MFS, Fidelity Funds Among Hardest-Hit by Cisco Systems Drop After Earnings

Mutual funds run by Fidelity Investments and MFS Investment Management were among the hardest-hit by today’s declines in Cisco Systems Inc., according to research firm Morningstar Inc.

The $179 million MFS Technology Fund had 7 percent of assets in Cisco as of Aug. 31, the most among all actively managed stock funds, Morningstar data show. The $17.3 million Fidelity Advisor Communications Equipment Fund had 6.7 percent in Cisco as of Sept. 30, and the $447 million Fidelity Select Communications Equipment Portfolio held 6.6 percent. They were the third and fourth most-affected funds.

Cisco, the world’s largest maker of computer-networking equipment, tumbled 16 percent in Nasdaq trading today after its profit and sales forecast fell short of analysts’ estimates because of increased competition and lower government spending. The drop, its biggest one-day decline in 16 years, wiped out Cisco’s gains since Sept. 2.

Cisco, based in San Jose, California, declined $3.97 to $20.52 at 4:29 p.m. in New York.

The MFS fund, if it retained its holding, stood to lose about $2 million on the stock, or 1.1 percent of assets. Before today the fund had gained 18 percent this year, beating 62 percent of technology-focused funds, according to data compiled by Bloomberg.

John Reilly, a spokesman for MFS, said the company doesn’t comment on specific holdings. MFS, which managed $190 billion as of Aug. 31, is a unit of Toronto-based Sun Life Financial Inc.

Rydex Fund

The $187 million Rydex Internet Fund, with about 6.9 percent in Cisco as of Sept. 30, had the second-highest weighting, according to Chicago-based Morningstar. The fund was up 23 percent this year, beating 91 percent of competing funds, Bloomberg data showed.

The $156 billion Growth Fund of America, managed by Los Angeles-based Capital Group Cos.’ American Funds unit, owned the largest number of Cisco shares, or 76.2 million as of June 30. That represented 1.2 percent of the fund’s assets. Chuck Freadhoff, a spokesman for the firm, declined to comment.

Fidelity Advisor Communications rose 23 percent this year, ahead of 83 percent of rivals, while Fidelity Select Communications gained 22 percent, beating 67 percent of competitors.

Fidelity, the world’s second-largest mutual fund company, managed $1.24 trillion as of July 31. Adam Banker, a spokesman for the Boston-based firm, declined to comment.

A call to Rydex in Rockville, Maryland, wasn’t immediately returned.

To contact the reporter on this story: Christopher Condon in Boston at ccondon4@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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