Fund Times: Changes at Vanguard and Fidelity

 Vanguard Extended Market Index Fund (VEXMX) will switch the index it tracks from the Wilshire 4500 Index to the new S&P Completion Index. According to Vanguard's press release, the firm prefers the new S&P index to the fund's current benchmark because the S&P index adjusts for float (i.e., the number of shares available on the open market); includes companies that are based overseas as long as their stock, shareholders, and operations are predominantly in the United States; and excludes limited partnerships. The change, which Vanguard expects to implement between May 31, 2005, and December 31, 2005, shouldn't result in any meaningful capital gains to shareholders.

The move makes sense because the S&P Completion Index is specifically designed to encompass stocks that are not included in the S&P 500 Index, and many investors hold Vanguard's Extended Market Index alongside  Vanguard 500 Index (VFINX).

More Manager Changes at Fidelity Latin America
Claudio Brocado left the helm of  Fidelity Latin America (FLATX) on April 28, 2005, which he had managed since January 2003. The newly appointed managers, Brent Bottamini and Adam Kutas, have come up the ranks at Fidelity as analysts, and will take his place. Prior to Brocado, Margaret Reynolds was in charge, but her tenure as the fund's manager lasted only 18 months. Smaller Fidelity funds generally have a fair amount of management turnover, but Brocado had a good run over his short tenure. The new folks running the fund have no record managing public money, so we're not delighted by this change.

Third Time's a Charm at Delaware Fund
Regular readers will recognize this change, as it's the third SEC notice since April 15, 2005, about the inevitable management shuffle at Delaware Investments. In its newest SEC filing dated May 3, 2005, Delaware finally confirmed that several managers it hired away from Transamerica will run  Delaware Select Growth . Specifically, management responsibilities would fall to Jeffrey S. Van Harte (who previously ran Transamerica Large Cap Growth), with comanagers Christopher J. Bonavico, Daniel J. Prislin, Patrick G. Fortier, and Kenneth F. Broad offering extra support.

We think that the Transamerica team has potential to improve Delaware's growth offerings.

Columbia Young Investor Gets New Leaders
In a May 2, 2005, supplement to the prospectus of  Columbia Young Investor , Columbia announced that Colin Moore, the firm's head of equities and recent manager of the fund, will turn over the reins to two new managers, Robert A. Unger and Emil A. Gjester. These two have done a good job running their previous charge,  Columbia Strategic Investor (CSVFX), in the past, so we're cautiously optimistic that shareholders may benefit from this change.

New Fund Option for Catholics
Schwartz Investment Counsel announced a new fund, Ave Maria Rising Dividend AVEDX, in a new prospectus released on May 5, 2005. The new fund will invest in 30 to 40 companies of any size that have a strong history of raising their dividends. This is one of the first funds to use a new index, Standard & Poor's "Dividend Aristocrats," which look for companies that have increased their dividend every year for the past 25 years. The fund's fees will be capped at 1.25%, which will take a bite out of its income stream.

Fidelity Makes Changes at the Top
On May 3, 2005, Fidelity Investments made some changes at the top of its mutual fund group. Abigail Johnson, who headed Fidelity Management & Research Company (FMRCo), is moving to head its human resources group, Fidelity Employer Services Company.

Fidelity said that vice chairman and chief operating officer Robert L. Reynolds will oversee a new FMRCo management team led by Stephen P. Jonas, who previously served as chief financial officer of FMRCo.

The firm also moved Dwight D. Churchill to head up its stock-funds group, where performance has been middling of late. It's an interesting move, as Churchill had played a big role in turning around Fidelity's fixed-income group. Once an embarrassment, the bond group is now the shining jewel in Fidelity's funds group.

On related news, Boyce I. Greer was named head of equity research/asset allocation. Greer is managing director of Fidelity Strategic Advisers Inc. and previously headed Fidelity's money market fund group. And Walter C. Donovan was named head of high income/fixed-income/global equity trading. Donovan has been serving as senior vice president and high-income group leader within FMRCo since 2002.

It's unclear at this point what changes the new management team will bring to Fidelity's mutual funds. There have already been signs that Fidelity was trying new tactics to more effectively handle its giant asset base in domestic-stock funds, such as naming two managers to run a single fund.