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BOSTON -- At Fidelity Investments there's one big question right now: When is this state of perpetual revolution going to end?

Because lately the conservative, family-controlled Boston firm has seemed a little more like the old Chinese Communist Party during the Cultural Revolution, with Chairman Ned Johnson, 77, playing the mercurial, mysterious and all-powerful role of Chairman Mao.

Almost every other month, big shots mysteriously disappear, while others suddenly return from Outer Mongolia and are restored to favor.

The latest is Rodger Lawson. He's one of old guard who worked with Johnson back in the 80s. He was suddenly called back to the fold in July and given the role of president.

Lawson quickly unleashed a sweeping reorganization of the immense and byzantine firm, which employs more than 40,000 people and manages more than $1.3 trillion in assets.

Yet the firm hasn't even settled down from the big revolution launched two years ago by Lawson's predecessor, Bob Reynolds. That time around, Reynolds and fellow firm veteran Stephen Jonas sought to turn around the struggling mutual-fund operation with broad changes in everything from the way fund managers were hired and promoted to the way Fidelity conducted its research.

Where are Reynolds and Jonas now? Gone.

Jonas quit suddenly in January.

Reynolds, who had been Chairman Ned's right hand man for years, left abruptly in April. That was less than a year after he had, bizarrely, angled publicly for the job of NFL commissioner.

The two men had been seen as possible successors to Chairman Ned in the inconceivable event that the old man, now 77, should ever die.

Long-time Fidelity watchers said their departure was great news for another rising star, 53-year old Ellyn McColgan, the head of Fidelity's brokerage business.

Johnson even encouraged the speculation by promoting McColgan when Reynolds left, broadening a role in which she answered only to him. fmagx

Three months later, she, too, was out, after Ned apparently reversed himself and effectively demoted her by bringing in Lawson from outside.

To lose two heirs-apparent might be considered a misfortune. To lose three begins to look like carelessness... or deliberate policy.

Above all hovers the $25 billion question: What becomes of Abby?

Fidelity has been run by a member of the Johnson dynasty since it was founded in the middle of the last century. But in recent years, questions have grown about whether Ned is willing to hand over the reins, in due course, to his eldest daughter and heir, 45-year-old Abigail, a senior executive at the firm.

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Two years ago, in the summer of 2005, it didn't look good. He removed her as head of the mutual-fund business, shuffling her sideways instead to run the lower-profile employee services division.

And he brought in Stephen Jonas to turn around the division she had run for four years. (It was on Abby's watch that FMR had first fallen behind



American Funds

in stock and bond mutual fund assets.)

Shortly afterwards, Anne Crowley, Ned Johnson's spokesman, told me pointedly: "Neither Abby, nor Ned, has ever said that Abby is the heir apparent," Crowley said, adding, "It is not something she or Ned has ever stated."

Speculation about Abby rose further some months later, after she transferred some of the family's stock from her control back to her father's.

But if Abby's star were obviously waning two years ago, Ned's view today is very different. In January he promoted Abby to vice-chairman. Notably he also put another of his kids -- Edward IV -- on the seven-person board of directors.

Adding to the drama are reports that Abby, 45 and a mother of two, has more recently battled a major health issue. Fidelity declined to comment.

If all that seems confused, and confusing, you should see what's happened to Bob Stansky.

The manager of the giant

(FMAGX) - Get Fidelity Magellan Report

Magellan fund was the most prominent scalp of the big shake-up launched by Bob Reynolds and Stephen Jonas in the mutual-fund business two years ago. He was dramatically ousted, after years of poor performance, shortly after Reynolds and Jonas took the reins.

Today? Jonas and Reynolds are gone and Fidelity is launching a new suite of team-managed funds, under the auspices of... Bob Stansky.

Johnson himself says he swears by the Japanese principle of "kaizen," or constant change. No kidding. But it remains to be seen if all the turmoil of the past few years is invigorating his many underlings, or just annoying them.

Mutual-fund sales continue to lag big rivals badly. Through the end of September, reports the Financial Research Corp., sales of stock and bond funds, net of redemptions, totalled just $4.1 billion.

The figure at Vanguard and American Funds? More than $50 billion each.

In keeping with TSC's editorial policy, Brett Arends doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Arends takes a critical look inside mutual funds and the personal finance industry in a twice-weekly column that ranges from investment advice for the general reader to the industry's latest scoop. Prior to joining in 2006, he worked for more than two years at the Boston Herald, where he revived the paper's well-known 'On State Street' finance column and was part of a team that won two SABEW awards in 2005. He had previously written for the Daily Telegraph and Daily Mail newspapers in London, the magazine Private Eye, and for Global Agenda, the official magazine of the World Economic Summit in Davos, Switzerland. Arends has also written a book on sports 'futures' betting.