NewsWire--MAY 14, 1996

TOPIC: Mutual Funds, Bond and Stock Markets

SOURCE: "Vinik Quits Magellan as Stansky Steps Aboard," by Robert McGough and James S. Hirsch, Wall Street Journal, May 24, 1996, C1; "The Fallout: What Options Do Fund's Investors Have?," by Susan Pulliam and Karen DaMato, Wall Street Journal, May 24, 1996, C1; "Stocks Decline; Bonds Retreat o;n Vinik News," by Patrick McGeehan, Wall Street Journal, May 24, 1996, C1.

SYNOPSIS: This series of articles discusses the resignation of Jeffrey Vinik as the manager of Fidelity's Magellan Fund: the World's largest mutual fund with $56 billion in value. Mr. Vinik is succeeded by Robert Stansky, manager of Fidelity's Growth company Fund with $8 billion in value. The articles offer an opportunity to discuss mutual funds and how it is difficult to make large trades in a fund like Magellan due to the huge size of the fund and the impact of large trades on the bond and stock markets. Determinants of bond yields and stock prices are also discussed.

DISCUSSION QUESTIONS:

1. How did Mr. Vinik's resignation, and the announcement of his successor, cause bond prices to fall?

2. How did the announcement of the change in Magellan's manager influence the value of Digital Equipment and Chrysler stock?

3. How did the announcement of the change in Magellan's manager influence the value of Microsoft and Hewlett-Packard stock?

4. Should the size of Magellan be of concern to regulators?