NEW YORK (MONEY Magazine) - Roughly one in every 10 households with any money at all in mutual funds owns shares in Fidelity Magellan.

"It's one of those funds that may have some sentimental value for a lot of people because of its association with Peter Lynch and its flagship status," says Roy Weitz, founder of Fund Alarm, an irreverent online guide to the fund industry.

Bob and Ruth Sessler, retirees in New Providence, N.J., have owned Magellan for more than 20 years -- investing some $8,000 in an IRA, worth about $65,000 today.

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"It has been good to us," says Bob Sessler, who's now 73. "I can't complain about it. Maybe it's not doing as well as when Peter Lynch was running it. But that's okay, that's life."

That seems sensible, but you may feel differently. Here's our advice to current and prospective investors.

If you're one of the million or so people who has owned Magellan in a taxable account since before it closed its doors to new investors in 1997, moving your money could lead to a big capital-gains tax bill. In that case, you may want to leave your money in the fund while directing new investments elsewhere.

If, like more than three-quarters of Magellan investors, you hold your shares in a retirement account, you needn't worry about taxes, so it makes sense to consider shifting some or all of your stake to other funds that invest in large growth companies.

If you don't already own Magellan, but have access via your company's 401(k) plan, don't be tempted by the fact that you can "sneak in." Chances are your plan has better alternatives, including many in the Fidelity family.

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Investors who prefer an index approach could switch to Fidelity Spartan 500 Index. Those who want active management have a number of more nimble core offerings to choose from. Among large-company funds, there's Fidelity Dividend Growth (for more conservative investors) or Stansky's old fund, Fidelity Growth Company, and Fidelity Contrafund (for more aggressive ones). Among funds that invest in a wider range of stocks, two good choices are Fidelity Capital Appreciation and Fidelity Low-Priced Stock.

"Fidelity has a baker's dozen of better large-cap growth funds," says Fidelity watcher Lowell. "Why anyone would recommend Magellan is beyond me." That's just the question Fidelity needs to answer.