Colling, Gilbert, Wright & Carter Securites Fraud

Last month, Fidelity Investments was sued in U.S. District Court in Boston on behalf of investors who have suffered losses in the Fidelity Ultra-Short bond fund (Ticker: FUSFX). Like several of its well-publicized peer funds, the Fidelity managers invested in risky and untested mortgage-backed securities.

Much like similar actions against Charles Schawb and Morgan Keegan, the class action complaint alleges the Boston-based mutual-fund giant was "misleading" in promoting the fund as a safe alternative to cash and that the company didn't adequately disclose risks to investors.

For its part, Fidelity has said the "lawsuit is without merit" and that the company intends to "defend the case vigorously."

Fidelity's Ultra-Short bond fund is one of several fixed-income funds that have come under fire and seen investor defections in recent months after losing money in securities tied to subprime mortgages, which are home loans given to borrowers with shaky credit. In similar actions nationwide, investors have sued Charles Schwab Corp. for deep losses in its Schwab YieldPlus fund.

Fidelity's stated objective for the Fidelity Ultra-Short bond fund is to seek a "high level of current income consistent with the preservation of capital." In large part due to its mortgage holdings, the fund is down 6.6% for the year, trailing its benchmark by 7.6%. While these losses are not as dramatic as the Morgan Keegan bond funds (down 80% in the last year) and Charles Schwaby (lost approx. 35% in the past 6 months), the losses sustained by the Fidelity Ultra-Short bond fund are still unfathomable to those investors who were sold this fund as an alternative to money market and a safe haven.

If you have lost money in the Fidelity Ultra-Short bond fund, please email or call (866) 352-3476. Thank you.