UPDATE 1-Fidelity Magellan fund reshuffles finance holdings

(Adds data on more holdings, fund performance, byline)

By Muralikumar Anantharaman

BOSTON, July 31 (Reuters) - Fidelity Investments' flagship Magellan stock fund significantly boosted its holdings in June of insurer American International Group (AIG.N) and U.S. investment bank Goldman Sachs (GS.N), in a big reshuffle of its financial sector exposure.

The $37.6 billion Magellan, run by Harry Lange, also dumped Citigroup Inc (C.N) from the portfolio and cut its holdings of rival commercial bank JPMorgan Chase (JPM.N) in June, according to data on Fidelity's website posted on Wednesday.

Privately owned Fidelity is the world's biggest mutual fund company and manages $1.5 trillion in assets, so portfolio changes by its key managers are closely watched.

The fund's AIG holdings jumped to $865.1 million at the end of June, to became its sixth-biggest holding, from $475 million at the end of May. Lange appears to have taken advantage of a 27 percent drop in AIG's shares last month as it battled concerns over credit losses and saw a management change.

Lange was not immediately available for comment. Fidelity said it does not comment on funds' holdings.

Magellan also tripled its holdings of Goldman Sachs Group Inc to $525 million in June. Goldman shares were down more than 8 percent by mid-June from the end of May, but recovered to close the month down just 0.9 percent.

The fund sold out of Citigroup in June, having held $328 million worth at the end of May. Its JPMorgan holdings fell by two-thirds to $154.4 million from $408.5 million at the end of May. JPMorgan shares fell 20 percent in June.

Magellan showed a $138.7 million holding of Lehman Brothers LEH.N shares as of the end of June. A month ago, it had $217 million of Lehman convertible securities.

The fund's financial sector exposure rose slightly to 10.3 percent of the total portfolio at the end of June from 10.1 percent a month earlier.

Magellan, which re-opened to new investors in January after being closed for more than a decade, saw the value of some of its biggest holdings drop in June. Its holdings of American depository receipts of mobile phone maker Nokia (NOK1V.HE), its top pick, fell to $1.81 billion from $2.05 billion.

The fund's holdings of specialty glass maker Corning Inc (GLW.N) dropped to $1.71 billion from $2.03 billion but Canadian Natural Resources (CNQ.TO) inched up to $1.57 billion from $1.56 billion. The fund had 251 holdings as of June 30.

Magellan had done relatively well up to the end of June but returns have tumbled in July as its energy-related picks, which accounted for 18.2 percent of the portfolio, faltered with the drop in oil prices.

The fund is down 2.67 percent in July through Wednesday's close compared with a 0.5 percent return for the S&P 500 index, according to Lipper Inc data. The poor performance in July has also caused the fund to lag year-to-date, losing 14.2 percent against the S&P index's negative 11.5 percent, the data show. (Editing by Maureen Bavdek and Braden Reddall)