Fidelity Investments of Boston has created a new index fund of funds. The new fund, the Fidelity Four-in-One Index Fund, invests in the Spartan Market, the Spartan Extended Market, the Spartan International and the Fidelity U.S. Bond index funds. The fund will invest 55 percent of assets in the Spartan Market Index Fund, which mimics the Standard & Poor's 500 Index, and split remaining assets equally between the three other funds.

Fidelity is introducing the new fund to the market with advertisements that tell investors Fidelity's index funds "can help you track the market - But our actively managed funds can help you do even better."

Why would Fidelity want to introduce the new fund while simultaneously telling investors its actively managed funds offer superior performance?

Eric Kobren, executive editor of Fidelity Insight of Boston said stressing the relevance of Fidelity's actively managed funds is important to the firm, since "they employ 400 investment professionals whose life it is to manage funds." Fidelity is probably introducing the Four-in-One Index Fund to take advantage of the "phenomenal cash flow into index funds," said Kobren

David O'Leary, president of Alpha Equity Research of North Hampton, N.H., an institutional broker that tracks Fidelity, does not view Fidelity's ad campaign for its new index fund as a conflicting message. Fidelity's index funds are well-suited for conservative investors, while its actively-managed funds serve the tastes of more aggressive investors, he said. And right now, Fidelity can tout the performance of both, he said.

A Fidelity spokesperson said the ad is meant to "recognize that all investors are different."

"What we want to do here is provide . . . options," the spokesperson said.

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