Magellan Trims Tech Holdings

Fidelity's Contrafund also cut back on the technology sector during the first quarter.
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As technology stocks soared in the first quarter,

Fidelity

(FMAGX) - Get Report

Magellan, the world's biggest mutual fund, was significantly decreasing its technology holdings.

The $90.7 billion fund's technology holdings slipped from 25.5% of the portfolio on Jan. 31 to 20.9% at the end of March, according to Fidelity's monthly mutual fund report. That represents about $4 billion moved out of the sector.

Intel

(INTC) - Get Report

, the onetime darling of tech managers everywhere, has disappeared from the giant mutual fund's top-10 holdings. It was the No. 4 holding as of Dec. 31, 1998.

America Online

(AOL)

, which made news earlier this year when it showed up in the mutual fund's No. 3 spot, has now dropped to No. 4.

"Alone that might not be that interesting, but

portfolio manager Robert Stansky is one of the best technology pickers on the Street," says Jim Lowell, editor of the

Fidelity Investor

, an independent newsletter that covers Fidelity mutual funds. "So it's at least one warning sign on the technology superhighway to at least slow down a bit."

AOL's drop among the fund's top-10 holdings was significant because "last quarter was one of the best quarters AOL has ever had," Lowell says. "That indicates it's a trim" rather than a decrease in the value of the holdings.

Shares of AOL rose 89.5% in the first quarter, according to

Baseline

.

Magellan has owned AOL since 1994, when the company was still struggling to familiarize a nation with a new phenomenon called the Internet. Fidelity was one of the first mutual fund firms to put its weight behind the company.

The technology-heavy

Nasdaq Composite Index

has offered a bumpy ride over the last few days, as investors have

rotated money out of technology and into the more stalwart cyclicals of oil producers, steel makers and paper firms.

Fidelity's $41.2 billion

(FCNTX) - Get Report

Contrafund, run by Will Danoff, also significantly reduced its position in technology, from 26.3% to 18.9%. Both Stansky and Danoff have been moving their money into energy stocks, says Lowell.

Scott Beyerl, a Fidelity spokesman, says the two funds' moves to sell technology don't represent a company-wide view on the sector.

"There's no Fidelity-wide view on any specific sector. It's really each portfolio manager's view," Beyerl says.