TABLE OF CONTENTS:
*New Manager at Fidelity Magellan Fund
*Security of Plan Assets
*New IRA Rollovers
*Confused by Direct Deposit?
*401(k) Without Employer Match
*401(k) Questions & Answers

New Manager at Fidelity Magellan Fund

Effective July 1, 1996, the Fidelity Magellan Fund has a new manager: Robert Stansky.

In May, Fidelity Management & Research Company announced the resignation of Jeff Vinik, Magellan's manager for the last four years. Bob Stansky joined Fidelity in 1983, and was a research analyst assistant for Magellan Fund from 1984 to 1987. Most recently he managed the Fidelity Growth Company Fund as well as Fidelity Advisor Equity Portfolio: Growth. Mr. Stansky worked with Mr. Vinik during the month of June to ensure a smooth transition in the management of Magellan.

It certainly is premature to determine how Mr. Stansky will approach managing Magellan Fund. But in a letter to plan sponsors from Mr. J. Gary Burkhead, President of Fidelity Management & Research Company, he stated "Bob is one of the finest portfolio managers in the business and I have every confidence in his ability to excel as Magellan's manager."

According to Fidelity, "Bob's portfolios have tended to contain a variety of stocks that meet his definitions of growth. One major category has been high-growth stocks with significant earnings momentum that are consistently beating consensus estimates. Examples at times have included technology stocks, certain retailers, biotechnology and others. Another significant category of interest to Bob has been the more 'stable, sustainable growth' stocks that have less dramatic earnings and revenue growth outlooks but may be more consistent. Examples have included pharmaceuticals, consumer staples, telecommunications, and certain financial services stocks. This diversity of experience across the breadth of the equity market should serve Bob well in managing Magellan Fund, a capital appreciation fund with a broad investment mandate."

Security of Plan Assets

Funds in a defined contribution plan (such as the Savings Investment Plan) do not have FDIC protection for private investors. PBGC protection is for defined benefit (pension) plans only. However, federal regulations require that employers keep plan investments in a trust, separate from company assets and not accessible to the firm's management. This also means that investments in the Savings Investment Plan ( and the S&L Retirement Plan) are protected from the firm's creditors.

In addition, money invested in any of the equity funds, either through a bank or investment company, is held in trust and not subject to the creditors of the bank or investment company. However, the money in the funds is subject to loss in value due to market fluctuations or investment decisions by a fund's manager.

And money invested with insurance companies and banks in GIC (guaranteed investment contracts), which are used by the Stable Asset Fund are as secure as the issuing insurance company or bank. That is why the SIP Committee considers credit quality of the insurance company or bank to be a major factor when making investment decisions and selects only those which high credit quality. This information is included in the enclosed investment summary each quarter and includes a listing of all the credit ratings possible

NEW IRA ROLLOVERS

Effective immediately, you can roll over funds from an IRA into the Savings Investment Plan. Previously, only funds in another employer's 401(k) plan could be directly rolled into your SIP account (a "plan to plan" transfer). But the plan can now accept a new type of rollover, whether you are currently employed by S&L or a former employee still participating in the plan, if it meets the following criteria:

* Was a direct rollover from a 401(k) plan into an IRA

* Was not commingled with any personal IRAs

Confused by Direct Deposit?

Participants who receive a partial withdrawal or retiree quarterly payments have the choice of either a check mailed by the bank to your home, or a direct deposit to your bank. When the bank uses an EFT (electronic funds transfer), the funds are electronically transferred from the plan's bank to your bank. These funds are transferred late in the day on the first business day of the month, but will not be credited to your account until the next business day. Check with your bank and see when transferred funds will be available.

Even though your funds will not be available to you on the first of the month, an EFT is still faster and more reliable than waiting for a check to be delivered through the mail and then deposited with your bank.

401(k) Without Employer Match

As previously announced, the employer matching contribution by Sargent & Lundy was suspended for the period July 1 - December 31, 1996. The employer match for the first six months of 1997 will be determined in December.

Several employees have asked if they should continue contribution to the plan, if there is no matching contribution. With or without a match, 401(k) plans are the most effective way to save for your retirement. Not only is the amount you contribute exempt from current income taxes, but your investments (including SIP after-tax contributions) grow tax-deferred until you make a withdrawal. Remember, while an employer match is an "icing on the cake", a great percentage of your retirement income will come from personal savings. Social Security and employer pension plans are designed only to supplement other retirement income.

Equity Rates of Return

Did you know that the latest rates of return are as close as your telephone? This information is updated every Monday afternoon and is available by calling (312) 269-2145.

Questions & Answers The following questions and answers are from "Building Your Nest Egg With Your 401(k)", published by Investors Press.

Q. I participate in my company's 401(k) plan but I also want to invest in an Individual Retirement Account. Can I do both?

A. Yes. But depending on your salary, your IRA contribution may not be tax-deductible.

Under current law, if you participate in a qualified employer-sponsored pension plan like a 401(k), you can only deduct a $2,000 annual IRA contribution if you are:

(a) single and earning less than $25,000, or

(b) married filing jointly and together earn less than $40,000.

You qualify for a partial deduction on the IRA contribution if you are:

a) single and earn between $25,000 and $35,000, or

b) married filing jointly and together earn between $40,000 and $50,000

Of course, even if you make a non-deductible IRA contribution, its earnings won't be taxed until the money is withdrawn.

Q. If I decide not to participate in the 401(k) plan, will I be eligible for a fully deductible IRA regardless of my salary?

A. Yes, provided neither you nor your spouse actively participates in a 401(k) plan or any other qualified pension plan.

You're automatically considered an active participant in a pension plan if you're eligible for a defined benefit plan - the traditional pension that's fully funded by the employer. But in a defined contribution plan like a 401(k), you're not considered an active participant unless you elect to contribute to the plan, or your employer contributes to it on your behalf.

Q. If I have to choose between a 401(k) and an IRA, which choice makes more sense?

A. The 401(k) plan, almost always. This decision is truly a no-brainer if your IRA contributions aren't tax deductible and/or employer provides a matching contribution to your 401(k) plan. A 401(k) with an employer's match is a much better deal than an IRA that has no matching contribution and won't reduce your current income tax bill.

In fact, unless you're uncomfortable with the 401(k) plan's investment options, it's a better deal even if you don't have an employer match and your IRA contributions are fully tax-deductible. The reason: depending on your salary, a 401(k) plan may let you save up to $9,500 a year. Your maximum annual IRA contribution is limited to $2,000.

It's also easier to save in a 401(k) plan than in a IRA and for a very simple reason: your 401(k) contributions are taken out of your paycheck automatically. Saving in a IRA requires a continuing conscious decision and self-discipline that may of us don't have.

Another important potential advantage 401(k)s have over IRAs is that many 401(k) plans allow loans. You can't ever borrow money from your IRA account.

Summer 1996