Fidelity Investments will seek shareholder approval of proposals to let its Magellan fund, the world's biggest mutual fund, put more of its money in a single stock and own bigger stakes in some companies.

Other proposed changes would streamline the Magellan fund's management rules and give the fund's board and investment advisers greater flexibility, according to a regulatory filing that outlined the plan. The board, for example, would no longer need shareholder approval to make minor changes in Magellan's management contract.

The fund's investment advisers now are limited to a maximum stake of 10 percent in any one company and can't invest more than 5 percent of the Magellan fund's assets in a single stock. Those restrictions would be eased under the proposal.

Magellan is the only Fidelity growth fund that doesn't already have this flexibility to diversify, as the Boston-based fund group has been making similar changes at its other funds for the past several years. Fidelity may have timed the proposals at Magellan to take advantage of the fund's improved performance under manager Bob Stansky, said Geoff Bobroff, an investment-company expert based in East Greenwich, R.I. "It is sometimes harder to get shareholders to vote on things" when a fund is lagging, Bobroff said. "They are now using the time when current portfolio activity has been very favorable to reach out to shareholders."

Magellan, which generated a total return of 24 percent last year, listed the proposals in a proxy statement filed with the Securities and Exchange Commission. Fidelity has scheduled a shareholder vote for an April 19 meeting in Boston.

Under the proposals, Magellan would be able to use as much as 25 percent of its assets for investments that exceed the 5 percent investment threshold. For example, the proposal would let the fund invest 25 percent of its assets in one company, or 10 percent in one company and 15 percent in another.

Fidelity also proposed to formally adopt a reduction in the management fee charged to Magellan as long as the entire fund group has assets under management of more than $210 billion. This change, which Magellan voluntarily put in place several years ago, reduced Magellan's total management fee by $15 million for the 12 months ended Nov. 30, 1999, according to the SEC filing. Without that reduction, Magellan's total fee for this period would have been $459 million.

Magellan, perhaps the best-known investment fund, had $106 billion of assets at the end of December that are primarily invested in growth stocks such as Microsoft Corp., MCI WorldCom Inc. and America Online Inc.

CAPTION: Fund manager Bob Stansky