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To: Carl R. who wrote (7411)	4/16/1999 11:59:00 PM
From: flickerful	Respond to of 17679

Fidelity's Magellan Pares Technology Holdings By Al Yoon Friday April 16 5:05 PM ET BOSTON (Reuters) - In a major strategy shift, the nation's largest mutual fund last quarter cut back on big technology investments that helped fuel top-tier returns and contributed to the stock market's heady rise above 10,000. Fidelity Investments' flagship Magellan fund revealed Friday that it pared holdings of both Intel Corp. (Nasdaq:INTC - news) and Lucent Technologies Inc. (NYSE:LU - news) and beefed-up its stakes in financial giant Citigroup Inc. and media conglomerate Time Warner Inc. (NYSE:TWX - news) . Magellan's assets totaled $90.7 billion at the end of March. The move, reported in the fund family's monthly report, shows that Magellan manager Robert Stansky believes some of the handful of huge stocks that led the market's recent run-up are overvalued, said David O'Leary, president of Alpha Equity Research Inc. ''They're basically going from overweighting technology stocks to underweighting,'' O'Leary said. ''They bought them right last fall, they really helped their performance a lot in the fourth and first quarters and they now view them as too high.'' Magellan's technology holdings dipped to 20.9 percent as of March 31, down from a peak of 25.8 percent at the end of 1998. The decline represents nearly $4 billion in market value, according to Jim Lowell, editor of the Fidelity Investor newsletter. Separately, Fidelity said its $41 billion Contrafund trimmed its technology sector holdings to 18.9 percent at the end of March from 26.3 percent in January. Magellan, which is closed to most new investors, outperformed the S&P500 Index in 1998, with a 33.63 percent return. The S&P500 Index returned 28.7 percent in 1998. It continued to outperform the market index. Magellan posted gains of 9.7 percent, while the S&P500 was up 7.62 percent through April 15. Because of its size and its legacy of star managers, Magellan's moves are closely watched by investors and analysts. Stansky's predecessor's include fund gurus Peter Lynch and Jeffrey Vinik. ''From a guy who is one of Wall Street's best technology buyers and sellers, this is a cautionary sign,'' said Lowell. ''Stansky has taken his foot off the gas.'' Tight competition and an inability to raise prices have cut into earnings at computer firms, a trend analysts said is likely behind Stansky's strategy. Investors grew worried about Intel's revenues this week after Compaq Computer Corp. (NYSE:CPQ - news), Intel's largest customers, said it would report sales far short of analysts' expectations. Magellan was joined by Fidelity's Contrafund and Growth and Income fund in trimming tech stocks. Fidelity's biggest funds also added energy stocks, which like financial services firms, tend to have more ''reasonable'' evaluations, O'Leary said.