Ford followed the decision by Microsoft 401(k) plan administrators to abandon Fidelity Magellan fund (FMAGX). The fund has already lost over 50% of its net assets since 1999. Will it bleed to death before the new manager can enhance its performance?

In a move that deals another blow to one of Fidelity Investments' largest funds, Ford Motor Co. will drop the Fidelity Magellan Fund from the 401(k) retirement plan it offers to employees.

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Total assets in Ford's 401(k) plan at the end of 2005 stood at $11.79 billion, of which 22.5% was in company stock, says David Kudla, chief executive at Mainstay Capital Management LLC of Grand Blanc, Mich., which provides investment advice to hundreds of workers in Ford's 401(k) plans. The last significant change that Ford made to its 401(k) plan was in 2002 when, in an effort to streamline its plan, it went from offering 61 investment options to 36, Mr. Kudla says. But the plan's allocation in retail mutual funds makes up less than half of total assets, so the impact on Magellan -- given its size -- is probably not going to be that much, he says.

Ford's move comes at a time when investors have been leaving Magellan in droves as the fund's performance has suffered in recent years. Microsoft Corp., for example, dropped the Fidelity Magellan Fund from its 401(k) plan in August 2005.