(2_FIDELITY_LOGOS)FIDELITY
MAGELLAN(REGISTERED TRADEMARK)
FUND
ANNUAL REPORT
MARCH 31, 1998
CONTENTS
PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.
PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.
FUND TALK 6 THE MANAGER'S REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.
INVESTMENT CHANGES 10 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS.
INVESTMENTS 11 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.
FINANCIAL STATEMENTS 30 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 34 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 40 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 41
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION
OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS
IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL AMOUNTS
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888 FOR A
FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
To reduce expenses and demonstrate respect for our environment, we
have initiated a project through which we will begin eliminating
duplicate copies of most financial reports and prospectuses to most
households, even if they have more than one account in the fund. If
additional copies of financial reports, prospectuses or historical
account information are needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
In the first quarter of 1998, the U.S. stock and bond markets
responded differently to lingering uncertainty over the direction of
the U.S. and global economies. On the one hand, the U.S. stock market
soared to record heights as corporate earnings proved to be stronger
than expected and investors shrugged off concerns about the effects of
economic difficulties in Asia. On the other hand, two factors tempered
returns in the bond market. First, interest-rate levels were generally
positive, but were low enough to encourage a flood of new issuance
that dampened performance. Second, there were concerns that continued
economic strength might lead to eventual inflation, even though
inflation indicators remained benign during the quarter.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. If you have a short investment time horizon, you might want to
consider moving some of your investment into a money market fund,
which seeks income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that there is no assurance that a money market fund will
achieve its goal of maintaining a stable net asset value of $1.00 per
share, and that these types of funds are neither insured nor
guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are
available 24 hours a day, seven days a week to provide you the
information you need to make the investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MARCH 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY MAGELLAN 45.41% 149.00% 485.58%
FIDELITY MAGELLAN (INCL. 3.00% SALES CHARGE) 41.05% 141.53% 468.02%
S&P 500 (REGISTERED TRADEMARK) 48.00% 174.71% 466.82%
GROWTH FUNDS AVERAGE 42.90% 137.63% 376.43%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare the fund's returns to the performance of the
Standard & Poor's 500 Index - a widely recognized, unmanaged index of
common stocks. To measure how the fund's performance stacked up
against its peers, you can compare it to the growth funds average,
which reflects the performance of mutual funds with similar objectives
tracked by Lipper Analytical Services, Inc. The past one year average
represents a peer group of 858 mutual funds. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MARCH 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY MAGELLAN 45.41% 20.02% 19.33%
FIDELITY MAGELLAN (INCL. 3.00% SALES CHARGE) 41.05% 19.29% 18.97%
S&P 500 48.00% 22.40% 18.94%
GROWTH FUNDS AVERAGE 42.90% 18.54% 16.42%
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by annualizing each fund's total return, then taking an
arithmetic average. This may produce a slightly different figure than
that obtained by averaging the cumulative total returns and
annualizing the result.)
$10,000 OVER 10 YEARS
Magellan S&P 500
00021 SP001
1988/03/31 9700.00 10000.00
1988/04/30 9873.76 10111.00
1988/05/31 9847.37 10198.97
1988/06/30 10520.43 10667.10
1988/07/31 10452.24 10626.56
1988/08/31 10120.11 10265.26
1988/09/30 10544.63 10702.56
1988/10/31 10764.58 11000.09
1988/11/30 10619.41 10842.79
1988/12/31 10828.07 11032.54
1989/01/31 11706.51 11840.12
1989/02/28 11516.03 11545.30
1989/03/31 11858.89 11814.31
1989/04/30 12454.97 12427.47
1989/05/31 13112.55 12930.78
1989/06/30 12998.79 12857.08
1989/07/31 14090.93 14018.07
1989/08/31 14459.53 14292.83
1989/09/30 14709.81 14234.22
1989/10/31 14247.93 13903.99
1989/11/30 14482.28 14187.63
1989/12/31 14572.90 14528.14
1990/01/31 13633.02 13553.30
1990/02/28 13913.04 13728.13
1990/03/31 14268.53 14091.93
1990/04/30 13908.17 13739.63
1990/05/31 15145.20 15079.25
1990/06/30 15211.03 14976.71
1990/07/31 15038.86 14928.78
1990/08/31 13565.36 13579.22
1990/09/30 12704.55 12917.91
1990/10/31 12547.58 12862.36
1990/11/30 13497.00 13693.27
1990/12/31 13915.86 14075.32
1991/01/31 14888.65 14689.00
1991/02/28 16181.41 15739.26
1991/03/31 16731.02 16120.15
1991/04/30 16792.95 16158.84
1991/05/31 17750.47 16856.90
1991/06/30 16707.42 16084.86
1991/07/31 17745.15 16834.41
1991/08/31 18290.62 17233.39
1991/09/30 18221.44 16945.59
1991/10/31 18466.24 17172.66
1991/11/30 17553.57 16480.60
1991/12/31 19625.31 18365.98
1992/01/31 19633.89 18024.38
1992/02/29 20031.49 18258.69
1992/03/31 19488.01 17902.65
1992/04/30 19776.91 18428.99
1992/05/31 19966.40 18519.29
1992/06/30 19614.71 18243.35
1992/07/31 20165.17 18989.50
1992/08/31 19727.86 18600.22
1992/09/30 19954.16 18819.70
1992/10/31 20094.84 18885.57
1992/11/30 20602.48 19529.57
1992/12/31 21001.94 19769.78
1993/01/31 21555.24 19935.85
1993/02/28 22005.21 20206.98
1993/03/31 22811.82 20633.34
1993/04/30 23035.14 20134.02
1993/05/31 23943.05 20673.61
1993/06/30 24276.95 20733.56
1993/07/31 24544.76 20650.63
1993/08/31 25988.16 21433.29
1993/09/30 26269.89 21268.25
1993/10/31 26287.28 21708.50
1993/11/30 25421.24 21502.27
1993/12/31 26180.51 21762.45
1994/01/31 27215.16 22502.37
1994/02/28 27015.62 21892.56
1994/03/31 25762.95 20938.04
1994/04/30 26021.61 21206.05
1994/05/31 25721.84 21553.83
1994/06/30 24605.84 21025.76
1994/07/31 25429.37 21715.41
1994/08/31 26633.88 22605.74
1994/09/30 25941.19 22051.90
1994/10/31 26818.60 22548.06
1994/11/30 25348.56 21726.86
1994/12/31 25706.45 22049.07
1995/01/31 25444.77 22620.81
1995/02/28 26872.47 23502.34
1995/03/31 27876.87 24195.89
1995/04/30 29173.74 24908.46
1995/05/31 29989.31 25904.05
1995/06/30 32273.58 26505.80
1995/07/31 34751.11 27384.74
1995/08/31 35052.59 27453.47
1995/09/30 35694.20 28612.01
1995/10/31 34782.03 28509.86
1995/11/30 35555.05 29761.45
1995/12/31 35172.43 30334.65
1996/01/31 35679.69 31367.24
1996/02/29 35446.51 31658.02
1996/03/31 35802.41 31962.88
1996/04/30 36031.49 32434.02
1996/05/31 36194.35 33270.49
1996/06/30 36160.51 33397.25
1996/07/31 34478.17 31921.76
1996/08/31 35348.34 32594.99
1996/09/30 36764.79 34429.44
1996/10/31 37634.96 35379.00
1996/11/30 40071.45 38053.30
1996/12/31 39282.93 37299.46
1997/01/31 41007.19 39629.93
1997/02/28 40456.79 39940.63
1997/03/31 39063.75 38299.47
1997/04/30 40807.49 40585.95
1997/05/31 43718.68 43056.82
1997/06/30 45528.83 44985.77
1997/07/31 49349.15 48565.29
1997/08/31 47153.97 45844.66
1997/09/30 49929.20 48355.57
1997/10/31 48229.06 46740.49
1997/11/30 49169.14 48904.11
1997/12/31 49728.87 49743.80
1998/01/31 50266.51 50293.96
1998/02/28 54076.95 53921.16
1998/03/31 56801.68 56682.47
IMATRL PRASUN SHR__CHT 19980331 19980408 170348 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Magellan Fund on March 31, 1988 and the current
3.00% sales charge was paid. As the chart shows, by March 31, 1998,
the value of the investment would have grown to $56,802 - a 468.02%
increase on the initial investment. For comparison, look at how the
S&P 500 did over the same period. With dividends and capital gains, if
any, reinvested, the same $10,000 would have grown to $56,682 - a
466.82% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
long-term growth and
short-term volatility. In turn, the
share price and return of a
fund that invests in stocks will
vary. That means if you sell
your shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
While the U.S. stock market's
resolve was tested repeatedly
during the 12-month period that
ended March 31, 1998, a strong
domestic economy helped stocks
post impressive gains. At the
beginning of the period, stocks
of larger companies were still
responsible for much of the
market's advance. The Standard &
Poor's 500 Index - a measure of
the U.S. stock market - returned
48.00% during this time. In August
and September, stocks of smaller
companies joined in the fun.
The Russell 2000 Index had a
12-month return of 42.01% as of
March 31. A solid U.S. economy
played a key role in stock
performance, as low inflation, low
interest rates and moderate growth
formed a favorable backdrop. But
while the U.S. economy was
chugging along nicely, economies
elsewhere were in trouble. After
several small Southeast Asian
countries devalued their currencies
in June 1997, a full-fledged
economic crisis took hold there in
late October. Markets around the
world reacted negatively,
particularly in the U.S. where the
Dow Jones Industrial Average fell
550-plus points in one trading
session. Concerns over a potential
slowdown in U.S. corporate
earnings sent investors on a "flight
to quality," as many sought shelter
in stocks of companies with
minimal international exposure.
The vibrant U.S. economy,
however, acted as a linchpin
throughout this volatility. Toward
the end of 1997 and early 1998,
investors had regained their
attraction to stocks and the Dow
was approaching the 9000-point
barrier.
An interview with Robert Stansky, Portfolio Manager of Fidelity
Magellan Fund
Q. BOB, HOW HAS THE FUND PERFORMED?
A. During the 12 months that ended March 31, 1998, the fund had a
total return of 45.41%. That beat the Lipper growth funds average,
which was 42.90%. Thus, the fund's performance relative to its peers
improved over the past year compared to the prior year.
Q. ALTHOUGH THE FUND HAD A STRONG YEAR OVERALL, THE FINANCIAL AND
ECONOMIC CRISIS IN ASIA PROMPTED A DOWNTURN IN THE U.S. STOCK MARKET
DURING THE FOURTH QUARTER OF 1997. HOW WAS THE FUND AFFECTED?
A. Investors' worries that the Asian situation would negatively affect
corporate earnings caused the prices of a number of the fund's stock
holdings to fall during the fourth quarter. In fact, almost all of the
fund's negative total return for the quarter occurred during a
relatively brief period from early November - shortly after word of
Asia's troubles became widespread - through the second week in
December. The fund's two largest sectors were among those hardest hit.
Technology stocks - which represented 15.3% of the fund at the end of
the period - suffered losses. The expectations for revenue growth
among many tech companies are tied in part to Asia, which prompted
concerns about future earnings growth. In addition, financial stocks -
especially those with overseas exposure - pulled back. Finally, a
broad "flight to quality" occurred in the fourth quarter as investors
shifted to those stocks they deemed "safe havens," such as utilities.
Magellan's underweighting in these defensive stocks relative to the
broad market is a key reason the fund had difficulty keeping up with
market averages during the fourth quarter.
Q. HOW DID YOU RESPOND?
A. As the Asian crisis unfolded, it was obvious that one direct result
would be pockets of earnings weakness over the near term, particularly
among companies with direct Asian exposure. Therefore, I did trim and
add to some positions where I saw fit, but I didn't make any dramatic
changes to the fund in the fourth quarter. Taking a longer-term view,
I've been looking closely at companies that are attempting to
capitalize on the Asian downdraft by making acquisitions in Asia that
may enhance future earnings growth. And I've increased positions in
some companies that already have made such acquisitions. In addition,
prior to the Asian crisis, I already had established positions in U.S.
companies that mainly do business domestically and whose stocks
appeared attractively priced. Two examples, Wal-Mart and Home Depot,
posted strong earnings gains in recent months.
Q. IN FACT, STOCK PRICES OVERALL, AND THE FUND IN PARTICULAR, BOUNCED
BACK STRONGLY IN THE FIRST QUARTER OF 1998. WHAT CONTRIBUTED TO THE
REBOUND?
A. Quite simply, earnings growth came in at least as strong, and in
some cases stronger, than most people expected. There was a belief
that many companies could manage through the Asian crisis due mainly
to the continued strength of the U.S. economy and, in particular, the
recent strength of the European economy. Several of the fund's top
holdings such as General Electric and Microsoft justified that belief,
reporting solid profit growth; their stock prices jumped accordingly.
Also, there was a noticeable trend toward rising price-to-earnings
(P/E) ratios in a number of stocks. The P/E ratio, or multiple, is the
price of a stock divided by its earnings per share. This calculation
is important because it gives investors an idea of how much they're
paying for a company's earning power. The higher the multiple, the
more investors are paying. Recently, investors were willing to pay
higher multiples for at least two reasons. First, they expected
greater earnings growth in the future and, second, they believed
companies could sustain that growth for longer periods.
Q. CAN YOU GIVE US SOME EXAMPLES?
A. Rising earnings growth expectations occurred in areas of the market
where the outlook was favorable and investor confidence was strong.
For example, the prices of pharmaceutical stocks such as
Schering-Plough and Pfizer rose sharply. These companies either met or
exceeded earnings estimates, but investors also rewarded their stocks
with higher multiples due to the expectation that the pipeline of new
drugs will be very productive over the next few years. At the end of
the period, health stocks made up 11.7% of the fund, up from 9.2% six
months earlier. The outlook was also bright in parts of the
telecommunications industry, which positively affected stocks such as
Lucent Technologies in the same way.
Q. BOB, AS YOU REVIEW THE PAST YEAR, WHAT WERE SOME OF THE
DISAPPOINTMENTS?
A. As is typical, those stocks that didn't do well were the ones whose
profits - for a variety of reasons - were not as strong as I had
projected. Technology companies Compaq and Oracle suffered recently
from internal operational difficulties and looming concerns about the
impact of the Asian crisis. However, earnings disappointments were not
limited to tech companies. Over the past year, holdings such as Oxford
Health Plans, Nike and Waste Management negatively affected the fund's
returns due to lower-than-expected profits.
Q. BOB, THE FUND'S TURNOVER RATE - A MEASURE OF HOW FREQUENTLY STOCKS
IN THE FUND ARE REPLACED - HAS FALLEN SIGNIFICANTLY SINCE YOU TOOK
OVER MAGELLAN IN JUNE 1996. IT APPEARS THUS FAR THAT YOU'VE ADOPTED A
STEADY APPROACH TO MANAGING THE FUND . . .
A. I think two factors were at work here. First, I do try to take a
relatively long-term approach to investing. I look for stocks that are
selling at attractive valuations that I believe will experience strong
earnings growth over the next 12 to 24 months. Once I make that
commitment, I try to have the patience to weather short-term bumps in
the road if I still believe in the long-term picture. Second, since
I've taken over the fund, stock prices have mostly risen due to solid
earnings growth. And many of the stronger performers - such as General
Electric - have continued to do well. In order to replace a stock like
that, I have to come up with a better idea. In a rising market, there
aren't many opportunities to buy great stocks at cheap valuations. An
increase in volatility in the market going forward - meaning wider
swings in stock prices - might well lead me to make more frequent
changes to the fund's holdings as I try to take advantage of the price
dips.
Q. WHAT'S YOUR OUTLOOK FOR THE REST OF THE YEAR?
A. Because multiples have already risen so substantially, I believe
that any appreciation in stock prices through the rest of the year
should be more closely tied to earnings growth. That makes it more
important than ever that I get the earnings right. I'll do that by
focusing both on companies whose multiples have risen but still have
potential for strong earnings growth, and on more value-oriented
companies that may be experiencing a positive turnaround. To the
extent that I can correctly forecast earnings through the rest of the
year - and more importantly over the next 12 to 24 months - the fund
should do well relative to its peers and the broad market.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
BOB STANSKY ON THE EFFECTS OF
THE FUND'S RECENT PARTIAL
CLOSING:
"It's been six months since we
limited new purchases of Magellan
Fund, and thus far I would say the
partial closing has been a success.
We limited new purchases of the
fund essentially to existing
shareholders last fall because we
were concerned that the fund's
improving performance could
result in accelerating investor
inflows, which likely would have
made it more difficult for me to
manage the fund. Since we took
this action, cash flows have been
steady and predictable. That has
indeed made it easier for me to
remain fully invested in the
market. Bottom line: I think we
made the right decision for
shareholders of the fund."
FUND FACTS
GOAL: to increase the value
of the fund's shares over the
long term by investing mainly
in equity securities with
growth potential
FUND NUMBER: 021
TRADING SYMBOL: FMAGX
START DATE: May 2, 1963
SIZE: as of March 31, 1998,
more than $71.9 billion
MANAGER: Robert Stansky,
since June 1996; manager,
Fidelity Growth Company
Fund and Fidelity Advisor
Equity Growth, 1987-1996;
Fidelity Emerging Growth
Fund 1990-1991; Fidelity
Select Defense & Aerospace
Portfolio 1984-1985; joined
Fidelity in 1983
(checkmark)
INVESTMENT CHANGES
TOP TEN STOCKS AS OF MARCH 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
GENERAL ELECTRIC CO. 3.5 3.0
MICROSOFT CORP. 2.2 1.3
MERCK & CO., INC. 1.7 1.2
CITICORP 1.5 1.4
CENDANT CORP. 1.4 1.2
WAL-MART STORES, INC. 1.4 1.0
HOME DEPOT, INC. 1.4 1.1
BRISTOL-MYERS SQUIBB CO. 1.3 1.1
CISCO SYSTEMS, INC. 1.1 0.6
PHILIP MORRIS COMPANIES, INC. 1.1 1.3
TOP FIVE MARKET SECTORS AS OF MARCH 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
TECHNOLOGY 15.3 16.8
FINANCE 13.1 12.3
HEALTH 11.7 9.2
RETAIL & WHOLESALE 8.6 7.2
INDUSTRIAL MACHINERY & EQUIPMENT 8.1 8.2
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF MARCH 31, 1998 * AS OF SEPTEMBER 30, 1997 **
ROW: 1, COL: 1, VALUE: 96.2
ROW: 1, COL: 2, VALUE: 3.8
STOCKS 95.9%
SHORT-TERM
INVESTMENTS 4.1%
FOREIGN
INVESTMENTS 8.2%
STOCKS 96.2%
SHORT-TERM
INVESTMENTS 3.8%
FOREIGN
INVESTMENTS 8.6%
ROW: 1, COL: 1, VALUE: 95.90000000000001
ROW: 1, COL: 2, VALUE: 4.1
*
**
INVESTMENTS MARCH 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 96.2%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 1.9%
AEROSPACE & DEFENSE - 1.6%
AlliedSignal, Inc. 7,958,800 $ 334,270
Boeing Co. 4,808,600 250,648
Gulfstream Aerospace Corp. (a) 938,000 40,686
Lockheed Martin Corp. 518,300 58,309
Textron, Inc. 1,211,400 93,278
United Technologies Corp. 4,021,900 371,272
1,148,463
DEFENSE ELECTRONICS - 0.2%
Raytheon Co.:
Class A 514,245 29,248
Class B 2,056,700 120,060
149,308
SHIP BUILDING & REPAIR - 0.1%
General Dynamics Corp. 501,900 43,226
Halter Marine Group, Inc. (a)(c) 1,534,725 24,364
67,590
TOTAL AEROSPACE & DEFENSE 1,365,361
BASIC INDUSTRIES - 2.6%
CHEMICALS & PLASTICS - 1.4%
Air Products & Chemicals, Inc. 471,500 39,076
AKZO Nobel NV 85,000 17,285
Atlantis Group, Inc. (Trivest/Winston)
(a)(g) 77,269 1,700
du Pont (E.I.) de Nemours & Co. 1,683,600 114,485
Hanna (M.A.) Co. (c) 2,816,425 68,826
Hercules, Inc. 716,500 35,377
Ivex Packaging Corp. 59,400 1,455
Monsanto Co. 4,182,800 217,506
Morton International, Inc. 1,833,500 60,162
Praxair, Inc. 2,961,030 152,308
Schulman (A.), Inc. 1,637,125 41,337
Sealed Air Corp. (a) 1,426,200 93,416
Synetic, Inc. (a)(c) 1,157,582 60,050
Trivest 1992 Special Fund Ltd. 26.6 (f) 2,966
W.R. Grace & Co. 876,300 73,335
979,284
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
IRON & STEEL - 0.5%
Aeroquip Vickers, Inc. (c) 1,441,500 $ 83,337
Inland Steel Industries, Inc. 1,817,200 50,200
Nucor Corp. 3,892,400 211,893
345,430
METALS & MINING - 0.0%
Aluminum Co. of America 250,000 17,203
PACKAGING & CONTAINERS - 0.0%
EarthShell Corp. 30,000 536
Owens-Illinois, Inc. (a) 742,700 32,122
32,658
PAPER & FOREST PRODUCTS - 0.7%
Champion International Corp. 1,107,100 60,129
Fort James Corp. 837,500 38,368
Kimberly-Clark Corp. 6,089,800 305,251
Louisiana-Pacific Corp. 2,032,600 47,258
UPM-Kymmene Corp. 1,411,100 35,980
486,986
TOTAL BASIC INDUSTRIES 1,861,561
CONSTRUCTION & REAL ESTATE - 2.4%
BUILDING MATERIALS - 1.5%
Centex Construction Products, Inc. 627,800 22,875
Lafarge Corp. (c) 4,980,596 191,130
Mark IV Industries, Inc. 2,720,412 61,889
Masco Corp. 3,037,900 180,755
Medusa Corp. (c) 1,445,900 88,381
Owens-Corning 1,779,100 63,936
Sherwin-Williams Co. 7,836,400 278,192
Southdown, Inc. 1,027,400 71,597
USG Corp. (a)(c) 2,413,000 130,754
1,089,509
CONSTRUCTION - 0.5%
Centex Corp. 1,692,400 64,523
Clayton Homes, Inc. 1,262,687 25,569
Lennar Corp. 426,900 14,701
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
CONSTRUCTION - CONTINUED
Morrison Knudsen Corp. warrants 3/11/03 (a) 7,002 $ 36
Oakwood Homes Corp. (c) 3,719,200 136,216
Pulte Corp. (c) 2,107,900 98,017
339,062
ENGINEERING - 0.1%
Fluor Corp. 981,600 48,835
Group Maintenance America Corp. 448,100 7,590
56,425
REAL ESTATE INVESTMENT TRUSTS - 0.3%
Starwood Hotels & Resorts Trust 4,400,327 235,142
TOTAL CONSTRUCTION & REAL ESTATE 1,720,138
DURABLES - 4.8%
AUTOS, TIRES, & ACCESSORIES - 2.2%
AutoZone, Inc. (a) 3,135,800 106,225
Chrysler Corp. 5,866,200 243,814
Circuit City Stores, Inc. - CarMax Group (a) 321,500 3,717
Danaher Corp. 1,253,500 95,188
Eaton Corp. 1,072,400 102,079
Ford Motor Co. 5,942,300 385,135
Ford Motor Co. (h) 1,561,700 68,812
General Motors Corp. 1,859,659 125,411
Goodyear Tire & Rubber Co. 1,400,000 106,050
Honda Motor Co. Ltd. 2,544,000 88,640
Lear Corp. (a) 1,316,300 74,206
Navistar International Corp. (a) 500,000 17,500
Pep Boys-Manny, Moe & Jack 655,000 15,188
Volvo AB Class B 5,194,434 165,054
1,597,019
CONSUMER DURABLES - 0.3%
Minnesota Mining & Manufacturing Co. 2,779,200 253,428
CONSUMER ELECTRONICS - 1.3%
Black & Decker Corp. (c) 5,419,800 287,588
General Motors Corp. Class H 500,000 22,625
Matsushita Electric Industrial Co. Ltd. 4,492,000 69,779
Maytag Co. 3,000,000 143,438
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
CONSUMER ELECTRONICS - CONTINUED
Newell Co. 1,125,900 $ 54,536
Philips Electronics NV (Bearer) 2,135,000 156,853
Sony Corp. 1,533,000 130,401
Whirlpool Corp. 1,323,900 90,770
955,990
HOME FURNISHINGS - 0.5%
Leggett & Platt, Inc. (c) 6,408,350 329,630
Steelcase, Inc. Class A 80,500 2,938
332,568
TEXTILES & APPAREL - 0.5%
Intimate Brands, Inc. Class A 1,090,300 29,506
Liz Claiborne, Inc. 2,547,800 127,072
NIKE, Inc. Class B 2,348,500 103,921
Polo Ralph Lauren Corp. Class A 168,100 5,054
Reebok International Ltd. (a) 407,100 12,417
Tommy Hilfiger (a) 1,325,400 79,607
357,577
TOTAL DURABLES 3,496,582
ENERGY - 7.9%
ENERGY SERVICES - 1.4%
BJ Services Co. (a) 200,000 7,287
Dresser Industries, Inc. 708,400 34,047
Halliburton Co. 4,191,200 210,346
Noble Drilling Corp. (a) 3,723,700 113,806
Schlumberger Ltd. 5,071,300 384,151
Transocean Offshore, Inc. 4,279,600 220,132
Weatherford Enterra, Inc. (a) 100,000 4,244
Western Atlas, Inc. 115,700 8,952
982,965
OIL & GAS - 6.5%
Amoco Corp. 2,723,870 235,274
Anadarko Petroleum Corp. (c) 4,217,050 290,976
Apache Corp. 3,059,715 112,445
British Petroleum PLC Ord. 29,693,337 428,177
Burlington Resources, Inc. 5,282,100 253,211
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Canadian Natural Resources Ltd. (a)(c) 6,005,800 $ 124,790
Chevron Corp. 2,699,200 216,779
Coastal Corp. (The) 2,692,000 175,317
Cooper Cameron Corp. (a) 1,671,500 100,917
Enron Oil & Gas Co. 7,379,200 169,260
Exxon Corp. 7,753,800 524,351
Mobil Corp. 1,045,000 80,073
Noble Affiliates, Inc. 1,141,700 47,523
Occidental Petroleum Corp. 8,771,400 257,112
Phillips Petroleum Co. 700,000 34,956
Poco Petroleums Ltd. (a) 3,481,700 37,643
Pogo Producing Co. 36,564 1,161
Renaissance Energy Ltd. (a)(c) 7,053,600 143,829
Royal Dutch Petroleum Co. 9,800,000 556,763
Texaco, Inc. 5,552,000 334,508
Total SA Class B 3,930,000 472,373
USX-Marathon Group 500,000 18,813
Unocal Corp. 2,979,310 115,262
4,731,513
TOTAL ENERGY 5,714,478
FINANCE - 13.1%
BANKS - 5.5%
Banc One Corp. 2,020,757 127,813
BANACCI SA de CV Class B (a) 3,840,000 9,778
BankAmerica Corp. 9,086,900 750,805
Barclays PLC Ord. 2,200,000 65,877
Chase Manhattan Corp. 3,435,000 463,296
Citicorp 7,829,800 1,111,832
Comerica, Inc. 250,000 26,453
Credit Suisse Group (Reg.) 839,100 167,985
HSBC Holdings PLC Ord. 540,723 17,621
Lloyds TSB Group PLC 3,755,453 58,363
Mellon Bank Corp. 1,859,600 118,085
National City Corp. 203,046 14,886
NationsBank Corp. 4,151,618 302,809
Providian Financial Corp. 2,251,300 129,309
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Societe Generale Class A 344,900 $ 69,093
Swiss Bank Corp. (Reg.) 75,000 26,436
Synovus Financial Corp. 1,139,850 42,317
U.S. Bancorp 1,387,200 173,053
Union Bank of Switzerland Ord. (Bearer) 17,000 27,785
Wells Fargo & Co. 915,600 303,292
4,006,888
CREDIT & OTHER FINANCE - 0.3%
Fleet Financial Group, Inc. 661,500 56,269
Greenpoint Financial Corp. 1,351,800 48,580
Household International, Inc. 873,465 120,320
225,169
FEDERAL SPONSORED CREDIT - 1.7%
Fannie Mae 11,848,000 749,386
Freddie Mac 9,061,600 429,860
SLM Holding Corp. 481,950 21,025
1,200,271
INSURANCE - 4.7%
AFLAC, Inc. 2,302,400 145,627
Aetna, Inc. 404,900 33,784
Allstate Corp. 6,306,500 579,804
American International Group, Inc. 5,606,150 706,025
Chubb Corp. (The) 1,500,000 117,562
General Re Corp. 1,208,500 266,625
ING Groep NV sponsored ADR 449,325 25,583
MBIA, Inc. 857,200 66,433
Old Republic International Corp. 1,391,800 61,674
Progressive Corp. 1,624,700 218,827
Reliastar Financial Corp. 1,776,559 81,833
SunAmerica, Inc. 4,587,450 219,624
Travelers Group, Inc. (The) 10,815,389 648,923
UNUM Corp. 4,333,400 239,150
3,411,474
SAVINGS & LOANS - 0.3%
Ahmanson (H.F.) & Co. 500,000 38,750
Charter One Financial Corp. 1,233,543 82,570
Dime Bancorp., Inc. 65,900 1,981
Washington Mutual, Inc. 1,502,500 107,757
231,058
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
SECURITIES INDUSTRY - 0.6%
Merrill Lynch & Co., Inc. 2,873,200 $ 238,476
Morgan Stanley, Dean Witter, Discover and Co. 2,550,035 185,834
Waddell & Reed Financial, Inc. Class A (a) 109,000 2,834
427,144
TOTAL FINANCE 9,502,004
HEALTH - 11.7%
DRUGS & PHARMACEUTICALS - 8.2%
Alkermes, Inc. (a) 74,600 1,856
American Home Products Corp. 6,997,600 667,396
Astra AB Class A Free shares 3,247,000 66,891
Aviron (a) 374,600 8,663
Bristol-Myers Squibb Co. 9,196,800 959,341
Cellegy Pharmaceuticals, Inc. (a) 225,000 1,603
Elan Corp. PLC ADR (a) 2,301,000 148,702
Genentech, Inc. special (a) 595,100 41,917
Hyseq, Inc. 86,300 1,079
Lilly (Eli) & Co. 4,732,800 282,193
Merck & Co., Inc. 9,687,600 1,243,646
Novartis AG (Reg.) 118,100 209,146
Pfizer, Inc. 7,126,700 710,443
Rhone Poulenc SA Class A 2,952,100 150,184
Sankyo Co. Ltd. 3,753,000 100,798
Schering-Plough Corp. 7,978,600 651,752
SmithKline Beecham PLC ADR 725,000 45,358
Takeda Chemical Industries Ltd. 4,257,000 104,755
Trimeris, Inc. 184,200 1,381
ViroPharma, Inc. (a) 62,800 1,319
Warner-Lambert Co. 3,195,300 544,200
Xoma, Inc. (a) 3,030 11
5,942,634
MEDICAL EQUIPMENT & SUPPLIES - 1.8%
Abbott Laboratories 1,190,700 89,675
Baxter International, Inc. 300,000 16,538
Becton, Dickinson & Co. 1,273,100 86,650
Boston Scientific Corp. (a) 2,997,900 202,358
Guidant Corp. 1,840,800 135,069
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - CONTINUED
Johnson & Johnson 6,400,000 $ 469,200
McKesson Corp. 1,928,000 111,342
Medtronic, Inc. 3,009,000 156,092
Pall Corp. 500,000 10,750
St. Jude Medical, Inc. (a) 1,198,900 40,088
1,317,762
MEDICAL FACILITIES MANAGEMENT - 1.7%
Carematrix Corp. (a)(c) 899,100 27,647
Columbia/HCA Healthcare Corp. 10,688,653 344,709
HEALTHSOUTH Corp. (a) 15,333,200 430,288
Humana, Inc. (a) 900,000 22,331
Oxford Health Plans, Inc. (a) 1,721,900 25,721
Tenet Healthcare Corp. (a) 1,392,195 50,554
Trigon Healthcare, Inc. (a) 110,000 3,307
United HealthCare Corp. 3,725,100 241,200
Universal Health Services, Inc. Class B (a) 788,100 45,513
Vencor, Inc. (a) 69 2
1,191,272
TOTAL HEALTH 8,451,668
HOLDING COMPANIES - 0.6%
ABB AB:
sponsored ADR 45,100 6,280
Series A 1,257,500 17,977
Cookson Group PLC 15,655,867 60,499
Norfolk Southern Corp. 9,109,100 340,453
425,209
INDUSTRIAL MACHINERY & EQUIPMENT - 8.1%
ELECTRICAL EQUIPMENT - 4.8%
Alcatel Alsthom Compagnie Generale
d'Electricite SA 2,515,300 472,595
Chicago Miniature Lamp, Inc. (a) 519,000 20,176
Emerson Electric Co. 5,564,800 362,755
General Electric Co. 29,015,600 2,500,782
General Instrument Corp. (a) 266,000 5,569
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
ELECTRICAL EQUIPMENT - CONTINUED
Honeywell, Inc. 179,400 $ 14,834
Loral Space & Communications Ltd. (a) 880,200 24,591
Omron Corp. 570,000 8,358
Smith (A.O.) Corp. Class B (c) 898,000 40,186
3,449,846
INDUSTRIAL MACHINERY & EQUIPMENT - 3.2%
AGCO Corp. 599,800 17,807
ASM Lithography Holding NV (a) 200,000 18,487
Case Corp. (c) 6,398,400 435,891
Caterpillar, Inc. 2,661,800 146,565
Cooper Industries, Inc. 200,000 11,887
Deere & Co. 3,490,000 216,162
Dover Corp. 3,641,200 138,366
Harnischfeger Industries, Inc. 1,839,300 62,881
IDEX Corp. (c) 1,628,525 59,238
Illinois Tool Works, Inc. 7,508,200 486,156
Ingersoll-Rand Co. 902,850 43,280
Tyco International Ltd. 11,402,206 622,846
UCAR International, Inc. (a)(c) 2,726,200 85,535
2,345,101
POLLUTION CONTROL - 0.1%
Browning-Ferris Industries, Inc. 47,800 1,559
Thermo Instrument Systems, Inc. (a) 200,000 6,625
USA Waste Services, Inc. (a) 1,000,000 44,563
Waste Management, Inc. 900,000 27,731
80,478
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 5,875,425
MEDIA & LEISURE - 5.2%
BROADCASTING - 2.1%
CBS Corp. 9,464,164 321,190
Chancellor Media Corp. (a) 217,600 9,982
Clear Channel Communications, Inc. (a) 3,175,600 311,209
Comcast Corp. Class A special 675,000 23,836
Cox Communications, Inc. Class A (a) 844,700 35,477
Heftel Broadcasting Corp. Class A (a) 763,800 34,180
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
Tele-Communications, Inc. (a):
(TCI Group), Series A 1,136,201 $ 35,329
(TCI Ventures Group), Series A 727,598 12,778
Time Warner, Inc. 9,105,109 655,568
USA Networks, Inc. (a) 1,196,980 32,618
Univision Communications, Inc. Class A (a) 595,000 22,164
1,494,331
ENTERTAINMENT - 1.2%
Disney (Walt) Co. 4,319,000 461,053
King World Productions, Inc. 303,500 8,877
News Corp. Ltd. ADR 2,800,000 75,425
Viacom, Inc. Class B (non-vtg.) (a) 6,654,400 357,674
903,029
LEISURE DURABLES & TOYS - 0.0%
Callaway Golf Co. 400,000 11,600
Hasbro, Inc. 182,550 6,446
Mattel, Inc. 350,000 13,869
31,915
LODGING & GAMING - 0.9%
Bally Gaming International, Inc. warrants
7/29/98 (a) 225,000 141
Extended Stay America, Inc. (a) 4,078,503 59,903
Hilton Hotels Corp. 6,829,200 217,681
Host Marriott Corp. (a)(c) 14,823,400 280,718
Prime Hospitality Corp. (a)(c) 3,077,600 60,013
618,456
PUBLISHING - 0.7%
Cognizant Corp. 1,418,900 81,409
Dun & Bradstreet Corp. 486,000 16,615
Gannett Co., Inc. 1,310,400 94,185
Harcourt General, Inc. 848,900 47,008
Houghton Mifflin Co. 600,000 19,125
McGraw-Hill Companies, Inc. 428,700 32,608
New York Times Co. (The) Class A 693,200 48,524
Times Mirror Co. Class A 697,300 44,191
Tribune Co. 823,100 58,029
US WEST Media Group (a) 1,250,000 43,438
485,132
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - 0.3%
Host Marriott Services Corp. (a)(c) 3,132,100 $ 44,241
McDonald's Corp. 2,953,200 177,192
Starbucks Corp. (a) 300,000 13,594
235,027
TOTAL MEDIA & LEISURE 3,767,890
NONDURABLES - 4.3%
BEVERAGES - 0.8%
Coca-Cola Co. (The) 1,750,000 135,516
Coca-Cola Enterprises, Inc. 200,000 7,338
PepsiCo, Inc. 9,056,800 386,612
Seagram Co. Ltd. 300,000 11,389
Stroh Brewery Co. warrants 1/1/01 (a) 21,307 76
540,931
FOODS - 0.3%
Bestfoods 400,000 46,750
Campbell Soup Co. 1,460,000 82,855
Corn Products International, Inc. (a) 100,000 3,587
Heinz (H.J.) Co. 585,800 34,196
Keebler Foods Co. (a) 77,200 2,316
Ralston Purina Co. 200,000 21,200
Sara Lee Corp. 500,000 30,813
Vlasic Foods International, Inc. (a) 156,000 4,017
225,734
HOUSEHOLD PRODUCTS - 2.1%
Avon Products, Inc. 1,173,000 91,494
Estee Lauder Companies, Inc. 963,000 65,364
Gillette Co. 3,837,900 455,511
Procter & Gamble Co. 7,086,400 597,915
Unilever:
PLC Ord. 10,240,400 99,837
NV ADR 3,429,700 235,363
1,545,484
TOBACCO - 1.1%
Philip Morris Companies, Inc. 18,379,800 766,208
RJR Nabisco Holdings Corp. 1,063,800 33,310
799,518
TOTAL NONDURABLES 3,111,667
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - 8.6%
APPAREL STORES - 1.0%
AnnTaylor Stores Corp. (a) 625,600 $ 10,283
Columbia Sportswear Co. 19,600 414
Gap, Inc. 9,835,600 442,602
Lamonts Apparel, Inc. warrants 6/10/99 (a) 264,824 -
Limited, Inc. (The) 4,900,400 140,580
Ross Stores, Inc. 822,200 36,280
Saks Holdings, Inc. (a) 200,000 5,000
TJX Companies, Inc. 2,498,400 113,053
748,212
APPLIANCE STORES - 0.0%
Cellstar Corp. (a) 566,400 18,125
DRUG STORES - 0.6%
CVS Corp. 4,838,143 365,280
Rite Aid Corp. 1,008,200 34,531
Walgreen Co. 400,000 14,075
413,886
GENERAL MERCHANDISE STORES - 3.1%
Consolidated Stores Corp. (a) 3,567,468 153,178
Dayton Hudson Corp. 6,354,700 559,214
Federated Department Stores, Inc. (a) 4,215,700 218,426
Ito-Yokado Co. Ltd. 1,275,000 66,822
Meyer (Fred), Inc. (a) 505,000 23,325
Neiman-Marcus Group, Inc. (a) 768,700 31,565
Penney (J.C.) Co., Inc. 1,600,000 121,100
Sears, Roebuck & Co. 1,000,000 57,438
Wal-Mart Stores, Inc. 19,972,500 1,014,853
2,245,921
GROCERY STORES - 0.6%
Ahold NV 890,000 28,761
Safeway, Inc. (a) 10,754,400 397,241
426,002
RETAIL & WHOLESALE, MISCELLANEOUS - 3.3%
Barnes & Noble, Inc. (a) 1,631,200 63,617
Circuit City Stores, Inc. - Circuit City Group 702,500 30,032
Corporate Express, Inc. (a) 837,500 8,349
Home Depot, Inc. 14,701,225 991,414
Lowe's Companies, Inc. 6,223,500 436,812
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - CONTINUED
Officemax, Inc. (a) 2,590,750 $ 46,310
Office Depot, Inc. (a) 6,881,900 214,199
Pier 1 Imports, Inc. 600,000 16,275
Staples, Inc. (a) 11,782,900 273,216
Tandy Corp. 1,722,600 80,962
Toys "R" Us, Inc. (a) 5,060,200 152,122
U.S. Office Products Co. (a) 2,100,000 39,900
Viking Office Products, Inc. (a) 1,562,500 36,328
2,389,536
TOTAL RETAIL & WHOLESALE 6,241,682
SERVICES - 3.3%
ADVERTISING - 0.8%
Interpublic Group of Companies, Inc. 60,500 3,759
Omnicom Group, Inc. (c) 8,501,576 400,105
Outdoor Systems, Inc. (a) 3,983,625 139,676
Universal Outdoor Holdings, Inc. (a) 372,000 23,994
567,534
LEASING & RENTAL - 0.3%
Avis Rent A Car, Inc. (a) 154,100 4,999
Hertz Corp. Class A 203,000 9,338
Republic Industries, Inc. (a) 7,860,000 202,886
Ryder Systems, Inc. 293,400 11,149
228,372
PRINTING - 0.0%
Wallace Computer Services, Inc. 674,400 23,351
SERVICES - 2.2%
AccuStaff, Inc. (a) 532,000 18,354
Assisted Living Concepts, Inc. (a)(c) 1,103,000 23,852
Cendant Corp. (a) 25,946,559 1,028,132
Computer Horizons Corp. (a) 300,000 15,075
Manpower, Inc. 3,255,900 131,457
Medpartners, Inc. (a) 500,000 5,125
Pittston Co. (Brinks Group) 1,704,400 64,980
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
SERVICES - CONTINUED
Rentokil Initial PLC 10,768,535 $ 65,617
Robert Half International, Inc. (a) 3,538,950 169,870
Service Corp. International 500,000 21,219
1,543,681
TOTAL SERVICES 2,362,938
TECHNOLOGY - 15.3%
COMMUNICATIONS EQUIPMENT - 2.6%
Advanced Fibre Communication, Inc. (a) 674,400 24,531
Ascend Communications, Inc. (a) 2,479,600 93,915
Cisco Systems, Inc. (a) 11,511,800 787,119
DSC Communications Corp. (a) 1,062,900 19,331
DSP Communications, Inc. (a) 300,000 5,119
Ericsson (L.M.) Telephone Co. Class B ADR 235,600 11,206
Lucent Technologies, Inc. 4,523,662 578,463
Newbridge Networks Corp. (a) 2,116,200 56,873
Nokia Corp. AB:
sponsored ADR 1,338,500 144,474
Series A 600,000 64,458
Northern Telecom Ltd. 1,050,000 67,855
3Com Corp. (a) 500,000 17,969
Xircom, Inc. (a) 200,000 2,763
1,874,076
COMPUTER SERVICES & SOFTWARE - 5.7%
America Online, Inc. (a) 4,765,100 325,516
BMC Software, Inc. (a) 2,100,000 176,006
Ceridian Corp. (a) 1,150,700 62,066
ChoicePoint, Inc. (a) 87,017 4,737
Command Systems, Inc. (a) 39,800 567
Computer Associates International, Inc. 5,652,900 326,455
CompUSA, Inc. (a) 2,085,700 54,228
Compuware Corp. (a) 400,000 19,750
Electronic Arts, Inc. (a) 1,511,100 70,927
Electronic Data Systems Corp. 800,000 36,700
Electronics for Imaging, Inc. (a) 1,074,800 27,945
Equifax, Inc. 870,170 31,761
First Data Corp. 4,274,000 138,905
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
HBO & Co. 5,970,400 $ 360,463
Harbinger Corp. (a) 100,000 3,775
ISS Group, Inc. 12,900 501
Keane, Inc. (a) 200,000 11,300
Manugistics Group, Inc. (a) 125,000 7,008
Microsoft Corp. (a) 17,597,600 1,574,985
Oracle Corp. (a) 16,315,600 514,961
Parametric Technology Corp. (a) 3,405,000 113,429
PeopleSoft, Inc. (a) 4,200,400 221,309
Sabre Group Holdings, Inc. Class A (a) 559,900 20,086
Shared Medical Systems Corp. 80,000 6,270
SunGard Data Systems, Inc. (a) 100,000 3,681
4,113,331
COMPUTERS & OFFICE EQUIPMENT - 4.2%
Adaptec, Inc. (a) 1,915,820 37,598
Apple Computer, Inc. (a) 1,000,000 27,500
Comdisco, Inc. (c) 5,265,175 229,693
Canon, Inc. 981,000 21,434
Compaq Computer Corp. 13,265,500 343,245
Dell Computer Corp. (a) 6,894,200 467,082
Diebold, Inc. 1,220,800 53,715
EMC Corp. (a) 9,060,482 342,599
Fore Systems, Inc. (a) 400,000 6,300
Hewlett-Packard Co. 3,270,600 207,274
International Business Machines Corp. 6,628,400 688,525
Pitney Bowes, Inc. 4,875,600 244,694
Quantum Corp. (a) 600,000 12,788
Seagate Technology (a) 1,755,300 44,321
Sequent Computer Systems, Inc. (a) 447,700 8,171
Sun Microsystems, Inc. (a) 3,050,000 127,242
Tech Data Corp. (a) 788,800 30,369
Wang Laboratories, Inc. (a) 100,000 3,094
Xerox Corp. 1,200,000 127,725
3,023,369
ELECTRONIC INSTRUMENTS - 0.4%
Applied Materials, Inc. (a) 4,036,100 142,525
KLA-Tencor Corp. (a) 496,100 18,976
Kulicke & Soffa Industries, Inc. (a) 500,000 10,875
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONIC INSTRUMENTS - CONTINUED
Teradyne, Inc. (a) 1,100,000 $ 44,069
Thermo Electron Corp. (a) 1,233,200 49,790
Waters Corp. (a) 765,800 38,242
304,477
ELECTRONICS - 2.2%
Advanced Micro Devices, Inc. (a) 950,000 27,609
Altera Corp. (a) 400,000 15,100
Analog Devices, Inc. (a) 1,453,866 48,341
Atmel Corp. (a) 1,110,582 16,728
Brightpoint, Inc. (a) 1,351,400 23,227
Galileo Technology Ltd. 5,000 141
Integrated Device Technology, Inc. (a) 200,000 2,813
Intel Corp. 9,708,800 757,893
LSI Logic Corp. (a) 500,000 12,625
Lattice Semiconductor Corp. (a) 77,100 3,966
Linear Technology Corp. 1,088,300 75,093
Maxim Integrated Products, Inc. (a) 1,389,200 50,619
Microchip Technology, Inc. (a) 100,000 2,100
Micron Technology, Inc. (a) 1,000,000 29,063
Minebea Co. Ltd. 2,000,000 21,196
Motorola, Inc. 2,316,800 140,456
Rohm Co. Ltd. 463,000 41,003
TDK Corp. 300,000 22,430
Texas Instruments, Inc. 5,797,000 313,763
VLSI Technology, Inc. (a) 500,000 9,375
Xilinx, Inc. (a) 100,000 3,744
1,617,285
PHOTOGRAPHIC EQUIPMENT - 0.2%
Fuji Photo Film Co. Ltd. 3,032,000 109,165
Polaroid Corp. 263,000 11,572
120,737
TOTAL TECHNOLOGY 11,053,275
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - 2.1%
AIR TRANSPORTATION - 0.7%
AMR Corp. (a) 1,223,900 $ 175,247
Comair Holdings, Inc. 2,369,037 62,779
Delta Air Lines, Inc. 663,300 78,435
Northwest Airlines Corp. Class A (a) 1,850,400 114,147
UAL Corp. (a) 1,291,400 120,019
550,627
RAILROADS - 1.2%
Bombardier, Inc. Class B 1,868,300 46,124
Burlington Northern Santa Fe Corp. 580,640 60,387
CSX Corp. 8,695,600 517,388
Trinity Industries, Inc. (c) 3,214,800 176,412
Wisconsin Central Transportation Corp. (a) 1,543,900 43,470
843,781
TRUCKING & FREIGHT - 0.2%
American Freightways Corp. (a) 1,054,500 11,600
C.H. Robinson Worldwide, Inc. 108,600 2,824
CNF Transportation, Inc. 900,000 32,344
Landstar System, Inc. (a)(c) 901,200 29,064
Swift Transportation Co., Inc. (a)(c) 3,548,250 85,158
160,990
TOTAL TRANSPORTATION 1,555,398
UTILITIES - 4.3%
CELLULAR - 0.2%
AirTouch Communications, Inc. (a) 1,690,000 82,704
Metromedia Fiber Network, Inc. Class A 82,100 2,761
Nextel Communications, Inc. Class A (a) 331,200 11,178
Teleglobe, Inc. 200,000 9,276
360 Degrees Communications Co. (a) 229,700 7,178
Vodafone Group PLC sponsored ADR 582,900 60,549
173,646
ELECTRIC UTILITY - 0.3%
Compania Energertica Minas Gerais 220,000,000 10,680
Duke Energy Corp. 1,382,000 82,315
Entergy Corp. 2,810,000 83,598
Niagara Mohawk Power Corp. (a) 1,139,000 14,807
PG&E Corp. 1,249,300 41,227
232,627
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - 3.8%
AT&T Corp. 10,658,900 $ 699,490
Ameritech Corp. 3,418,400 168,997
BellSouth Corp. 4,128,700 278,945
Exodus Communications, Inc. (a) 20,900 585
GTE Corp. 1,000,000 59,875
MCI Communications Corp. 4,323,500 214,013
NEXTLINK Communications, Inc. Class A (a) 73,800 2,371
Qwest Communications International, Inc. 200,000 7,775
SBC Communications, Inc. 7,132,800 311,168
Telebras sponsored ADR 877,700 113,936
Telefonos de Mexico SA sponsored ADR
representing Ord. Class L shares 400,000 22,550
Teleport Communications Group, Inc. Class A (a)1,705,600 100,204
Telecom Italia Mobile Spa 17,100,000 92,344
WorldCom, Inc. (a) 14,903,000 641,760
2,714,013
TOTAL UTILITIES 3,120,286
TOTAL COMMON STOCKS
(Cost $43,204,188) 69,625,562
NONCONVERTIBLE PREFERRED STOCKS - 0.0%
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
ELECTRICAL EQUIPMENT - 0.0%
Ampex Corp. 8% (a)(g) (Cost $2,318) 4,415 3,432
NONCONVERTIBLE BONDS - 0.0%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (000S)
RETAIL & WHOLESALE - 0.0%
APPAREL STORES - 0.0%
Lamonts Apparel, Inc. 10 1/4%, 11/1/99
pay-in-kind (b)(e) (Cost $8,515) - $ 8,804 308
COMMERCIAL MORTGAGE SECURITIES - 0.0%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
Bardell Associates Note Trust
12 1/2%, 11/1/08 (g) (Cost $4,453) - $ 4,381 $ 4,654
CASH EQUIVALENTS - 3.8%
SHARES
Taxable Central Cash Fund (d) 2,576,652,128 2,576,652
MATURITY
AMOUNT (000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.92%, dated
3/31/98 due 4/1/98 $ 159,068 159,042
TOTAL CASH EQUIVALENTS
(Cost $2,735,694) 2,735,694
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $45,955,168) $ 72,369,650
LEGEND
(a) Non-income producing
(b) Non-income producing - issuer filed for protection under the
Federal Bankruptcy Code or is in default of interest payment.
(c) Affiliated company (see Note 7 of Notes to Financial Statements).
(d) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.63%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(e) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
At the period end, the value of these securities amounted to $308,000
or 0% of net assets.
(f) Quantity represents number of units held.
(g) Restricted securities - Investment in securities not registered
under the Securities Act of 1933 (see Note 2 of Notes to Financial
Statements).
Additional information on each holding is
as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST (000S)
Ampex Corp. 8% 2/16/95 $ 2,318
Atlantis Group, Inc.
(Trivest/Winston) 4/16/93 $ 90
Bardell Associates
Note Trust 12 1/2%
11/1/08 4/19/94 $ 4,453
(h) Security purchased on a delayed delivery or when-issued basis (see
Note 2 of Notes to Financial Statements).
INCOME TAX INFORMATION
At March 31, 1998, the aggregate cost of investment securities for
income tax purposes was $46,028,020,000. Net unrealized appreciation
aggregated $26,341,630,000, of which $26,804,189,000 related to
appreciated investment securities and $462,559,000 related to
depreciated investment securities.
The fund hereby designates approximately $3,105,969,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) MARCH 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 72,369,650
AGREEMENTS OF $159,042) (COST $45,955,168) -
SEE ACCOMPANYING SCHEDULE
CASH 1
RECEIVABLE FOR INVESTMENTS SOLD 148,554
RECEIVABLE FOR FUND SHARES SOLD 210,063
DIVIDENDS RECEIVABLE 69,612
INTEREST RECEIVABLE 12,240
OTHER RECEIVABLES 4,820
TOTAL ASSETS 72,814,940
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED
REGULAR DELIVERY $ 430,430
DELAYED DELIVERY 66,262
PAYABLE FOR FUND SHARES REDEEMED 312,659
ACCRUED MANAGEMENT FEE 25,321
OTHER PAYABLES AND ACCRUED EXPENSES 11,983
TOTAL LIABILITIES 846,655
NET ASSETS $ 71,968,285
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 43,487,831
UNDISTRIBUTED NET INVESTMENT INCOME 152,096
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 1,914,146
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 26,414,212
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS, FOR 661,382 SHARES OUTSTANDING $ 71,968,285
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $108.82
($71,968,285 (DIVIDED BY) 661,382 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/97 OF $108.82) $112.19
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED MARCH 31, 1998
INVESTMENT INCOME $ 682,850
DIVIDENDS (INCLUDING $48,257 RECEIVED FROM
AFFILIATED ISSUERS)
INTEREST 166,871
TOTAL INCOME 849,721
EXPENSES
MANAGEMENT FEE $ 366,402
BASIC FEE
PERFORMANCE ADJUSTMENT (102,362)
TRANSFER AGENT FEES 112,966
ACCOUNTING FEES AND EXPENSES 934
NON-INTERESTED TRUSTEES' COMPENSATION 317
CUSTODIAN FEES AND EXPENSES 2,331
REGISTRATION FEES 1,511
AUDIT 396
LEGAL 488
INTEREST 1
MISCELLANEOUS 286
TOTAL EXPENSES BEFORE REDUCTIONS 383,270
EXPENSE REDUCTIONS (8,370) 374,900
NET INVESTMENT INCOME 474,821
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (INCLUDING REALIZED GAIN OF $348,641 4,386,639
ON SALES OF AFFILIATED ISSUERS)
FOREIGN CURRENCY TRANSACTIONS (230) 4,386,409
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 17,839,610
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (317) 17,839,293
NET GAIN (LOSS) 22,225,702
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 22,700,523
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31,
1998 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 474,821 $ 945,962
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 4,386,409 1,163,977
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 17,839,293 2,622,185
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 22,700,523 4,732,124
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS (794,010) (718,653)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (3,324,791) (8,153,202)
TOTAL DISTRIBUTIONS (4,118,801) (8,871,855)
SHARE TRANSACTIONS 11,459,995 9,169,545
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 4,050,132 8,742,406
COST OF SHARES REDEEMED (13,367,016) (18,707,881)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 2,143,111 (795,930)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 20,724,833 (4,935,661)
NET ASSETS
BEGINNING OF PERIOD 51,243,452 56,179,113
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 71,968,285 $ 51,243,452
INCOME OF $152,096 AND $544,318, RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 119,540 115,978
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 44,167 118,619
REDEEMED (141,304) (237,540)
NET INCREASE (DECREASE) 22,403 (2,943)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED MARCH 31,
1998 1997 1996 1995 1994
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING $ 80.20 $ 87.52 $ 72.44 $ 69.72 $ 68.44
OF PERIOD
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .73 C 1.38 C .79 .27 .61
NET REALIZED AND UNREALIZED 34.35 5.25 19.57 5.22 7.92
GAIN (LOSS)
TOTAL FROM INVESTMENT OPERATIONS 35.08 6.63 20.36 5.49 8.53
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (1.25) (1.10) (.59) (.14) (.75)
FROM NET REALIZED GAIN (5.21) (12.85) (4.69) (2.63) (6.50)
TOTAL DISTRIBUTIONS (6.46) (13.95) (5.28) (2.77) (7.25)
NET ASSET VALUE, $ 108.82 $ 80.20 $ 87.52 $ 72.44 $ 69.72
END OF PERIOD
TOTAL RETURN A, B 45.41% 9.11% 28.43% 8.21% 12.94%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 71,968 $ 51,243 $ 56,179 $ 39,803 $ 33,119
(IN MILLIONS)
RATIO OF EXPENSES TO AVERAGE .62% .66% .95% .99% 1.00%
NET ASSETS
RATIO OF EXPENSES TO AVERAGE .61% D .64% D .92% D .96% D .99% D
NET ASSETS AFTER EXPENSE
REDUCTIONS
RATIO OF NET INVESTMENT INCOME TO .77% 1.75% .95% .39% 1.07%
AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 34% 67% 155% 120% 132%
AVERAGE COMMISSION RATE E $ .0328 $ .0394
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO
FINANCIAL STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS).
E FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended March 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Magellan Fund(the fund) is registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company organized as a Massachusetts business
trust and is authorized to issue an unlimited number of shares.
Effective at the close of business on September 30, 1997, the fund was
closed to new accounts. The financial statements have been prepared in
conformity with generally accepted accounting principles which require
management to make certain estimates and assumptions at the date of
the financial statements. The following summarizes the significant
accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Foreign securities are valued based
on quotations from the principal market in which such securities are
normally traded. If trading or events occurring in other markets after
the close of the principal market in which foreign securities are
traded, and before the close of business of the fund, are expected to
materially affect the value of those securities, then they are valued
at their fair value taking this trading or these events into account.
Fair value is determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Securities (including restricted securities) for which exchange
quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value. Short-term
securities with remaining maturities of sixty days or less for which
quotations are not readily available are valued at amortized cost or
original cost plus accrued interest, both of which approximate current
value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
INCOME TAXES - CONTINUED
that it distributes substantially all of its taxable income for its
fiscal year. The schedule of investments includes information
regarding income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. Investment
income is recorded net of foreign taxes withheld where recovery of
such taxes is uncertain.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for litigation proceeds, foreign currency transactions,
partnerships, and losses deferred due to wash sales. The fund also
utilized earnings and profits distributed to shareholders on
redemption of shares as a part of the dividends paid deduction for
income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase
2. OPERATING POLICIES -
CONTINUED
JOINT TRADING ACCOUNT -
CONTINUED
agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by Fidelity Investments Money Management, Inc.,
(formerly FMR Texas, Inc.) an affiliate of FMR. The Cash Fund is an
open-end money market fund available only to investment companies and
other accounts managed by FMR and its affiliates. The Cash Fund seeks
preservation of capital, liquidity, and current income by investing in
U.S. Treasury securities and repurchase agreements for these
securities. Income distributions from the Cash Fund are declared daily
and paid monthly from net interest income. Income distributions earned
by the fund are recorded as interest income in the accompanying
financial statements.
WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place a month or
more after the date of the transaction. The price of the underlying
securities is fixed at the time the transaction is negotiated. The
market values of the securities purchased on a when-issued basis or
forward commitment basis are identified as such in the fund's schedule
of investments. The fund may receive compensation for interest forgone
in the purchase of a when-issued security. With respect to purchase
commitments, the fund identifies securities as segregated in its
custodial records with a value at least equal to the amount of the
commitment. The payables and receivables associated with the purchases
and sales of when-issued securities having the same settlement date
and broker are offset. When-issued securities that have been purchased
from and sold to different brokers are reflected as both payables and
receivables in the statement of assets and liabilities under the
caption "Delayed delivery." Losses may arise due to changes in the
market value of the underlying securities, if the counterparty does
not perform under the contract, or if the issuer does not isssue the
securities due to political, economic, or other factors.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
2. OPERATING POLICIES -
CONTINUED
RESTRICTED SECURITIES - CONTINUED
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, restricted securities (excluding 144A
issues) amounted to $9,786,000 or 0% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $19,650,713,000 and $21,856,615,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly basic fee that is calculated on the basis of a group fee rate
plus a fixed individual fund fee rate applied to the average net
assets of the fund. The group fee rate is the weighted average of a
series of rates and is based on the monthly average net assets of all
the mutual funds advised by FMR. The rates ranged from .2500% to
.5200% for the period. The annual individual fund fee rate is .30%. In
the event that these rates were lower than the contractual rates in
effect during the period, FMR voluntarily implemented the above rates,
as they resulted in the same or a lower management fee. The basic fee
is subject to a performance adjustment (up to a maximum of
(plus/minus).20% of the fund's average net assets over the performance
period) based on the fund's investment performance as compared to the
appropriate index over a specified period of time. For the period, the
management fee was equivalent to an annual rate of .43% of average net
assets after the performance adjustment.
SALES LOAD. For the period, Fidelity Distributors Corporation (FDC),
an affiliate of FMR and the general distributor of the fund, received
sales charges of $10,307,000 on sales of shares of the fund of which
$20,000 was paid to securities dealers, banks and other financial
institutions.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the fund's transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. For the period, the transfer agent fees were
equivalent to an annual rate of .18% of average net assets.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee
is based on the level of average net assets for the month plus
out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $4,101,000 for the
period.
5. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. Under the most
restrictive arrangement, the fund must pledge to the bank securities
having a market value in excess of 220% of the total bank borrowings.
The interest rate on the borrowings is the bank's base rate, as
revised from time to time. The maximum loan and the average daily loan
balance during the period for which the loan was outstanding amounted
to $6,176,000. The weighted average interest rate was 5.8%
6. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $4,455,000 under this arrangement.
In addition the fund has entered into arrangements with its custodian
and transfer agent whereby credits realized as a result of uninvested
cash balances were used to reduce a portion of the fund's expenses.
During the period, the fund's custodian and transfer agent fees were
reduced by $32,000 and $3,883,000, respectively, under these
arrangements.
7. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of
at least 5% of the voting securities. Transactions during the period
with companies which are or were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
AK Steel Holding Corp. $ - $ 35,399 $ 2,154 $ -
Aeroquip Vickers, Inc. 49,433 94,484 1,742 83,337
Anadarko Petroleum Corp. - - 1,265 290,976
Apache Corp. - 1,717 - -
Assisted Living Concepts, Inc. - - - 23,852
Black & Decker Corp. - 20,313 2,853 287,588
CSX Corp. - 121,961 3,154 -
Canadian Natural Resources Ltd. - - - 124,790
Carematrix Corp. 43 - - 27,647
Carlisle Companies, Inc. - 7,166 - -
Case Corp. - 10,678 1,300 435,891
Centex Corp. - 1,457 - -
Centex Construction Products, Inc. - 4,424 136 -
Chesapeake Energy Corp. - 20,179 72 -
Cincinnati Milacron, Inc. - 37,567 629 -
Comdisco, Inc. - 15,489 1,098 229,693
Dresser Industries, Inc. - 31,222 5,319 -
Echlin, Inc. - 16,244 1,685 -
Enron Oil & Gas Co. - 19,080 255 -
Global Marine, Inc. - 8,295 - -
Guitar Center, Inc. - - - -
7. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Halter Marine Group, Inc. $ - $ 3,375 $ - $ 24,364
Hanna (M.A.) Co. 2,322 - 1,182 68,826
Host Marriott Services Corp. - - - 44,241
Host Marriott Corp. - 8,613 - 280,718
IDEX Corp. - - 806 59,238
Lafarge Corp. 2,287 - 2,171 191,130
Landstar System, Inc. - 5,714 - 29,064
Leggett & Platt, Inc. - 40,963 3,988 329,630
Maytag Co. - 60,412 3,675 -
Medusa Corp. - 6,389 958 88,381
NACCO Industries, Inc. Class A - 20,836 - -
Noble Affiliates, Inc. - 65,082 467 -
Nucor Corp. - 13,184 919 -
Oakwood Homes Corp. - - 149 136,216
Omnicom Group, Inc. - 4,816 4,128 400,105
Owens-Corning - - - -
Pegasus Communications Corp.
Class A - 1,120 - -
Pioneer Natural Resources Co. - - - -
Prime Hospitality Corp. - - - 60,013
Pulte Corp. - 7,808 538 98,017
Renaissance Energy Ltd. - 54,176 - 143,829
Revco (D.S.), Inc. - 2,211 - -
Robert Half International, Inc. - 8,511 - -
Sherwin-Williams Co. - 52,788 3,228 -
Smith (A.O.) Corp. Class B - 9,246 713 40,186
Sonat, Inc. - 73,657 1,197 -
Southdown, Inc. - 7,265 154 -
Swift Transportation Co., Inc. - - - 85,158
Synetic, Inc. - - - 60,050
Toll Brothers, Inc. - 11,266 - -
Trinity Industries, Inc. - 7,485 2,322 176,412
UCAR International, Inc. - 28,632 - 85,535
USG Corp. - 11,950 - 130,754
TOTALS $ 54,085 $951,174 $48,257 $ 4,035,641
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and the Shareholders of Fidelity Magellan Fund:
We have audited the accompanying statement of assets and liabilities
of Fidelity Magellan Fund, including the schedule of portfolio
investments, as of March 31, 1998, and the related statement of
operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of the fund's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of March 31, 1998 by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Fidelity Magellan Fund as of March 31, 1998, the
results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then
ended, in conformity with generally accepted accounting principles.
/s/COOPERS & LYBRAND L.L.P. COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
May 1, 1998
DISTRIBUTIONS
The Board of Trustees of Fidelity Magellan Fund voted to pay to
shareholders of record at the opening of business on record date, the
following distributions derived from capital gains realized from sales
of portfolio securities, and dividends derived from net investment
income:
PAY DATE 5/5/97 12/8/97 5/4/98
RECORD DATE 5/2/97 12/5/97 5/1/98
DIVIDENDS $.75 $.50 $.20
SHORT-TERM
CAPITAL GAINS - $.75 $.11
LONG-TERM
CAPITAL GAINS $1.46 $3.00 $2.51
LONG-TERM
CAPITAL GAIN BREAK DOWN:
28% rate 100% 28.33% 11.83%
20% rate - 71.67% 88.17%
A total of 48% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund will notify shareholders in January 1999 of the applicable
percentage for use in preparing 1998 income tax returns.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity TouchTone Xpressprovides a single toll-free number to access
account balances, positions, quotes and trading. It's easy to navigate
the service, and on your first call, the system will help you create a
personal identification number (PIN) for security.
SM
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
0
*
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at
1-800-544-7272 for significant savings on Web access from internetMCI.
SM
(PHONE_GRAPHIC)
FIDELITY ON-LINE XPRESS+
TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A GAIN
OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY
MARKET FUNDS WILL BE ABLE TO
MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND
IS NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and
send you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
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3 Canal Plaza
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NEW JERSEY
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501 Route 17, South
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NEW YORK
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NORTH CAROLINA
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439 Fifth Avenue
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TENNESSEE
6150 Poplar Road
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10000 Research Boulevard
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400 East Las Colinas Blvd.
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14100 San Pedro
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19740 IH 45 North
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UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
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1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Abigail Johnson, Vice President
Robert Stansky, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
State Street Bank and Trust Company
North Quincy, MA
FIDELITY'S GROWTH FUNDS
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund
Contrafund II
Disciplined Equity Fund
Dividend Growth Fund
Emerging Growth Fund
Export and Multinational Fund
Fidelity Fifty
Growth Company Fund
Large Cap Stock Fund
Low-Priced Stock Fund
Magellan(registered trademark) Fund
Mid-Cap Stock Fund
New Millennium(registered trademark) Fund
OTC Portfolio
Retirement Growth Fund
Small Cap Selector
Small Cap Stock Fund
Stock Selector
TechnoQuantGrowth Fund
SM
Trend Fund
Value Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
TouchTone Xpress 1-800-544-5555
SM
* INDEPENDENT TRUSTEES
AUTOMATED LINE FOR QUICKEST SERVICE
