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To: Dealer who wrote (15787)	11/14/2000 6:51:57 AM
From: Dealer	Respond to of 65232

Magellam Fund and Techs--Fidelity's Magellan Lags Peers Monday November 13 7:55 PM ET BOSTON (Reuters) - Fidelity's Magellan fund, the world's second largest mutual fund, underperformed industry benchmarks in the past six months. Total returns at Magellan fell 4.52 percent in the six months to Sept. 30 compared with a decline of 3.60 percent in the Standard & Poor's 500 index and a decline of 2.73 percent for similar growth funds tracked by Lipper Inc, according to a filing by Fidelity with the Securities and Exchange Commission (news - web sites). Magellan, which had total net assets of $103.6 billion as of Sept. 30, is the largest actively-managed mutual fund and the second-largest in the world behind the Vanguard 500 Index Fund. Despite the fund's decline, Magellan portfolio manager Robert Stansky spared the fund even worse losses by cutting back on technology shares in the period. Magellan reduced its holdings in the technology sector to 29.1 percent of the fund's net assets as of Sept. 30 compared with 35.2 percent six months ago, according to the portfolio's semi-annual report. Even so, Magellan was unable to sidestep technology losses entirely. The technology-packed Nasdaq Composite Index(^IXIC - news) was down nearly 20 percent in the period as companies like Intel Corp.(NasdaqNM:INTC - news), Microsoft Corp.(NasdaqNM:MSFT - news), Cisco Systems Inc.(NasdaqNM:CSCO - news) and Texas Instruments Inc. (NYSE:TXN - news) took a beating. Cisco was Magellan's third-largest holding, representing 2.9 percent of the portfolio. The good news, though, was that Magellan owned less of many of those companies than the S&P 500. The fund also did well on its investments in tech stocks such as EMC Corp. (NYSE:EMC - news), Sun Microsystems Inc.(NasdaqNM:SUNW - news) and Juniper Networks (NasdaqNM:JNPR - news). But since Sept. 30, those stocks have taken significant falls, which could take a toll on the fund's performance in the upcoming six-month period. Particularly damaging in the latest period was a big bet on Home Depot, which dropped 21.7 percent from April to September. The stock was Magellan's fifth-largest holding, representing 2.4 percent of the portfolio compared with just 1 percent for the S&P 500. Stansky said he believed in the solid, long-term growth potential for the company. But the stock fell as interest rates rose and retail spending slowed, prompting investors to worry about weaker demand for building products. Stansky boosted the fund's investments in healthcare and finance, but still trailed in comparison with the S&P 500's weighting in those sectors. ``During the period, many of the market's traditional defensive stocks in sectors such as health care, consumer non-durables, utilities and finance did well,'' Stansky said in remarks published in the portfolio's semi-annual report. ``Underweighting in the latter three groups relative to the index hurt the fund's performance,'' he said. One industry expert said it looked like Stansky had made some bad calls but added that sharp criticism might be out of place. ``He seems to be a shrewd investor,'' said independent fund industry consultant Geoff Bobroff. ``I don't see this as any significant black mark other than the fact people see Magellan as a proxy for Fidelity.'' Year to date, the fund is down 6.53 percent, but the widely-watched fund has been a strong performer. In 1998, Magellan gained 33.63 percent and in 1999 it rose 24.05 percent, beating the S&P both times. Its one-year return was 16.11 percent compared to the S&Ps 13.28 percent and over the last 10 years, it returned 549.58 percent, outpacing the S&P's 490.99 percent.