Keep the champagne corked. Don't even break out the Bud.

Yes, Fidelity

(FMAGX) - Get Report

Magellan is all set to roll over another zero in assets, breaking through the $100 billion mark.

Big deal.

I know -- fund fans, feeling left out during the hype and hoopla of

Dow

10,000, want some cool party hats too. And there's no question the media like nothing better than a "big event" to headline. So we're told Magellan's move into 12 figures is a "major milestone" and the "latest sign of how big the U.S. mutual fund business has become."

Don't believe it. (And neither should you believe the other Magellan size myth: that big is always bad. I'll get to that in a moment.)

First, why aren't those 11 zeros a sign of booming business in fundland? As Dow 10K demonstrated the strength of the U.S. bull market, doesn't Magellan's busting through this psychologically significant number show that mutual funds are more popular than ever?

After all, the World's Biggest Mutual Fund has long been considered a barometer of the fund business. And for good reason. Magellan's rapid growth went hand in hand with the exploding popularity of mutual funds through the 1980s and much of the 1990s, when then-manager and famed stock picker

Peter Lynch

offered small investors the dream that they too could join the pros in beating the market. While Lynch was at Magellan's helm (1977-1990), assets jumped along with returns, from $22 million to $14 billion as he beat the

S&P 500

by an average of 13 points a year.

After his departure, the megafund continued to balloon. Even in 1994 -- tough times for the market overall, and for Magellan (it was down 2%) -- $6 billion of net flows chased its long-term record. But when one of Lynch's successors, Jeff Vinik, made a big bet on bonds, Magellan's fortunes started to diverge from the extremely successful industry. Returns (and rankings) headed south and shareholders started yanking out their money. In 1996, 98% of its peers beat Magellan, which was 12 points behind the S&P 500. Fund flows dipped significantly, even as domestic equity funds took in a record $157 billion.

Now Magellan seems to be back on track, thanks in large part to Vinik's replacement, Robert Stansky, who shook up the portfolio as soon as he took over in 1997. With the market heavily favoring large-cap growth stocks, Stansky took the fund back to the top of the category with a 34% return last year, and once again the money started flowing. Although closed to new shareholders for nearly two years, Magellan is one of 1999's best-selling funds, tacking on $20 billion in assets in the last 12 months alone (from existing shareholders and 401(k) investors).

It's natural to assume this means all is well with the industry. Not actually. Fund investors, disillusioned by underperformance of active managers, are pulling money out of funds, taking cash or shifting into stocks. For the first five months of this year, net sales are off 45% from the previous year. The irony is that the biggest mutual fund in the world, poised to smash through an eye-popping number, doesn't say all that much about what's happening in the business.

Another irony: Magellan is the perennial poster child for the "bigger isn't better" debate. Here's how the argument goes: As a fund grows, it loses its agility in the market. While there is much truth to this -- and you should consider size when you're buying a fund, particularly a small-cap one -- Magellan is not the best example to use of a big, bloated fund stumbling. Yes, $100 billion dollars is a lot to handle, but Stansky has managed, in a variety of market environments to hold his own.

Magellan delivered 16% so far this year, ranking in the top fifth of all large-cap growth/value blend funds. And agile? The first quarter of this year, Stansky cut the fund's sizable tech exposure without moving the market. And in the second quarter, he dropped

America Online

(AOL)

and

Time Warner

(TWX)

from his top-10 holdings and added

AT&T

(T) - Get Report

and

Lucent

(LU)

, again with nary a ripple.

Sure, we all crave a symbol, some milestone that tells us where an industry or market is headed. But I think more significant than Magellan's growing girth is the fact that the second-biggest fund,

(VFINX) - Get Report

Vanguard 500 Index, is nipping at its heels and growing at a faster rate -- a signal that investors still can't get enough of low-cost index funds.

But lest you think I'm a total party pooper -- even though I yawn at Magellan's newest zero, I will be where I always am every New Year's Eve for the big bash when we hit those other zeros.

Asleep on the couch.

Brenda Buttner's column, Under the Hood, appears Thursdays. At time of publication, Buttner held no positions in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks or funds. While she cannot provide investment advice or recommendations, Buttner appreciates your feedback at

TSCBrenda@aol.com.