June 23, 2003 — Fidelity Investments said it eliminated the sales charge on five funds, including its flagship Fidelity Magellan (FMAGX).

In addition to Magellan, the largest actively managed U.S. stock fund, Fidelity dropped the 3% front-end sales commission, or load, on Fidelity Contrafund (FCNTX), Fidelity’s second-largest fund; Fidelity Contrafund II (FCONX); Fidelity Low Priced Stock (FLPSX); and Fidelity New Millennium (FMILX).

As a result of the change, all of Fidelity’s diversified stock funds will be offered without a sales charge, although its 41 sector and industry funds still carry the charge.

In dropping the charges, Fidelity believes it will give investors who might have ruled the funds out as investment options a chance to buy them, said John Brockelman, a company spokesman.

In addition, the move provides consistent pricing across Fidelity’s diversified retail stock funds, Brockelman said, adding that the change also is an “extension” of the company’s long-term strategy of removing sales charges.

Fidelity dropped the front-end loads on nine international stock funds earlier this year. At that time it also temporarily waived the charge on Contrafund.

John Bonnanzio, group editor of Fidelity Insight, a newsletter, said Fidelity’s latest move is ultimately aimed at pulling money into the funds. “What they want to do is drum up interest in these funds and get the assets back in,” he said.

Bonnanzio noted that Magellan, which had grown to more than $100 billion in 2000, before the start of the bear market, has since seen its assets shrink by some 40%. The fund’s assets totaled $61.2 billion at the end of May, according to Brockelman.

The decline in assets has also reduced the fees Fidelity receives for managing Magellan. The company disclosed last month that it collected $344.4 million for managing Magellan for the year ended March 31, down from $556.3 million a year earlier.

Separately, Fidelity said it introduced three funds that invest in undervalued stocks of large companies. The new Blue Chip Value, Advisor Value Leaders and VIP Values Leaders funds invest primarily in stocks that are in the Dow Jones Industrial Average or the Standard & Poor’s 500 index.

They are run by Fidelity portfolio manager Brian Hogan, who has been handling the domestic stock portion of Fidelity Worldwide (FWWFX) since February 2002.