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NEW MANAGER RESCUES MAGELLAN

When Jeff Vinik took the helm at Fidelity Magellan three years ago, it looked as if he were undertaking a mission impossible in attempting to manage a fund swollen to over $20 billion in assets.

Three years later Vinik, 36, has proven the critics wrong. Magellan is succeeding beyond virtually all expectations.In the first six months of this year, its total return of 25.6 percent beat Standard & Poor's 500-stock index by nearly six percentage points. Its one-, three- and five-year total returns put it among the top 20 percent of all stock funds.

Magellan has burgeoned to $50 billion in assets, and it has more shareholders than there are people in Ireland. Yet Vinik is at the top of his game.

"Let there be no doubt," he says, "that I could manage $100 million better than $50 billion. But I still have no shortage of ideas for stocks to buy. My problem is finding things to sell."

How does Vinik run Magellan? He believes earnings growth is the single factor that propels stock prices over the long term. And he says persistent trends in the economy lead to trends in stocks.

"In the 1970s," he explains, "energy was the leader in the economy and the leader in the stock market. In the 1980s the consumer was the leader of the economy, and consumer stocks led the market. In the 1990s cyclical industries and those involved in capital spending and technology are leading the economy.

"So that says to me there's a good chance that cyclical stocks, capital spending and technology will lead the market. That's the blueprint in the back of my head.

"I'm looking for every stock I can find that fits that blueprint, because it's easier to have the wind behind you than in your face."

In selecting stocks, he draws on two assistants and Fidelity's scores of analysts.

Magellan is riskier than most stock funds. Some 40 percent of the fund is in volatile technology stocks.