Unless you specifically ask Fidelity to withdraw money from your 401(k), I would certainly expect "sell" to mean sell the investment but leave the proceeds in cash inside the 401(k). Once the trade for the "sell" side settles (used to be 3 days, may be sooner now but I don't think so), then you can go in and do the "buy" transaction using the cash inside the 401(k) to buy the more conservative fund.
In some places, you can do an "exchange", which does the "sell" and "buy" transactions in one step. You might look around to see if that option is available on their website.
An actual withdrawal from your 401(k) would be a different animal, and would be obvious as they would probably warn you that it was a taxable event and probably bringing up options for federal income tax withholding.
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