May 23, 2001
Mutual Funds
Fidelity Magellan Fund Slashes Tech Holdings
By JOHN HECHINGER
Staff Reporter of THE WALL STREET JOURNAL
BOSTON -- Fidelity Investments' $87 billion Magellan Fund has slashed holdings of fallen technology and Internet stars, but could end up buying in the tech sector again this year if manager Robert Stansky sees evidence of business improvement.
Those disclosures, contained in Fidelity Magellan Fund's annual report filed with the Securities and Exchange Commission, were accompanied by a brief commentary in which Mr. Stansky described himself as "optimistic" about the stock market. But the Magellan manager also said he regretted that he didn't move more into utilities and other defensive stocks that might have improved his investment loss of 24.2% in the fund's year ended March 31.
Overall, the percentage of Magellan invested in information-technology stocks fell to 11.6% as of March 31 from 28.5% six months before. At the same time, Mr. Stansky bet more heavily on financial stocks, including new holdings First Union Corp., Goldman Sachs Group Inc. and Merrill Lynch & Co. He also added health-care holdings, such as biotech leader Amgen Inc.
During the second half of the year ended March 31, Mr. Stansky sold a third of his shares of Cisco Systems Inc. and more than half his holdings of data-storage leader EMC Corp., which dropped out of the fund's top 10 holdings. He also unloaded many of the speculative Internet-related holdings he had scooped up more than a year ago near the height of the Web craze, and purged many of what he described as "early-stage tech companies," such as business-to-business marketplace-software firm Ariba Inc. and Phone.com Inc., whose values have been decimated in the Net rout.
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As a result, Mr. Stansky, who is credited with turning around the performance of the huge fund, has an enviable three-year record -- an annualized return of 9.2% through Monday -- 2.3 percentage points better than the Standard & Poor's 500-stock index and in the top 20% of similar managers, according to tracker Morningstar Inc.
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