the industry's flows as money has gushed from actively managed products--Fidelity's included. Yet overall, the asset management division has continued to achieve positive organic growth by introducing or maintaining aggressive pricing on its own suite of passively managed funds and expanding its menu of client-demanded investment structures, such as managed accounts and collective investment trusts. These moves are made possible by the firm's strong distribution network, scale, established brand, and willingness to tolerate losses on some products in pursuit of broader strategic objectives.

Fidelity continues to invest heavily in its active managers' analytical and technological resources. It is home to a handful of the industry's most talented equity managers and boasts a topnotch fixed-income division. Across asset-class teams, elevated levels of turnover within its leadership ranks bear watching. Overall, though, the firm has served fundholders well through its competitive capabilities and costs. Competitive on several fronts. 2020-01-13T10:52:00 2020-01-13T16:52:00Z Although this fund's past performance isn't relevant, the manager's history is. When a new manager takes over a strategy and makes a major shift in approach, the strategy's past performance becomes much less relevant to its future prospects. That's the situation here. Longtime manager Jeff Feingold retired at the end of 2019. Sammy Simnegar, who had been named comanager on Feb. 22, 2019, officially took over as sole manager at the start of 2020 and has changed its approach.

But there's a history to examine. Since 2008, Simnegar has run Fidelity International Capital Appreciation FIVFX, and from 2012 to October 2019 he also ran Fidelity Emerging Markets FEMKX. Although those are foreign-focused funds--he has never before managed a U.S.-focused fund--his record is relevant because he's using a similar strategy here, and he owned many U.S. stocks in those funds. It's an impressive record. Fidelity International Capital Appreciation, which he still runs, is in the 4th percentile of the foreign large-growth category for the 10-year period through Feb. 12, 2020. On the emerging-markets fund, he started relinquishing control in February of 2019: From Oct. 15, 2012, through Jan. 31, 2019, that fund achieved a 5.3% annualized return, far ahead of the MSCI Emerging Markets Index and the diversified emerging-markets category average, which posted gains of 3.2% and 2.5%, respectively. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's cheapest quintile. Based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Bronze. FOUSA06TY4 LiveFidelity Magellan Commingled Pool