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Fidelity Magellan Fund – ‘N-30D’ for 9/30/98

As of:  Monday, 11/23/98   ·   For:  9/30/98   ·   Accession #:  35331-98-8   ·   File #:  811-01193

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

11/23/98  Fidelity Magellan Fund            N-30D       9/30/98    1:71K                                    Fidelity Destiny Ports

Annual or Semi-Annual Report Mailed to Shareholders   —   Rule 30d-1
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: N-30D       Annual or Semi-Annual Report Mailed to                51±   166K 
                          Shareholders                                           


Document Table of Contents

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11st Page   -   Filing Submission
"Income Tax Information
"Financial Statements


FIDELITY MAGELLAN(REGISTERED TRADEMARK) FUND SEMIANNUAL REPORT SEPTEMBER 30, 1998 (2 fidelity logo graphics)(registered trademark) 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 27 Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. NOTES 31 Notes to the financial statements. REPORT OF INDEPENDENT 37 The auditors' opinion. ACCOUNTANTS 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. 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. PRESIDENT'S MESSAGE (photo_of_Edward_C_Johnson_3d) DEAR SHAREHOLDER: The stock and bond markets continued to be influenced by competing factors as the third quarter of 1998 ended. On the one hand, low inflation, low unemployment and moderate growth in the U.S. economy provided a foundation for positive returns. But growing concerns about U.S. corporate earnings, combined with fears about the health of the economies and financial markets in Japan, Russia and many emerging markets, led to a continuation of the volatility that has marked most of the year. 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 SEPTEMBER PAST 6 PAST 1 PAST 5 PAST 10 30, 1998 MONTHS YEAR YEARS YEARS FIDELITY MAGELLAN -8.04% 4.61% 98.83% 395.34% FIDELITY MAGELLAN (INCL. -10.80% 1.47% 92.86% 380.48% 3.00% SALES CHARGE) S&P 500 (registered trademark) -6.97% 9.05% 147.93% 392.68% Growth Funds Average -11.80% -1.44% 98.73% 303.03% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, six months, 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 six months average represents a peer group of 1070 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 SEPTEMBER PAST 1 PAST 5 PAST 10 30, 1998 YEAR YEARS YEARS FIDELITY MAGELLAN 4.61% 14.74% 17.35% FIDELITY MAGELLAN (INCL. 1.47% 14.04% 17.00% 3.00% SALES CHARGE) S&P 500 9.05% 19.91% 17.29% Growth Funds Average -1.44% 14.35% 14.57% 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 1988/09/30 9700.00 10000.00 1988/10/31 9902.34 10278.00 1988/11/30 9768.79 10131.02 1988/12/31 9960.74 10308.32 1989/01/31 10768.81 11062.89 1989/02/28 10593.59 10787.42 1989/03/31 10908.99 11038.77 1989/04/30 11457.33 11611.68 1989/05/31 12062.24 12081.95 1989/06/30 11957.58 12013.09 1989/07/31 12962.25 13097.87 1989/08/31 13301.32 13354.59 1989/09/30 13531.56 13299.83 1989/10/31 13106.67 12991.28 1989/11/30 13322.25 13256.30 1989/12/31 13405.60 13574.45 1990/01/31 12541.02 12663.60 1990/02/28 12798.60 12826.96 1990/03/31 13125.62 13166.88 1990/04/30 12794.12 12837.71 1990/05/31 13932.07 14089.38 1990/06/30 13992.62 13993.57 1990/07/31 13834.25 13948.80 1990/08/31 12478.77 12687.82 1990/09/30 11686.91 12069.93 1990/10/31 11542.51 12018.03 1990/11/30 12415.89 12794.39 1990/12/31 12801.20 13151.35 1991/01/31 13696.07 13724.75 1991/02/28 14885.28 14706.07 1991/03/31 15390.87 15061.96 1991/04/30 15447.84 15098.11 1991/05/31 16328.66 15750.35 1991/06/30 15369.16 15028.98 1991/07/31 16323.76 15729.33 1991/08/31 16825.54 16102.12 1991/09/30 16761.90 15833.21 1991/10/31 16987.09 16045.38 1991/11/30 16147.53 15398.75 1991/12/31 18053.32 17160.36 1992/01/31 18061.21 16841.18 1992/02/29 18426.96 17060.12 1992/03/31 17927.02 16727.44 1992/04/30 18192.78 17219.23 1992/05/31 18367.08 17303.61 1992/06/30 18043.57 17045.78 1992/07/31 18549.94 17742.95 1992/08/31 18147.66 17379.22 1992/09/30 18355.83 17584.30 1992/10/31 18485.24 17645.84 1992/11/30 18952.22 18247.57 1992/12/31 19319.68 18472.01 1993/01/31 19828.66 18627.18 1993/02/28 20242.59 18880.51 1993/03/31 20984.59 19278.89 1993/04/30 21190.02 18812.34 1993/05/31 22025.21 19316.51 1993/06/30 22332.36 19372.53 1993/07/31 22578.72 19295.04 1993/08/31 23906.51 20026.32 1993/09/30 24165.66 19872.11 1993/10/31 24181.66 20283.47 1993/11/30 23384.99 20090.77 1993/12/31 24083.44 20333.87 1994/01/31 25035.22 21025.22 1994/02/28 24851.67 20455.44 1994/03/31 23699.33 19563.58 1994/04/30 23937.28 19814.00 1994/05/31 23661.52 20138.95 1994/06/30 22634.91 19645.54 1994/07/31 23392.48 20289.92 1994/08/31 24500.50 21121.80 1994/09/30 23863.30 20604.32 1994/10/31 24670.43 21067.92 1994/11/30 23318.14 20300.62 1994/12/31 23647.36 20601.68 1995/01/31 23406.64 21135.88 1995/02/28 24719.99 21959.55 1995/03/31 25643.93 22607.57 1995/04/30 26836.92 23273.37 1995/05/31 27587.16 24203.60 1995/06/30 29688.47 24765.85 1995/07/31 31967.54 25587.09 1995/08/31 32244.87 25651.31 1995/09/30 32835.09 26733.80 1995/10/31 31995.99 26638.36 1995/11/30 32707.09 27807.78 1995/12/31 32355.12 28343.36 1996/01/31 32821.74 29308.17 1996/02/29 32607.24 29579.85 1996/03/31 32934.63 29864.71 1996/04/30 33145.37 30304.91 1996/05/31 33295.17 31086.48 1996/06/30 33264.04 31204.92 1996/07/31 31716.47 29826.28 1996/08/31 32516.94 30455.32 1996/09/30 33819.93 32169.35 1996/10/31 34620.40 33056.58 1996/11/30 36861.72 35555.32 1996/12/31 36136.36 34850.97 1997/01/31 37722.51 37028.46 1997/02/28 37216.20 37318.76 1997/03/31 35934.73 35785.34 1997/04/30 37538.80 37921.72 1997/05/31 40216.81 40230.40 1997/06/30 41881.97 42032.72 1997/07/31 45396.28 45377.26 1997/08/31 43376.93 42835.23 1997/09/30 45929.87 45181.31 1997/10/31 44365.91 43672.26 1997/11/30 45230.68 45693.84 1997/12/31 45745.58 46478.41 1998/01/31 46240.16 46992.46 1998/02/28 49745.38 50381.56 1998/03/31 52251.86 52961.59 1998/04/30 52852.07 53494.39 1998/05/31 51807.74 52574.82 1998/06/30 54015.05 54710.41 1998/07/31 53611.03 54127.74 1998/08/31 45308.98 46301.95 1998/09/30 48048.41 49268.06 IMATRL PRASUN SHR__CHT 19980930 19981008 142354 R00000000000123 $10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested in Fidelity Magellan Fund on September 30, 1988, and the current 3.00% sales charge was paid. As the chart shows, by September 30, 1998, the value of the investment would have grown to $48,048 - a 380.48% increase on the initial investment. For comparison, look at how the Standard & Poor's 500 Index did over the same period. With dividends and capital gains, if any, reinvested, the same $10,000 would have grown to $49,268 - a 392.68% increase. (checkmark)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. FUND TALK: THE MANAGER'S OVERVIEW MARKET RECAP While it may be a clich<UNDEF> to compare the performance of a volatile market to a roller coaster, few comparisons would be more appropriate for the ups and downs that equity investors experienced during the six-month period ending September 30, 1998. Consider these swings: On Friday, July 17, the Dow Jones Industrial Average - an index of 30 blue-chip stocks - reached a record high of 9337.97. By the following Friday, it dropped over 400 points. On August 31, the Dow plunged 512.61 points - erasing all previous gains for the year. The next day, blue-chips roared back up 288.36. Other skyrocketing rallies and precipitous drops include the record-setting one-day gain of 380.53 points on September 8, followed by a 275.75-point plummet on September 9. Appropriately, the Dow closed on September 30 with a 237.90 loss, triggered by investor disappointment over a lower-than-hoped-for decrease in the Federal interest rate. At the controls of this see-sawing volatility were several drivers, including the continuing Asian and Russian economic dilemmas, chaotic emerging markets and concerns over U.S. political leadership. Despite these drawbacks, the U.S. economy demonstrated exceptional resiliency. Inflation remained benign, unemployment was at its lowest rate in decades and interest rates continued to decline. For the period, the Dow was down -10.10%, while the Standard & Poor's 500 Index - a market-capitalization weighted index of 500 widely held U.S. stocks - returned -6.97%. (photograph of Robert Stansky) An interview with Robert Stansky, Portfolio Manager of Fidelity Magellan Fund Q. BOB, HOW HAS THE FUND PERFORMED? A. As I'm sure most Magellan shareholders realize, it's been a very tough past few months for investors in the U.S. stock market. The fund's performance looks like this: During the six-month period that ended September 30, 1998, Magellan Fund had a total return of -8.04%. Despite being in negative territory, that return beat the Lipper growth funds average, which was -11.80% during the same period. The fund's benchmark index, the Standard & Poor's 500 Index, returned -6.97%. For the 12-month period that ended September 30, the fund returned 4.61%, the growth funds average returned -1.44% and the S&P 500 returned 9.05%. Q. YOU MENTIONED THE RECENT MARKET VOLATILITY. WHAT WERE THE FACTORS BEHIND IT, AND HOW DID IT AFFECT THE FUND? A. The volatility we've experienced in recent months had its roots in last October's downdraft of the Asian markets. The economic and financial crisis that began in the Far East - and later spread to other parts of the world - created serious global concerns about liquidity, or the ability of individuals and companies to convert assets to cash without significant losses, and credit risk, or the risk of borrowers defaulting on loans. The question that loomed over the U.S. market was the extent to which these factors would negatively affect the earnings of U.S. companies. At first, it was mostly worries about potential earnings shortfalls that caused stock prices to fall. Later in the period, however, we saw concrete evidence that these concerns were justified. Several large consumer food and personal products companies warned investors to lower their expectations regarding future profits. As I've stated many times, stock prices tend to follow company earnings over time. And to the extent that earnings forecasts are revised downward, stock prices often will head that way as well. The market drop over the past three months effectively negated gains made by U.S. stocks - and the fund - in the first half of 1998. Q. IN LIGHT OF THIS, HAVE YOU MADE CHANGES TO THE FUND? A. Mainly, I took advantage of lower stock prices by buying more of the stocks I was most optimistic about. However, market volatility does not change my core strategy. As always, I am focused on accurately forecasting corporate earnings over the next year or two. I invest in those companies whose earnings I believe will outpace the average earnings in the broad market and whose stocks are selling at reasonable valuations. At this point, there is still a healthy selection of companies that fit these criteria, and they are the opportunities I've pursued. Q. LET'S TAKE A CLOSER LOOK AT THE FUND'S INVESTMENTS. THE TECHNOLOGY SECTOR HAS RISEN AS A PERCENTAGE OF THE FUND'S INVESTMENTS FROM 15.3% SIX MONTHS AGO TO 21.6% ON SEPTEMBER 30. WHY? A. Technology names probably make up the bulk of those stocks I've been nibbling at since prices dropped so significantly, which accounts for part of the increase. At the end of the period, the technology sector remained among the most attractive in terms of its strong long-term unit growth and earnings potential. The rest of the increase is due to market appreciation of many of the fund's existing technology investments over the past six months. The short list of stocks that have made the greatest contribution to the fund's returns during this period includes Microsoft, Dell Computer, Cisco Systems, America Online, EMC, Lucent Technologies and IBM. Q. WHAT OTHER FACTORS INFLUENCED THE FUND'S PERFORMANCE? A. Selected health care stocks such as Schering-Plough and Warner-Lambert benefited from continued strong earnings outlooks, particularly relative to stocks in other sectors of the market. Financial stocks were a double-edged sword. While the fund generally benefited from being underweighted in financials relative to the broad market and some of its peers, many of these stocks fell sharply during the period. A number of large U.S. financial institutions such as Citicorp and Chase Manhattan had significant overseas exposure. Weakening global economies and potential credit losses raised very real concerns about future profit growth for these companies. Q. ANY OTHER SIGNIFICANT DISAPPOINTMENTS? A. The biggest was Cendant, a services company that owns brands such as Avis car rentals, Howard Johnson hotels and Century 21 real estate. In mid-April, the company unexpectedly disclosed accounting irregularities. Because Cendant's earnings had been overstated as a result, its future growth prospects immediately worsened significantly. That led to heavy selling of the stock and a substantial drop in its price. While this problem caught me by surprise, accounting irregularities of this type within a company can be very difficult to detect. Q. ON A DIFFERENT SUBJECT, THE NUMBER OF INDIVIDUAL HOLDINGS IN THE FUND HAS DECREASED FROM ABOUT 470 ON MARCH 31 TO ABOUT 350 ON SEPTEMBER 30. WHAT'S BEHIND THIS? A. This is part of a strategy I've gradually been employing as market conditions have given me the opportunity. As I've reduced the number of overall holdings in the fund, I've increased the concentration of the fund's investments in the top 10 and top 50 largest holdings. This was a more difficult process when markets were generally rising, but the recent volatility has provided me the opportunity to buy more of my favorite stocks at attractive prices. Historical analysis I've done shows that the fund's largest holdings have had the strongest positive influence on its overall performance. Thus, I believe I can incrementally improve Magellan's long-term performance by giving heavier weighting to my best ideas. As a result, the percentage of the fund's investments concentrated in its top 10 largest holdings has increased from 16.6% on March 31 to 21.8% on September 30. The percentage of investments in the top 50 stocks has risen, too. Finally, it's important to note that the fund remained well diversified across more than 300 stocks in more than a dozen different industries at the end of the period. Q. BOB, WHAT'S YOUR PERSPECTIVE GOING FORWARD? A. As Magellan shareholders know, I don't predict the near-term direction of the market. There is still a great deal of uncertainty about how the worldwide economic troubles will impact U.S. corporate profits; we'll learn more as companies report their third- and fourth-quarter results. Over longer periods, stock prices generally follow earnings, and I will continue to focus on those companies that I believe can grow earnings faster than the overall market. The market backdrop - in terms of interest rates and inflation - at this point still appears relatively favorable. However, we all know that can change. If I can pinpoint companies with significant potential for earnings growth as well as companies that may be growing more slowly but whose stock valuations are historically low, I believe the fund has an excellent chance to outperform the market and its peers over the long term. 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. (checkmark)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 September 30, 1998, more than $65.8 billion MANAGER: Robert Stansky, since 1996; manager, Fidelity Growth Company Fund and Fidelity Advisor Equity Growth, 1987-1996; Fidelity Emerging Growth Fund, 1990-1991; Fidelity Select Defense and Aerospace Portfolio, 1984- 1987; joined Fidelity in 1983 BOB STANSKY ON INVESTING IN A VOLATILE MARKET: "Volatile market conditions don't change the fundamental way in which I manage money. I believe over the long run the best defense is a good offense. If I can find companies that are growing earnings over a one-, two- or three-year period, that are able to finance their growth and are selling at attractive valuations, I've provided the fund with the opportunity for capital appreciation. That's opposed to battening down the hatches and investing in defensive-type stocks that may not fall as far as others in a down market. Stocks can make strong gains over short periods, and I don't want to be standing on the sidelines when upside potential is realized. "The bottom line is that I don't time or predict the market; any number of factors can make stocks rise or fall over the course of a day, week, month or even a year. But over the long haul it all gets down to one thing: earnings. Companies that can grow their profits significantly and whose stocks are fairly priced or undervalued have the best chance at appreciation. Those are the opportunities that will catch my eye time and time again, whether the current direction of the market is up or down." INVESTMENT CHANGES [Download Table] TOP TEN STOCKS AS OF SEPTEMBER 30, 1998 % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS IN THESE STOCKS 6 MONTHS AGO General Electric Co. 3.9 3.5 Microsoft Corp. 3.6 2.2 Intel Corp. 2.1 1.0 Cisco Systems, Inc. 2.0 1.1 Merck & Co., Inc. 1.9 1.7 Wal-Mart Stores, Inc. 1.8 1.4 Home Depot, Inc. 1.8 1.4 MCI WorldCom, Inc. 1.7 1.2 Lucent Technologies, Inc. 1.5 0.8 America Online, Inc. 1.5 0.4 [Download Table] TOP FIVE MARKET SECTORS AS OF SEPTEMBER 30, 1998 % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS IN THESE MARKET SECTORS 6 MONTHS AGO TECHNOLOGY 21.6 15.3 HEALTH 11.7 11.7 FINANCE 11.2 13.1 RETAIL & WHOLESALE 9.3 8.6 INDUSTRIAL 7.0 8.1 MACHINERY & EQUIPMENT ASSET ALLOCATION (% OF FUND'S INVESTMENTS) AS OF SEPTEMBER 30, 1998 * ROW: 1, COL: 1, VALUE: 93.59999999999999 ROW: 1, COL: 2, VALUE: 6.4 STOCKS 93.6% SHORT-TERM INVESTMENTS 6.4% *FOREIGN INVESTMENTS 4.8% AS OF MARCH 31, 1998 ** ROW: 1, COL: 1, VALUE: 96.2 ROW: 1, COL: 2, VALUE: 3.8 STOCKS 96.2% SHORT-TERM INVESTMENTS 3.8% **FOREIGN INVESTMENTS 8.6% INVESTMENTS SEPTEMBER 30, 1998 SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES COMMON STOCKS - 93.6% SHARES VALUE (NOTE 1) (000S) AEROSPACE & DEFENSE - 1.3% AEROSPACE & DEFENSE - 1.2% AlliedSignal, Inc. 7,852,500 $ 277,782 Boeing Co. 2,908,600 99,801 Gulfstream Aerospace 938,000 37,755 Corp. (a) Textron, Inc. 1,211,400 73,441 United Technologies Corp. 3,821,900 292,136 780,915 DEFENSE ELECTRONICS - 0.0% Raytheon Co. Class B 651,500 35,140 SHIP BUILDING & REPAIR - 0.1% General Dynamics Corp. 1,003,800 50,378 TOTAL AEROSPACE & 866,433 DEFENSE BASIC INDUSTRIES - 1.7% CHEMICALS & PLASTICS - 1.0% Air Products & Chemicals, 500,000 14,875 Inc. du Pont (E.I.) de Nemours 5,672,300 318,358 & Co. Hanna (M.A.) Co. 1,358,325 15,281 Monsanto Co. 3,982,800 224,530 Praxair, Inc. 1,356,000 44,324 Schulman (A.), Inc. 174,625 2,467 Synetic, Inc. (a)(c) 1,157,582 48,040 Trivest 1992 Special Fund 26.6(d) 4,487 Ltd. 672,362 IRON & STEEL - 0.2% Aeroquip-Vickers, Inc. 541,500 15,568 Nucor Corp. 2,692,400 109,379 124,947 METALS & MINING - 0.2% Aluminum Co. of America 1,950,000 138,450 PACKAGING & CONTAINERS - 0.0% Owens-Illinois, Inc. (a) 742,700 18,568 PAPER & FOREST PRODUCTS - 0.3% Fort James Corp. 737,500 24,199 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) BASIC INDUSTRIES - CONTINUED PAPER & FOREST PRODUCTS - CONTINUED Kimberly-Clark Corp. 2,889,800 $ 117,037 Louisiana-Pacific Corp. 2,032,600 41,414 182,650 TOTAL BASIC 1,136,977 INDUSTRIES CONSTRUCTION & REAL ESTATE - 1.9% BUILDING MATERIALS - 1.0% Centex Construction 577,800 19,717 Products, Inc. Lafarge Corp. (c) 4,418,943 126,216 Masco Corp. 6,075,800 149,617 Owens-Corning 1,779,100 57,932 Sherwin-Williams Co. 6,836,400 147,837 Southdown, Inc. (c) 2,199,792 98,991 USG Corp. 2,413,000 104,362 704,672 CONSTRUCTION - 0.3% Centex Corp. 1,200,000 41,400 Clayton Homes, Inc. 1,262,687 22,097 Oakwood Homes Corp. (c) 3,719,200 48,815 Pulte Corp. (c) 2,878,000 70,691 183,003 REAL ESTATE INVESTMENT TRUSTS - 0.6% Boston Properties, Inc. 1,105,000 31,493 Crescent Real Estate 2,101,900 53,073 Equities, Inc. Equity Office Properties 2,086,400 51,117 Trust Equity Residential 1,271,500 53,641 Properties Trust (SBI) Patriot American 1,988,400 25,352 Hospitality, Inc. Unit Public Storage, Inc. 1,136,300 30,467 Starwood Hotels & Resorts 4,400,327 134,210 379,353 TOTAL CONSTRUCTION 1,267,028 & REAL ESTATE DURABLES - 3.2% AUTOS, TIRES, & ACCESSORIES - 1.5% AutoZone, Inc. (a) 3,135,800 77,219 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) DURABLES - CONTINUED AUTOS, TIRES, & ACCESSORIES - CONTINUED Chrysler Corp. 1,819,300 $ 87,099 Circuit City Stores, Inc. - 224,300 1,318 CarMax Group (a) Danaher Corp. 2,507,000 75,210 Ford Motor Co. 11,504,000 539,969 Lear Corp. (a) 1,316,300 57,588 Pep Boys-Manny, Moe & 1,155,000 15,448 Jack Republic Industries, Inc. (a) 10,379,927 151,158 1,005,009 CONSUMER DURABLES - 0.3% Minnesota Mining & 2,909,100 214,364 Manufacturing Co. CONSUMER ELECTRONICS - 0.6% Black & Decker Corp. (c) 4,780,000 198,968 General Motors Corp. 500,000 18,406 Class H Matsushita Electric 614,000 8,335 Industrial Co. Ltd. Maytag Corp. 2,600,000 124,150 Whirlpool Corp. 611,000 28,717 378,576 HOME FURNISHINGS - 0.4% Leggett & Platt, Inc. (c) 12,416,700 257,647 TEXTILES & APPAREL - 0.4% Liz Claiborne, Inc. 2,547,800 66,721 NIKE, Inc. Class B 3,398,500 125,107 Polo Ralph Lauren Corp. 1,799,000 35,868 Class A (a)(c) Tommy Hilfiger (a) 1,100,000 45,100 Warnaco Group, Inc. Class 800,000 18,500 A 291,296 TOTAL DURABLES 2,146,892 ENERGY - 6.2% ENERGY SERVICES - 0.5% Halliburton Co. 4,899,600 139,945 Schlumberger Ltd. 3,271,300 164,587 304,532 OIL & GAS - 5.7% Amoco Corp. 5,447,740 293,497 Anadarko Petroleum 7,434,100 292,253 Corp. (c) COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) ENERGY - CONTINUED OIL & GAS - CONTINUED Apache Corp. 2,659,715 $ 71,314 British Petroleum Co. PLC 13,400,000 194,968 Burlington Resources, Inc. 4,082,100 152,568 Canadian Natural 2,702,600 44,127 Resources Ltd. (a) Chevron Corp. 3,034,200 255,062 Coastal Corp. (The) 5,384,000 181,710 Cooper Cameron Corp. (a) 1,671,500 47,011 Elf Aquitaine 1,215,600 151,117 Exxon Corp. 6,253,800 438,939 Mobil Corp. 1,045,000 79,355 Occidental Petroleum Corp. 8,571,400 184,285 Phillips Petroleum Co. 2,888,300 130,335 Poco Petroleums Ltd. (a) 3,481,700 34,222 Renaissance Energy Ltd. (a) 1,425,000 19,451 Royal Dutch Petroleum Co. 9,600,000 457,200 (NY Registry Gilder 1.25) Texaco, Inc. 5,852,000 366,847 Total SA Class B 2,344,300 294,361 Unocal Corp. 2,510,369 91,001 USX-Marathon Group 550,000 19,491 3,799,114 TOTAL ENERGY 4,103,646 FINANCE - 11.2% BANKS - 3.7% BANACCI SA de CV Class 3,840,000 3,382 B (a) Banc One Corp. 1,835,357 78,232 BankAmerica Corp. 8,086,900 486,225 Chase Manhattan Corp. 5,870,000 253,878 Citicorp 4,429,800 411,695 Comerica, Inc. 775,000 42,480 National City Corp. 306,551 20,213 NationsBank Corp. 4,051,618 216,762 Norwest Corp. 600,000 21,488 Societe Generale, France 485,000 53,720 Class A SunTrust Banks, Inc. 100,000 6,200 Synovus Finanical Corp. 1,709,775 33,768 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) FINANCE - CONTINUED BANKS - CONTINUED U.S. Bancorp 6,111,600 $ 217,344 Wells Fargo & Co. 1,664,900 591,040 2,436,427 CREDIT & OTHER FINANCE - 1.3% American Express Co. 1,100,000 85,388 Associates First Capital 4,758,787 310,511 Corp. First Chicago NBD Corp. 200,000 13,700 Fleet Financial Group, Inc. 1,761,000 129,323 Greenpoint Financial Corp. 2,351,800 74,964 Household International, 2,620,395 98,265 Inc. Providian Financial Corp. 2,201,300 186,698 898,849 FEDERAL SPONSORED CREDIT - 1.9% Fannie Mae 12,048,000 774,084 Freddie Mac 9,061,600 447,983 SLM Holding Corp. 481,950 15,633 1,237,700 INSURANCE - 3.3% Aetna, Inc. 404,900 28,141 AFLAC, Inc. 4,604,800 131,525 Allstate Corp. 11,813,000 492,454 American International 8,009,225 616,710 Group, Inc. Chubb Corp. (The) 1,100,000 69,300 General Re Corp. 326,100 66,198 Hartford Financial Services 400,000 18,975 Group, Inc. Old Republic International 2,087,700 46,973 Corp. Progressive Corp. 1,624,700 183,185 Provident Companies, Inc. 238,000 8,033 Reliastar Financial Corp. 1,691,616 65,973 SunAmerica, Inc. 4,237,450 258,484 UNUM Corp. 4,333,400 215,316 2,201,267 SAVINGS & LOANS - 0.2% Ahmanson (H.F.) & Co. 500,000 27,750 Charter One Financial, Inc. 2,590,440 64,437 Washington Mutual, Inc. 2,253,750 76,064 168,251 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) FINANCE - CONTINUED SECURITIES INDUSTRY - 0.8% Merrill Lynch & Co., Inc. 1,673,200 $ 79,268 Morgan Stanley, Dean 2,650,035 114,117 Witter, Discover & Co. Travelers Group, Inc. (The) 8,815,389 330,577 523,962 TOTAL FINANCE 7,466,456 HEALTH - 11.7% DRUGS & PHARMACEUTICALS - 8.6% American Home Products 14,295,200 748,711 Corp. Bristol-Myers Squibb Co. 9,080,800 943,268 Elan Corp. PLC ADR (a) 2,301,000 165,816 Lilly (Eli) & Co. 6,351,200 497,378 Merck & Co., Inc. 9,587,600 1,242,193 Pfizer, Inc. 4,326,700 458,360 Rhone-Poulenc SA Class A 2,000,932 83,499 Sankyo Co. Ltd. 1,514,000 33,459 Schering-Plough Corp. 8,328,600 862,531 Takeda Chemical Industries 2,130,000 56,891 Ltd. Warner-Lambert Co. 8,534,100 644,325 XOMA Corp. (a) 3,030 7 5,736,438 MEDICAL EQUIPMENT & SUPPLIES - 2.2% Abbott Laboratories 1,470,700 63,884 Baxter International, Inc. 300,000 17,850 Becton, Dickinson & Co. 2,546,200 104,712 Boston Scientific Corp. (a) 4,731,000 243,055 Johnson & Johnson 7,900,000 618,175 McKesson Corp. 2,265,000 207,531 Medtronic, Inc. 3,009,000 174,146 St. Jude Medical, Inc. (a) 1,198,900 27,725 1,457,078 MEDICAL FACILITIES MANAGEMENT - 0.9% Carematrix Corp. (a)(c) 899,100 20,455 Columbia/HCA Healthcare 8,529,253 171,118 Corp. HEALTHSOUTH Corp. (a) 16,144,800 170,529 Humana, Inc. (a) 900,000 14,738 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) HEALTH - CONTINUED MEDICAL FACILITIES MANAGEMENT - CONTINUED Tenet Healthcare Corp. (a) 1,392,195 $ 40,026 United HealthCare Corp. 2,494,100 87,294 Universal Health Services, 788,100 32,903 Inc. Class B (a) Wellpoint Health Networks, 1,000,000 56,063 Inc. (a) 593,126 TOTAL HEALTH 7,786,642 INDUSTRIAL MACHINERY & EQUIPMENT - 7.0% ELECTRICAL EQUIPMENT - 4.8% Alcatel Alsthom 1,356,000 115,204 Compagnie Generale d'Electricite SA Emerson Electric Co. 5,482,400 341,279 General Electric Co. 32,803,100 2,609,889 Loral Space & 580,200 8,558 Communications Ltd. (a) Philips Electronics NV 1,600,000 85,355 (Bearer) SLI, Inc. (a) 519,000 8,012 3,168,297 INDUSTRIAL MACHINERY & EQUIPMENT - 2.0% Case Corp. (c) 4,440,000 96,570 Caterpillar, Inc. 1,770,100 78,880 Cooper Industries, Inc. 1,150,000 46,863 Deere & Co. 1,880,000 56,870 Illinois Tool Works, Inc. 6,400,000 348,800 Ingersoll-Rand Co. 902,850 34,252 Tyco International Ltd. 12,202,206 674,172 1,336,407 POLLUTION CONTROL - 0.2% Republic Services, Inc. 2,000,000 39,000 Class A (a) Waste Management, Inc. 1,652,500 79,423 118,423 TOTAL INDUSTRIAL 4,623,127 MACHINERY & EQUIPMENT MEDIA & LEISURE - 5.3% BROADCASTING - 2.7% CBS Corp. 12,464,164 302,256 Chancellor Media Corp. (a) 100,000 3,338 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) MEDIA & LEISURE - CONTINUED BROADCASTING - CONTINUED Clear Channel 7,849,680 $ 372,860 Communications, Inc. (a) Comcast Corp. Class A 875,000 41,070 (special) Cox Communications, Inc. 844,700 46,142 Class A (a) Heftel Broadcasting Corp. 663,800 25,058 Class A (a) MediaOne Group, Inc. (a) 1,450,000 64,434 Metromedia Fiber 164,200 5,378 Network, Inc. Class A Nielsen Media Research, 472,966 4,848 Inc. (a) Tele-Communications, Inc. 1,936,201 75,754 (TCI Group) Series A (a) Time Warner, Inc. 9,459,603 828,306 Univision Communications, 595,000 17,701 Inc. Class A (a) USA Networks, Inc. (a) 1,196,980 23,266 1,810,411 ENTERTAINMENT - 1.2% Alliance Gaming 17,753 36 Corp. (a)(e) Disney (Walt) Co. 9,557,000 241,912 News Corp. Ltd. ADR 3,400,000 87,125 Viacom, Inc. Class B 8,254,400 478,755 (non-vtg.) (a) 807,828 LODGING & GAMING - 0.4% Extended Stay America, 4,828,503 38,628 Inc. (a)(c) Hilton Hotels Corp. 3,929,200 67,042 Host Marriott Corp. (a)(c) 13,228,400 167,835 Prime Hospitality Corp. (a) 1,577,600 11,043 Promus Hotel Corp. (a) 100,000 2,756 287,304 PUBLISHING - 0.4% Gannet Co., Inc. 2,010,400 107,682 Harcourt General, Inc. 848,900 41,066 Houghton Mifflin Co. 17,100 530 McGraw-Hill Companies, 163,000 12,918 Inc. Times Mirror Co. Class A 697,300 37,044 Tribune Co. 823,100 41,412 240,652 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) MEDIA & LEISURE - CONTINUED RESTAURANTS - 0.6% Host Marriott Services 2,832,100 $ 25,843 Corp. (a)(c) McDonald's Corp. 6,282,200 374,969 400,812 TOTAL MEDIA & LEISURE 3,547,007 NONDURABLES - 4.2% BEVERAGES - 0.9% Coca-Cola Co. (The) 5,466,800 315,024 Coca-Cola Enterprises, Inc. 525,000 13,256 PepsiCo, Inc. 9,656,800 284,272 Stroh Brewery Co. 21,307 76 warrants 7/1/01 (a) 612,628 FOODS - 0.1% Bestfoods 800,000 38,750 Heinz (H.J.) Co. 585,800 29,949 Sara Lee Corp. 500,000 27,000 95,699 HOUSEHOLD PRODUCTS - 1.7% Avon Products, Inc. 2,346,000 65,835 Clorox Co. 70,200 5,792 Estee Lauder Companies, 863,000 44,229 Inc. Gillette Co. 9,775,800 373,924 Procter & Gamble Co. 6,247,300 443,168 Revlon, Inc. Class A (a) 200,000 6,363 Unilever NV (NY shares) 3,029,700 185,569 1,124,880 TOBACCO - 1.5% Philip Morris Companies, 21,410,200 986,207 Inc. TOTAL NONDURABLES 2,819,414 RETAIL & WHOLESALE - 9.3% APPAREL STORES - 1.3% Gap, Inc. 11,355,800 599,018 Intimate Brands, Inc. Class 1,090,300 20,648 A COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) RETAIL & WHOLESALE - CONTINUED APPAREL STORES - CONTINUED Lamonts Apparel, Inc. (a): Class A 433,431 $ 271 Class A warrants 269,324 67 1/31/08 Class B warrants 85,594 21 1/31/08 Limited, Inc. (The) 5,100,400 111,890 TJX Companies, Inc. 5,496,800 97,912 829,827 DRUG STORES - 0.7% CVS Corp. 9,776,286 428,324 Rite Aid Corp. 1,008,200 35,791 464,115 GENERAL MERCHANDISE STORES - 3.0% Consolidated Stores 2,519,068 49,437 Corp. (a) Costco Companies, Inc. (a) 855,500 40,529 Dayton Hudson Corp. 12,509,400 447,211 Federated Department 4,215,700 153,346 Stores, Inc. (a) Ito-Yokado Co. Ltd. 88,000 4,186 J.C. Penney Co., Inc. 1,907,100 85,700 Neiman-Marcus Group, 668,700 14,461 Inc. (a) Wal-Mart Stores, Inc. 22,172,500 1,211,173 2,006,043 GROCERY STORES - 0.8% Meyer (Fred), Inc. (a) 1,405,000 54,619 Safeway, Inc. (a) 10,954,400 508,010 562,629 RETAIL & WHOLESALE, MISCELLANEOUS - 3.5% AgriBioTech, Inc. (a) 1,137,500 12,655 Circuit City Stores, Inc. - 1,202,500 40,058 Circuit City Group Home Depot, Inc. 30,402,450 1,200,897 Lowe's Companies, Inc. 13,047,000 415,058 N2K, Inc. 394,700 2,837 Office Depot, Inc. (a) 8,644,400 193,959 Pier 1 Imports, Inc. 600,000 4,500 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) RETAIL & WHOLESALE - CONTINUED RETAIL & WHOLESALE, MISCELLANEOUS - CONTINUED Staples, Inc. (a) 12,582,900 $ 369,623 Tandy Corp. 1,722,600 92,159 2,331,746 TOTAL RETAIL & 6,194,360 WHOLESALE SERVICES - 1.5% ADVERTISING - 0.7% Interpublic Group of 200,000 10,788 Companies, Inc. Omnicom Group, Inc. 8,151,576 366,821 Outdoor Systems, Inc. (a) 5,975,437 116,521 494,130 LEASING & RENTAL - 0.0% Hertz Corp. Class A 203,000 8,399 PRINTING - 0.0% Wallace Computer 575,300 10,319 Services, Inc. SERVICES - 0.8% AccuStaff, Inc. (a) 532,000 7,747 Assisted Living Concepts, 1,103,000 15,649 Inc. (a)(c) Cendant Corp. (a) 14,487,000 168,411 Manpower, Inc. 2,955,900 60,411 Rentokil Initial PLC 10,566,935 65,207 Robert Half International, 3,338,950 144,201 Inc. (a) Service Corp. International 1,200,000 38,250 499,876 TOTAL SERVICES 1,012,724 TECHNOLOGY - 21.6% COMMUNICATIONS EQUIPMENT - 4.6% 3Com Corp. (a) 2,866,700 86,180 Ascend Communications, 4,079,600 185,622 Inc. (a) Cisco Systems, Inc. (a) 21,980,200 1,358,651 Lucent Technologies, Inc. 14,817,724 1,023,349 Newbridge Networks 2,116,200 37,959 Corp. (a) Northern Telecom Ltd. 105,900 3,396 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) TECHNOLOGY - CONTINUED COMMUNICATIONS EQUIPMENT - CONTINUED OY Nokia AB: Series A 1,200,000 $ 94,088 sponsored ADR 3,577,000 280,571 3,069,816 COMPUTER SERVICES & SOFTWARE - 8.0% America Online, Inc. 9,065,100 1,008,492 BMC Software, Inc. 4,817,700 289,363 Ceridian Corp. (a) 1,250,700 71,759 CompUSA, Inc. (a) 2,085,700 36,109 Computer Associates 5,052,900 186,957 International, Inc. Compuware Corp. (a) 1,100,000 64,763 DST Systems, Inc. (a) 200,400 10,571 Electronic Arts, Inc. (a) 1,711,100 75,075 Equifax, Inc. 870,170 31,054 First Data Corp. 4,424,000 103,964 HBO & Co. 6,000,000 173,250 IMS Health, Inc. 1,418,900 87,883 Keane, Inc. (a) 600,000 21,075 Lycos, Inc. (a) 100,000 3,381 Microsoft Corp. (a) 22,097,700 2,432,128 Netscape Communications 1,370,000 29,969 Corp. (a) Oracle Corp. (a) 17,315,600 504,317 Parametric Technology 3,405,000 34,263 Corp. (a) PeopleSoft, Inc. (a) 3,559,200 116,119 SAP AG sponsored ADR 417,000 16,237 Sportsline USA, Inc. 400,000 6,975 Yahoo, Inc. (a) 400,000 51,800 5,355,504 COMPUTERS & OFFICE EQUIPMENT - 5.5% Comdisco, Inc. (c) 9,900,000 134,888 Compaq Computer Corp. 17,765,500 561,834 Dell Computer Corp. (a) 9,688,400 637,012 EMC Corp. (a) 9,660,482 552,459 Fore Systems, Inc. (a) 1,400,000 23,275 Hewlett-Packard Co. 770,600 40,794 International Business 6,928,400 886,835 Machines Corp. Pitney Bowes, Inc. 4,875,600 266,025 Seagate Technology, 2,455,300 61,536 Inc. (a) Sun Microsystems, Inc. (a) 3,950,000 196,759 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) TECHNOLOGY - CONTINUED COMPUTERS & OFFICE EQUIPMENT - CONTINUED Tech Data Corp. (a) 788,800 $ 39,489 Xerox Corp. 3,200,000 271,200 3,672,106 ELECTRONIC INSTRUMENTS - 0.1% Thermo Electron Corp. (a) 2,733,200 41,169 Thermo Instruments 200,000 2,200 Systems, Inc. (a) Waters Corp. (a) 765,800 51,309 94,678 ELECTRONICS - 3.2% Altera Corp. (a) 200,000 7,025 Analog Devices, Inc. (a) 1,453,866 23,353 Intel Corp. 16,408,800 1,407,055 Lattice Semiconductor 77,100 1,908 Corp. (a) Linear Technology Corp. 1,588,300 79,415 LSI Logic Corp. (a) 900,000 11,363 Maxim Integrated Products, 1,889,200 52,661 Inc. (a) Micron Technology, Inc. (a) 1,200,000 36,525 Motorola, Inc. 1,309,400 55,895 Rambus, Inc. (a) 800,000 51,200 Rohm Co. Ltd. 483,000 45,948 Solectron Corp. (a) 1,430,100 68,645 Texas Instruments, Inc. 5,397,000 284,692 Xilinx, Inc. (a) 100,000 3,500 2,129,185 PHOTOGRAPHIC EQUIPMENT - 0.2% Fuji Photo Film Co. Ltd. 3,032,000 104,280 TOTAL TECHNOLOGY 14,425,569 TRANSPORTATION - 1.3% AIR TRANSPORTATION - 0.2% AMR Corp. (a) 1,978,100 109,661 Delta Air Lines, Inc. 563,300 54,781 164,442 RAILROADS - 0.9% Bombardier, Inc. Class B 8,700 95 Burlington Northern Santa 1,741,920 55,741 Fe Corp. COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) TRANSPORTATION - CONTINUED RAILROADS - CONTINUED CSX Corp. 6,895,600 $ 290,046 Norfolk Southern Corp. 8,409,100 244,389 590,271 TRUCKING & FREIGHT - 0.2% CNF Transportation, Inc. 642,000 18,698 Landstar System, Inc. (a)(c) 901,200 25,403 Swift Transportation Co., 3,333,250 57,915 Inc. (a)(c) 102,016 TOTAL 856,729 TRANSPORTATION UTILITIES - 6.2% CELLULAR - 0.4% AirTouch Communications, 1,990,000 113,430 Inc. (a) Nextel Communications, 1,700,000 34,319 Inc. Class A (a) Teleglobe, Inc. 400,000 10,410 Vodafone Group PLC 782,900 88,272 sponsored ADR 246,431 ELECTRIC UTILITY - 0.4% Duke Energy Corp. 1,382,000 91,471 PG&E Corp. 5,413,048 172,879 264,350 GAS - 0.2% Enron Corp. 2,581,300 136,325 TELEPHONE SERVICES - 5.2% ALLTEL Corp. 213,000 10,091 Ameritech Corp. 3,018,400 142,997 AT&T Corp. 12,367,280 722,713 Bell Atlantic Corp. 979,100 47,425 BellSouth Corp. 5,228,700 393,460 GTE Corp. 6,770,800 372,394 MCI WorldCom, Inc. (a) 23,027,341 1,125,461 Qwest Communications 1,100,000 34,444 International, Inc. (a) SBC Communications, Inc. 7,332,800 325,851 Sprint Corp. 1,444,700 104,018 Telebras sponsored ADR 1,338,300 92,343 COMMON STOCKS - CONTINUED SHARES VALUE (NOTE 1) (000S) UTILITIES - CONTINUED TELEPHONE SERVICES - CONTINUED Telecom Italia Mobile Spa 13,960,000 $ 81,455 Telefonica de Espana SA 813,000 29,696 3,482,348 TOTAL UTILITIES 4,129,454 TOTAL COMMON 62,382,458 STOCKS (Cost $43,727,761) PREFERRED STOCKS - 0.0% CONVERTIBLE PREFERRED STOCKS - 0.0% BASIC INDUSTRIES - 0.0% CHEMICALS & PLASTICS - 0.0% Sealed Air Corp. Series A, 416,242 15,037 $2.00 INDUSTRIAL MACHINERY & EQUIPMENT - 0.0% ELECTRICAL EQUIPMENT - 0.0% Ampex Corp. 8% 631 984 non-cumulative (a) TOTAL CONVERTIBLE 16,021 PREFERRED STOCKS NONCONVERTIBLE PREFERRED STOCKS - 0.0% INDUSTRIAL MACHINERY & EQUIPMENT - 0.0% ELECTRICAL EQUIPMENT - 0.0% Ampex Corp. 8% 1,379 2,151 non-cumulative (a) TOTAL PREFERRED 18,172 STOCKS (Cost $21,748) COMMERCIAL MORTGAGE SECURITIES - 0.0% MOODY PRINCIPAL 'S AMOUNT (000S) RATING S (UNAUD ITED) Bardell Associates Note - $ 4,278 4,545 Trust 12.5%, 11/1/08 (e) (Cost $4,349) CASH EQUIVALENTS - 6.4% MATURITY VALUE (NOTE 1) AMOUNT (000S) (000S) Investments in repurchase $ 1,864,146 $ 1,863,864 agreements (U.S. Treasury obligations), in a joint trading account at 5.44%, dated 9/30/98 due 10/1/98 SHARES Taxable Central Cash 2,424,151,337 2,424,151 Fund (b) TOTAL CASH 4,288,015 EQUIVALENTS (Cost $4,288,015) TOTAL INVESTMENT $ 66,693,190 IN SECURITIES - 100% (Cost $48,041,873) LEGEND (a) Non-income producing (b) At period end, the seven-day yield on the Taxable Central Cash Fund was 5.36%. The yield refers to the income earned by investing in the fund over the seven-day period, expressed as an annual percentage. (c) Affiliated company (see Note 6 of Notes to Financial Statements). (d) Share amount represents number of units held. (e) 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: SECURITY ACQUISTION ACQUISITION DATE COST (000S) Alliance Gaming 7/28/98 $ - Corp. Bardell Associates 4/19/94 $ 4,349 Note Trust 12.5%, 11/1/08 INCOME TAX INFORMATION At September 30, 1998, the aggregate cost of investment securities for income tax purposes was $48,087,491,000. Net unrealized appreciation aggregated $18,605,699,000, of which $21,131,111,000 related to appreciated investment securities and $2,525,412,000 related to depreciated investment securities. FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES [Enlarge/Download Table] AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) SEPTEMBER 30, 1998 ASSETS INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 66,693,190 AGREEMENTS OF $1,863,864) (COST $48,041,873) - SEE ACCOMPANYING SCHEDULE CASH 1,732 RECEIVABLE FOR INVESTMENTS SOLD 315,480 RECEIVABLE FOR FUND SHARES SOLD 59,373 DIVIDENDS RECEIVABLE 72,186 INTEREST RECEIVABLE 9,689 OTHER RECEIVABLES 5,310 TOTAL ASSETS 67,156,960 LIABILITIES PAYABLE FOR INVESTMENTS PURCHASED $ 1,177,181 PAYABLE FOR FUND SHARES REDEEMED 112,794 ACCRUED MANAGEMENT FEE 22,661 OTHER PAYABLES AND ACCRUED EXPENSES 11,273 TOTAL LIABILITIES 1,323,909 NET ASSETS $ 65,833,051 NET ASSETS CONSIST OF: PAID IN CAPITAL $ 45,314,135 UNDISTRIBUTED NET INVESTMENT INCOME 246,239 ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 1,620,172 INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 18,652,505 AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES NET ASSETS, FOR 675,075 SHARES OUTSTANDING $ 65,833,051 NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $97.52 ($65,833,051 (DIVIDED BY) 675,075 SHARES) MAXIMUM OFFERING PRICE PER SHARE (100/97.00 OF $97.52) $100.54 STATEMENT OF OPERATIONS [Enlarge/Download Table] AMOUNTS IN THOUSANDS SIX MONTHS ENDED SEPTEMBER 30, 1998 INVESTMENT INCOME $ 385,684 DIVIDENDS (INCLUDING $10,453 RECEIVED FROM AFFILIATED ISSUERS) INTEREST 76,169 TOTAL INCOME 461,853 EXPENSES MANAGEMENT FEE $ 211,873 BASIC FEE PERFORMANCE ADJUSTMENT (58,099) TRANSFER AGENT FEES 62,525 ACCOUNTING FEES AND EXPENSES 481 NON-INTERESTED TRUSTEES' COMPENSATION 214 CUSTODIAN FEES AND EXPENSES 1,401 REGISTRATION FEES 610 AUDIT 263 LEGAL 123 MISCELLANEOUS 22 TOTAL EXPENSES BEFORE REDUCTIONS 219,413 EXPENSE REDUCTIONS (5,767) 213,646 NET INVESTMENT INCOME 248,207 REALIZED AND UNREALIZED GAIN (LOSS) NET REALIZED GAIN (LOSS) ON: INVESTMENT SECURITIES (INCLUDING REALIZED GAIN OF 1,716,288 $105,644 ON SALES OF INVESTMENTS IN AFFILIATED ISSUERS) FOREIGN CURRENCY TRANSACTIONS (1,085) 1,715,203 CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: INVESTMENT SECURITIES (7,763,165) ASSETS AND LIABILITIES IN FOREIGN CURRENCIES 1,458 (7,761,707) NET GAIN (LOSS) (6,046,504) NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (5,798,297) FROM OPERATIONS STATEMENT OF CHANGES IN NET ASSETS [Enlarge/Download Table] AMOUNTS IN THOUSANDS SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30, MARCH 31, 1998 1998 INCREASE (DECREASE) IN NET ASSETS OPERATIONS $ 248,207 $ 474,821 NET INVESTMENT INCOME NET REALIZED GAIN (LOSS) 1,715,203 4,386,409 CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (7,761,707) 17,839,293 NET INCREASE (DECREASE) IN NET ASSETS RESULTING (5,798,297) 22,700,523 FROM OPERATIONS DISTRIBUTIONS TO SHAREHOLDERS (132,542) (794,010) FROM NET INVESTMENT INCOME FROM NET REALIZED GAIN (1,736,276) (3,324,791) TOTAL DISTRIBUTIONS (1,868,818) (4,118,801) SHARE TRANSACTIONS 6,444,543 11,459,995 NET PROCEEDS FROM SALES OF SHARES REINVESTMENT OF DISTRIBUTIONS 1,838,256 4,050,132 COST OF SHARES REDEEMED (6,750,918) (13,367,016) NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,531,881 2,143,111 FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) IN NET ASSETS (6,135,234) 20,724,833 NET ASSETS BEGINNING OF PERIOD 71,968,285 51,243,452 END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 65,833,051 $ 71,968,285 INCOME OF $246,239 AND $152,096, RESPECTIVELY) OTHER INFORMATION SHARES SOLD 60,562 119,540 ISSUED IN REINVESTMENT OF DISTRIBUTIONS 17,018 44,167 REDEEMED (63,887) (141,304) NET INCREASE (DECREASE) 13,693 22,403 FINANCIAL HIGHLIGHTS [Enlarge/Download Table] SIX MONTHS ENDED YEARS ENDED MARCH 31, SEPTEMBER 30, 1998 1998 1997 1996 1995 1994 SELECTED PER-SHARE DATA NET ASSET VALUE, BEGINNING $ 108.82 $ 80.20 $ 87.52 $ 72.44 $ 69.72 $ 68.44 OF PERIOD INCOME FROM INVESTMENT OPERATIONS NET INVESTMENT INCOME .37 D .73 D 1.38 D .79 .27 .61 NET REALIZED AND (8.85) 34.35 5.25 19.57 5.22 7.92 UNREALIZED GAIN (LOSS) TOTAL FROM INVESTMENT (8.48) 35.08 6.63 20.36 5.49 8.53 OPERATIONS LESS DISTRIBUTIONS FROM NET INVESTMENT (.20) (1.25) (1.10) (.59) (.14) (.75) INCOME FROM NET REALIZED GAIN (2.62) (5.21) (12.85) (4.69) (2.63) (6.50) TOTAL DISTRIBUTIONS (2.82) (6.46) (13.95) (5.28) (2.77) (7.25) NET ASSET VALUE, END $ 97.52 $ 108.82 $ 80.20 $ 87.52 $ 72.44 $ 69.72 OF PERIOD TOTAL RETURN B, C (8.04)% 45.41% 9.11% 28.43% 8.21% 12.94% RATIOS AND SUPPLEMENTAL DATA NET ASSETS, END OF PERIOD $ 65,833 $ 71,968 $ 51,243 $ 56,179 $ 39,803 $ 33,119 (IN MILLIONS) RATIO OF EXPENSES TO .60% A .62% .66% .95% .99% 1.00% AVERAGE NET ASSETS RATIO OF EXPENSES TO .59% A, E .61% E .64% E .92% E .96% E .99% E AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS RATIO OF NET INVESTMENT .68% A .77% 1.75% .95% .39% 1.07% INCOME TO AVERAGE NET ASSETS PORTFOLIO TURNOVER RATE 37% A 34% 67% 155% 120% 132% A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD. E 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 5 OF NOTES TO FINANCIAL STATEMENTS). NOTES TO FINANCIAL STATEMENTS For the period ended September 30, 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 that it distributes substantially all of its 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED INCOME TAXES - CONTINUED 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. DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the Plan) non-interested Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the fund or are invested in a cross-section of other Fidelity funds. Deferred amounts remain in the fund until distributed in accordance with the Plan. 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 2. OPERATING POLICIES - CONTINUED FOREIGN CURRENCY CONTRACTS - CONTINUED 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 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., 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 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. 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 issue 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 registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt 2. OPERATING POLICIES - CONTINUED RESTRICTED SECURITIES - CONTINUED sale at an acceptable price may be difficult. At the end of the period, restricted securities (excluding 144A issues) amounted to $4,581,000 or 0% of net assets. 3. PURCHASES AND SALES OF INVESTMENTS. Purchases and sales of securities, other than short-term securities, aggregated $12,627,139,000 and $13,809,041,000, 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 annualized rate of .42% 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 $4,054,000 on sales of shares of the fund of which $4,044,000 was retained. 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 annualized rate of .17% 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 $2,003,000 for the period. 5. 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 $3,315,000 under this arrangement. 5. EXPENSE REDUCTION - CONTINUED 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 $4,000 and $2,448,000, respectively, under these arrangements. 6. 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 Aeroquip-Vickers, Inc. $- $ 1,280 $ 317 $ - Anadarko Petroleum Corp. - 28,373 827 292,253 Assisted Living Concepts, Inc. - - - 15,649 Black & Decker Corp. 8,727 26,391 1,281 198,968 Canadian Natural Resources Ltd. - 30,868 - - Carematrix Corp. - - - 20,455 Case Corp. - 58,511 542 96,570 Comdisco, Inc. - 4,030 524 134,888 Extended Stay America, Inc. - - - 38,628 Halter Marine Group, Inc. - 1,222 - - Hanna (M.A.) Co. - 6,522 634 - Host Marriott Services Corp. - 1,773 - 25,843 Host Marriott Corp. - 15,592 - 167,835 IDEX Corp. - 2,015 440 - Lafarge Corp. 1,234 14,000 1,172 126,216 Landstar System, Inc. - - - 25,403 Leggett & Platt, Inc. - 4,659 2,003 257,647 Oakwood Homes Corp. - - 74 48,815 Omnicom Group, Inc. - 269 1,063 - Polo Ralph Lauren Corp. Class A 1,429 - - 35,868 Prime Hospitality Corp. - 4,950 - - Pulte Corp. - 19,285 279 70,691 Renaissance Energy Ltd. - - - - Smith (A.O.) Corp. Class B - 10,173 303 - Southdown, Inc. 9,348 21,131 447 98,991 Swift Transportation Co., Inc. - 2,763 - 57,915 Synetic, Inc. - - - 48,040 Trinity Industries, Inc. - 29,852 547 - UCAR International, Inc. - 18,986 - - USG Corp. - - - - TOTALS $20,738 $302,645 $10,453 $1,760,675 7. LITIGATION In August 1998, the NGC Asbestos Disease and Property Damage Settlement Trust commenced an action against FMR and other unrelated parties. The complaint alleges that during the reorganization of National Gypsum Company, the defendants (including FMR acting on behalf of the fund and another) failed to disclose information material to the valuation of the reorganized entity. FMR denies the allegations and intends to defend the lawsuit vigorously. REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees and the Shareholders of Fidelity Magellan Fund: In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Fidelity Magellan Fund at September 30, 1998, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Magellan Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at September 30, 1998 by correspondence with the custodian and brokers, provide a reasonable basis for the opinion expressed above. /s/PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Boston, Massachusetts October 28, 1998 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 Xpress(registered trademark) provides 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. (PHONE_GRAPHIC)TOUCHTONE XPRESS 1-800-544-5555 PRESS 1 For mutual fund and brokerage trading. 2 For quotes.* 3 For account balances and holdings. 4 To review orders and mutual fund activity. 5 To change your PIN. *0 To speak to a Fidelity representative. 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. (PC_GRAPHIC)FIDELITY'S WEB SITE WWW.FIDELITY.COM If you are not currently on the Internet, call Fidelity at 1-800-544-7272 and we'll send you an America Online CD or disk with up to 50 free hours of Web access. (PC_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 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 SM 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 TechnoQuant SM Growth Fund 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) TouchTone Xpress (registered trademark) (automated graphic) 1-800-544-5555 * INDEPENDENT TRUSTEES (automated graphic) AUTOMATED LINE FOR QUICKEST SERVICE MAG-SANN-1198 64331 1.537468.101 (FIDELITY LOGO GRAPHIC)(REGISTERED TRADEMARK) Corporate Headquarters 82 Devonshire St., Boston, MA 02109 www.fidelity.com

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3/31/9813F-E,  24F-2NT,  N-30D,  NSAR-B
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