To paraphrase Donald Trump, Morgan Asset Management has essentially told bond fund manager James Kelsoe, "You're fired!"

In what The Wall Street Journal is characterizing as "bond broadside" - and news that MME first reported in January - Kelsoe has been removed as the manager of seven of the firm's bond funds, replaced with outside specialists.

The two fund laggards have decreased 70% and 73% in the past 12 months due to junk mortgage-backed and collateralized debt obligation holdings. They are the Regions Morgan Keegan Select High Income Fund and the Regions Morgan Keegan Select Intermediate Bond Fund, respectively. Today, the former fund, which had more than $1 billion in assets in July, is down to a mere $104 million.

The new manager, along with new boards of directors, will be Hyperion Brookfield Asset Management, subject to shareholder approval.

Before his removal, Kelsoe wrote letters and e-mails to investors to try and assuage their concerns. In one, he citied the lack of liquidity and "truly unprecedented times."

(c) 2008 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

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