FIDELITY
(REGISTERED TRADEMARK)
CONTRAFUND
ANNUAL REPORT
DECEMBER 31, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.
PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.
FUND TALK 6 THE MANAGER'S REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.
INVESTMENT CHANGES 10 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS.
INVESTMENTS 11 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.
FINANCIAL STATEMENTS 37 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 41 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 48 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 49
PROXY VOTING RESULTS 50
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION
OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS
IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888 FOR A
FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
To reduce expenses and demonstrate respect for our environment, we
have initiated a project through which we will begin eliminating
duplicate copies of most financial reports and prospectuses to most
households, even if they have more than one account in the fund. If
additional copies of financial reports, prospectuses or historical
account information are needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
Although financial turmoil in Pacific Basin countries was a catalyst
for significant volatility in U.S. markets throughout the fourth
quarter, the Standard & Poor's 500 Index rose more than 33% in 1997,
about three times its historical annual average. Meanwhile, bond
markets - primarily influenced by a relatively steady flow of positive
news on the inflation front - continued to post solid returns as the
year drew to a close.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. If you have a short investment time horizon, you might want to
consider moving some of your investment into a money market fund,
which seeks income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that there is no assurance that a money market fund will
achieve its goal of maintaining a stable net asset value of $1.00 per
share, and that these types of funds are neither insured nor
guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are
available 24 hours a day, seven days a week to provide you the
information you need to make the investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value).
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED DECEMBER 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY CONTRAFUND 23.00% 145.40% 693.37%
FIDELITY CONTRAFUND (INCL. 3% SALES CHARGE) 19.31% 138.04% 669.57%
S&P 500 (REGISTERED TRADEMARK) 33.36% 151.62% 425.77%
GROWTH FUNDS AVERAGE 25.30% 117.56% 356.18%
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare the fund's returns to the performance of the
Standard & Poor's 500 Index - a widely recognized, unmanaged index of
common stocks. To measure how the fund's performance stacked up
against its peers, you can compare it to the average growth fund,
which reflects the performance of mutual funds with similar objectives
tracked by Lipper Analytical Services, Inc. The past one year average
represents a peer group of 820 mutual funds. These benchmarks reflect
reinvestment of dividends and capital gains, if any, and exclude the
effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY CONTRAFUND 23.00% 19.67% 23.01%
FIDELITY CONTRAFUND (INCL. 3% SALES CHARGE) 19.31% 18.94% 22.64%
S&P 500 33.36% 20.27% 18.05%
GROWTH FUNDS AVERAGE 25.30% 16.47% 15.93%
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by annualizing each fund's total return, then taking an
arithmetic average. This may produce a slightly different figure than
that obtained by averaging the cumulative total returns and
annualizing the result.)
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19971231 19980108 180532 S00000000000001
Contrafund S&P 500
00022 SP001
1987/12/31 9700.00 10000.00
1988/01/31 10324.35 10421.00
1988/02/29 10794.87 10906.62
1988/03/31 10812.97 10569.60
1988/04/30 11030.13 10686.93
1988/05/31 10876.31 10779.90
1988/06/30 11401.12 11274.70
1988/07/31 11482.56 11231.86
1988/08/31 11229.20 10849.97
1988/09/30 11690.67 11312.18
1988/10/31 11998.32 11626.66
1988/11/30 11907.84 11460.40
1988/12/31 11739.15 11660.96
1989/01/31 12518.67 12514.54
1989/02/28 12444.43 12202.93
1989/03/31 13103.31 12487.26
1989/04/30 13947.79 13135.34
1989/05/31 14671.62 13667.32
1989/06/30 14578.82 13589.42
1989/07/31 15915.14 14816.55
1989/08/31 16369.86 15106.95
1989/09/30 16685.38 15045.01
1989/10/31 16184.26 14695.97
1989/11/30 16555.46 14995.77
1989/12/31 16804.82 15355.66
1990/01/31 15913.50 14325.30
1990/02/28 16243.99 14510.09
1990/03/31 16594.51 14894.61
1990/04/30 16424.26 14522.25
1990/05/31 17976.55 15938.17
1990/06/30 18206.89 15829.79
1990/07/31 17866.39 15779.13
1990/08/31 16474.33 14352.70
1990/09/30 15783.31 13653.72
1990/10/31 15863.43 13595.01
1990/11/30 16804.82 14473.25
1990/12/31 17466.26 14877.05
1991/01/31 19167.59 15525.69
1991/02/28 20617.24 16635.78
1991/03/31 21825.28 17038.36
1991/04/30 21946.08 17079.26
1991/05/31 23345.40 17817.08
1991/06/30 22036.69 17001.06
1991/07/31 23597.07 17793.31
1991/08/31 24784.98 18215.01
1991/09/30 24855.45 17910.82
1991/10/31 25570.21 18150.82
1991/11/30 24221.23 17419.34
1991/12/31 27058.48 19412.12
1992/01/31 27830.07 19051.05
1992/02/29 28733.18 19298.72
1992/03/31 27953.39 18922.39
1992/04/30 28256.64 19478.71
1992/05/31 28559.90 19574.15
1992/06/30 27866.75 19282.50
1992/07/31 28570.73 20071.15
1992/08/31 28040.04 19659.70
1992/09/30 28516.58 19891.68
1992/10/31 29155.57 19961.30
1992/11/30 30563.53 20641.98
1992/12/31 31359.13 20895.88
1993/01/31 32352.30 21071.40
1993/02/28 32565.73 21357.97
1993/03/31 34121.97 21808.63
1993/04/30 34352.52 21280.86
1993/05/31 35712.79 21851.19
1993/06/30 35724.32 21914.55
1993/07/31 36116.26 21826.90
1993/08/31 37868.47 22654.14
1993/09/30 37949.16 22479.70
1993/10/31 38283.46 22945.03
1993/11/30 36842.50 22727.05
1993/12/31 38078.19 23002.05
1994/01/31 39275.86 23784.12
1994/02/28 38994.06 23139.57
1994/03/31 37452.20 22130.68
1994/04/30 37912.27 22413.96
1994/05/31 37700.89 22781.54
1994/06/30 36246.07 22223.40
1994/07/31 36979.70 22952.32
1994/08/31 38521.55 23893.37
1994/09/30 38011.74 23307.98
1994/10/31 39093.53 23832.41
1994/11/30 37315.42 22964.43
1994/12/31 37651.15 23305.00
1995/01/31 37041.87 23909.30
1995/02/28 38533.99 24841.04
1995/03/31 39939.07 25574.10
1995/04/30 41742.04 26327.26
1995/05/31 42749.22 27379.56
1995/06/30 45459.91 28015.58
1995/07/31 48941.52 28944.58
1995/08/31 49588.11 29017.23
1995/09/30 50495.81 30241.76
1995/10/31 49575.67 30133.80
1995/11/30 50881.28 31456.67
1995/12/31 51311.02 32062.53
1996/01/31 52471.66 33153.93
1996/02/29 52791.55 33461.27
1996/03/31 54256.80 33783.50
1996/04/30 55935.43 34281.47
1996/05/31 56404.87 35165.59
1996/06/30 55978.10 35299.57
1996/07/31 53360.58 33740.04
1996/08/31 55394.85 34451.61
1996/09/30 57670.96 36390.55
1996/10/31 59520.30 37394.20
1996/11/30 62977.15 40220.83
1996/12/31 62567.07 39424.06
1997/01/31 65001.47 41887.27
1997/02/28 63294.40 42215.67
1997/03/31 61649.41 40481.03
1997/04/30 63037.85 42897.74
1997/05/31 66825.85 45509.36
1997/06/30 69587.62 47548.18
1997/07/31 75488.46 51331.58
1997/08/31 73013.43 48455.99
1997/09/30 77888.03 51109.92
1997/10/31 75518.64 49402.85
1997/11/30 75397.91 51689.71
1997/12/31 76956.57 52577.22
IMATRL PRASUN SHR__CHT 19971231 19980108 180534 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Contrafund on December 31, 1987, and the current
3% sales charge was paid. As the chart shows, by December 31, 1997,
the value of the investment would have grown to $76,957 - a 669.57%
increase on the initial investment. For comparison, look at how the
S&P 500 did over the same period. With dividends and capital gains, if
any, reinvested, the same $10,000 investment would have grown to
$52,577 - a 425.77% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
long-term growth and
short-term volatility. In turn, the
share price and return of a
fund that invests in stocks will
vary. That means if you sell
your shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Despite a bout with global volatility
in late October, the U.S. equity
market still managed to register
strong gains for the third
consecutive calendar year. For the
12 months that ended December
31, 1997, the Standard & Poor's
500 Index - a measure of the U.S.
stock market - returned 33.36%.
The strength of the S&P 500
reflected the continued
dominance of large-capitalization
stocks during most of the period.
For most of 1996 and part of 1997,
stocks of the largest companies
performed well as investors
sought reliability and consistent
earnings growth track records.
Stock prices surged, investor
enthusiasm was high and the Dow
Jones Industrial Average reached
the 8,000-point mark in August for
the first time ever. But the adage
"what goes up, must come down"
may have crept into investors'
minds as many felt the market had
risen too rapidly. In mid-August,
several multinational companies
announced earnings shortfalls and
stocks of smaller companies came
into favor. From August through
December, the S&P 500 returned
2.43%, while the S&P MidCap 400
Index - a measure of
medium-sized stocks - returned
6.50%. In October, currency
turmoil in several Asian countries
bubbled over, causing concern in
many world markets. As we
entered 1998, sentiment indicated
that the effects of this crisis could
linger, placing pressure on U.S.
economic growth as well as
corporate profits.
An interview with Will Danoff, Portfolio Manager of Fidelity
Contrafund
Q. HOW DID THE FUND PERFORM, WILL?
A. It was a disappointing period. For the 12 months that ended
December 31, 1997, the fund returned 23.00%. The growth funds average
returned 25.30% during the period, according to Lipper Analytical
Services. The Standard & Poor's 500 Index returned 33.36% during this
time. As a fellow shareholder of the fund, I consider this performance
unsatisfactory and am working harder than ever with Fidelity's
research team to find the best stocks to strengthen the fund's future
returns.
Q. WHY DID THE FUND LAG THE S&P 500?
A. The primary factor was the "narrowness" of the stock market: The
market's gains were concentrated among a relatively small number of
large-capitalization stocks. To illustrate this narrowness, shares of
the largest 100 companies in the S&P 500 appreciated by 35% in 1997,
while the shares of the smallest 100 rose only 21%. This narrowness
hurt funds like Contrafund, which tend to emphasize smaller- and
medium-sized companies. Stock valuations for larger companies
continued to stretch the bounds of reason. Many of these large-cap
stocks appreciated due to increases in their price-to-earnings (P/E)
ratios, which measure how much an investor must pay for a dollar of a
company's earnings. The S&P 500's largest companies were trading at
their highest P/E ratios ever and thus were quite expensive at the
close of the period.
Q. WHAT OTHER FACTORS DAMPENED THE FUND'S PERFORMANCE?
A. A larger exposure to finance-related stocks would have helped. Due
to declining interest rates and strong business prospects, finance
stocks produced some of the market's best gains during the period. The
banking, savings and loan, and brokerage sectors each rose more than
40% in 1997. While the fund was equally weighted in finance stocks
relative to the index, I could have easily doubled its weighting. My
mistake was in arguing that the sector had performed splendidly in
1996 and that most stocks were trading at expensive prices relative to
their projected growth rates. Nevertheless, at the end of the period,
the fund still had around 13% of its assets in finance stocks,
including high-quality names such as U.S. Bancorp and Fannie Mae, both
of which generated good returns and were among the fund's top
holdings.
Q. WHAT OTHER MARKET SEGMENTS APPEALED TO YOU?
A. The Internet was a fertile area. By some estimates, traffic over
the Internet grew almost tenfold in 1997. I tried to capitalize on
this growth by buying companies that provide access to the Internet -
such as WorldCom and AT&T - as well as companies that supply equipment
to facilitate access to the Internet, including Alcatel and Lucent
Technologies. I felt these companies were well-positioned to meet
surging demand for Internet service, and to benefit from the
deregulation in the telecommunications industry in both the U.S. and
Europe. Cable television service providers also appealed to me, as
they had an opportunity to reaccelerate their growth rates by offering
faster Internet access over their existing cable infrastructure.
Examples in the portfolio included Tele-Communications, Inc. and
Comcast, both of which were solid contributors during the second half
of the period.
Q. A QUICK SCAN OF THE FUND'S INDUSTRY EXPOSURES SHOWS THAT YOU
DECREASED ITS ENERGY-RELATED POSITIONS. WHY?
A. As I mentioned six months ago, I reduced many energy positions,
most notably in the exploration and production area. These stocks had
enjoyed two consecutive years of very strong growth and many investors
appeared poised to lock in profits. Also, oil prices fell during the
period as production increased while demand slowed due to the Asian
crisis. I did retain a number of energy service stocks, though, such
as Schlumberger and Halliburton. These stocks benefited from increased
exploration and production activity, improved pricing power and new
products and technologies.
Q. THE FUND'S BOND EXPOSURE INCREASED DURING THE PERIOD. WHAT WAS
BEHIND YOUR STRATEGY?
A. There were a number of factors. First, inflation was extremely low
in the U.S., and bonds benefit from low or falling inflation. The
buoyant stock market also enabled many companies to finance capacity
expansions which should prevent inflationary pressure from bubbling
up. Secondly, the strong dollar made foreign imports cheaper and
hindered the ability of U.S. companies to raise prices. Along the same
lines, the crisis in Asia during the fourth quarter should slow world
economic growth, which in turn would dampen inflationary pressure and
be a positive for bonds. The government's fiscal condition also played
a role, as the country's shrinking budget deficit contributed to the
attractiveness of bonds. Because of the solid economy and
well-contained government spending, the federal deficit could be
eliminated in the near future. For the same reasons, many state and
local governments operated with budget surpluses as well. Budget
surpluses reduce the supply of new government bonds and thus put
upward pressure on the prices of existing bonds.
Q. THE FUND WILL BE ASKING SHAREHOLDERS TO APPROVE CERTAIN CHANGES TO
THE FUND IN JANUARY 1998. WHAT ARE SHAREHOLDERS BEING ASKED TO
APPROVE, AND HOW WILL THESE CHANGES AFFECT THE WAY YOU MANAGE THE
FUND?
A. The description of the fund's investment policies and objectives
have not changed significantly since 1967, when the fund commenced
operations. As the fund's assets have grown - and as I've mentioned in
previous reports - the fund's contrarian discipline has evolved from
focusing on companies that are performing poorly or are out of favor
to emphasizing companies whose potential has not been fully recognized
by the public. Also, as corporate earnings growth has accelerated in
recent years, the number of out-of-favor companies in the market has
decreased. The proposed investment objectives and policies would
reflect this change in emphasis. The proposed changes will not affect
the way I manage Contrafund. Rather, the changes more clearly describe
how the fund's investment mix has evolved over time.
Q. WHAT'S YOUR OUTLOOK?
A. All indications are that economic growth will slow and inflation
will remain low. Earnings growth should also slow for the large-cap
stocks I mentioned earlier, and this could swing the pendulum toward
the smaller- and medium-sized stocks featured within the fund. The
strong dollar, weak Asian demand and intensified global competition
should also constrain revenue growth and further profit margin
expansion. Thus, corporate profits may grow modestly - if at all - in
the coming year. Going forward, I may reduce the fund's exposure to
the industrial machinery and basic industries sectors, both of which
are particularly sensitive to recessionary conditions. As
opportunities present themselves, the fund should be well-positioned
to increase its holdings in companies that have the ability to grow
profits rapidly in a slow- to no-growth environment.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
WILL DANOFF ON THE
ASIAN CRISIS:
"Many portfolio managers are
dismissing the turmoil in
Southeast Asia as a relatively
minor influence on the U.S.
market since many companies do
very little business in that region. I
tend to differ. I believe the crisis
will severely hurt demand for U.S.
goods and services.
"The Southeast Asian countries
built a significant amount of
excess capacity in the past decade
and will need years to grow into
their current infrastructure. The
sustained recession in Southeast
Asia could considerably dampen
the growth prospects of both China
and Japan, each of which have
exported many goods and services
to Southeast Asia over the past
decade. Thus, the crisis could
stall economies representing
almost one-third of the world's
productive output.
"The slowdown will undoubtedly
strengthen the deflationary forces
already at work in the U.S. and
global economies, which would
be beneficial to bonds. The
slowdown will certainly make it
more difficult for U.S. companies
to grow as quickly as they have in
the past three years. Slower profit
growth is bad for stocks,
particularly stocks of companies
dependent upon economic growth
to increase earnings."
FUND FACTS
GOAL: to increase the value of
the fund's shares over the long
term by investing in companies
where value is not fully
recognized by the public
FUND NUMBER: 022
TRADING SYMBOL: FCNTX
START DATE: May 17, 1967
SIZE: as of December 31,
1997, more than $30.7 billion
MANAGER: Will Danoff, since
1990; manager, VIP II:
Contrafund, since 1995;
Fidelity Select Retailing
Portfolio, 1986-1989;
joined Fidelity in 1986
(checkmark)
INVESTMENT CHANGES
TOP TEN STOCKS AS OF DECEMBER 31, 1997
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
TYCO INTERNATIONAL LTD. 1.9 1.0
SCHLUMBERGER LTD. 1.6 1.6
TIME WARNER, INC. 1.5 0.7
CBS CORP. 1.4 0.0
ALCATEL ALSTHOM COMPAGNIE GENERALE 1.3 1.0
D'ELECTRICITE SA
WORLDCOM, INC. 1.2 0.9
LUCENT TECHNOLOGIES, INC. 1.2 1.1
U. S. BANCORP 1.2 0.3
CVS CORP. 1.2 1.0
AT&T CORP. 1.0 0.0
TOP FIVE MARKET SECTORS AS OF DECEMBER 31, 1997
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
ENERGY 13.1 12.7
FINANCE 12.7 13.7
TECHNOLOGY 10.9 14.1
MEDIA & LEISURE 8.5 5.6
RETAIL & WHOLESALE 7.5 7.7
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF DECEMBER 31, 1997 * AS OF JUNE 30, 1997 **
ROW: 1, COL: 1, VALUE: 85.8
ROW: 1, COL: 2, VALUE: 4.7
ROW: 1, COL: 3, VALUE: 9.5
STOCKS 92.3%
BONDS 1.3%
SHORT-TERM
INVESTMENTS 6.4%
FOREIGN
INVESTMENTS 16.4%
STOCKS 85.8%
BONDS 4.7%
SHORT-TERM
INVESTMENTS 9.5%
FOREIGN
INVESTMENTS 14.1%
ROW: 1, COL: 1, VALUE: 92.3
ROW: 1, COL: 2, VALUE: 1.3
ROW: 1, COL: 3, VALUE: 6.4
*
**
INVESTMENTS DECEMBER 31, 1997
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 84.9%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.3%
AEROSPACE & DEFENSE - 0.1%
Lockheed Martin Corp. 129,200 $ 12,725
Orbital Sciences Corp. (a) 519,300 15,449
28,174
DEFENSE ELECTRONICS - 0.2%
Anaren Microwave Inc. (a)(d) 350,900 5,571
Raytheon Company Class A 895,565 44,163
Remec, Inc. (a) 735,300 16,544
66,278
SHIP BUILDING & REPAIR - 0.0%
Fred Olsen Energy ASA (a) 365,900 7,593
TOTAL AEROSPACE & DEFENSE 102,045
BASIC INDUSTRIES - 2.9%
CHEMICALS & PLASTICS - 1.9%
AKZO Nobel NV 24,800 4,278
Avery Dennison Corp. 56,900 2,546
Cambrex Corp. 415,050 19,092
Crompton & Knowles Corp. 2,678,917 70,991
Cytec Industries, Inc. (a) 1,628,900 76,456
ICI (Imperial Chemical Industries) PLC Class L 3,950,800 61,900
Ivex Packaging Corp. 591,700 14,201
Millennium Chemicals, Inc. 254,700 6,001
Monsanto Co. 1,602,600 67,309
Morton International, Inc. 126,300 4,342
Nalco Chemical Co. 308,900 12,221
Potash Corp. of Saskatchewan 485,300 40,415
Sealed Air Corp. (a) 1,523,300 94,064
Solutia, Inc. 44,100 1,177
Tredegar Industries, Inc. 4,100 270
Witco Corp. 640,000 26,120
W.R. Grace & Co. 944,700 75,989
577,372
IRON & STEEL - 0.0%
Steel Dynamics, Inc. (a) 1,053,200 16,851
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
METALS & MINING - 0.0%
Commscope, Inc. 525,698 $ 7,064
Tongkah Holdings BHD (a) 6,642,000 2,103
9,167
PACKAGING & CONTAINERS - 0.4%
Ball Corp. 67,400 2,380
Owens-Illinois, Inc. (a) 2,560,300 97,131
Silgan Holdings, Inc. 340,300 11,060
110,571
PAPER & FOREST PRODUCTS - 0.6%
Champion International Corp. 148,800 6,743
Fort James Corp. 4,425,712 169,283
Mail-Well, Inc. (a) 82,800 3,353
Malakoff BHD 5,956,000 12,420
191,799
TOTAL BASIC INDUSTRIES 905,760
CONSTRUCTION & REAL ESTATE - 3.9%
BUILDING MATERIALS - 0.6%
Coflexip sponsored ADR 212,200 11,777
Coltec Industries, Inc. (a) 868,500 20,138
Elcor Corp. 6,100 146
Hume Industries BHD 4,329,000 4,547
Lilly Industrial Coatings, Inc. Class A 152,100 3,137
Masco Corp. 1,636,600 83,262
Sherwin-Williams Co. 211,000 5,855
Southdown, Inc. 304,600 17,971
USG Corp. (a) 1,016,900 49,828
196,661
CONSTRUCTION - 0.2%
Centex Corp. 440,300 27,711
Fleetwood Enterprises, Inc. 144,400 6,128
Lennar Corp. 572,500 12,345
Oakwood Homes Corp. 195,000 6,472
Willbros Group, Inc. (a) 348,800 5,232
YTL Corp. BHD 10,614,375 14,346
72,234
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
ENGINEERING - 0.1%
Stolt Comex Seaway SA (a) 405,400 $ 20,270
REAL ESTATE - 0.2%
Grand Palais Management Co. LP (a)(e) 398,400 -
LNR Property Corp. 366,900 8,668
Rouse Co. (The) 665,276 21,788
Trizec Hahn Corp. (sub-vtg.) 734,600 17,163
47,619
REAL ESTATE INVESTMENT TRUSTS - 2.8%
Avalon Properties, Inc. 41,300 1,278
Bay Apartment Communities, Inc. 354,100 13,810
Bedford Property Investors, Inc. (d) 1,133,500 24,795
Boston Properties, Inc. 514,700 17,017
CCA Prison Realty Trust 295,000 13,164
Crescent Real Estate Equities, Inc. 4,189,500 164,962
Duke Realty Investors, Inc. 313,286 7,597
Equity Office Properties Trust 4,767,500 150,474
Equity Residential Properties Trust (SBI) 1,190,300 60,185
Felcor Suite Hotels, Inc. 861,400 30,580
Glenborough Realty Trust, Inc. 1,237,100 36,649
Golf Trust of America, Inc. 141,000 4,089
Irvine Apartment Communities, Inc. 72,800 2,316
Kimco Realty Corp. 285,200 10,053
LTC Properties, Inc. 329,300 6,833
Macerich Co. 232,700 6,632
Patriot American Hospitality, Inc. 753,541 21,711
Public Storage, Inc. 595,600 17,496
Reckson Associates Realty Corp. 1,023,800 25,979
Spieker Properties, Inc. 1,058,800 45,396
Starwood Lodging Trust combined certificate (SBI) 2,142,900 124,020
Vornado Realty Trust 2,046,800 96,072
881,108
TOTAL CONSTRUCTION & REAL ESTATE 1,217,892
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - 3.2%
AUTOS, TIRES, & ACCESSORIES - 1.8%
BBA Group PLC 4,210,100 $ 28,161
Breed Technologies, Inc. (d) 1,907,300 34,808
Circuit City Stores, Inc. - CarMax Group 652,800 5,875
Danaher Corp. 2,007,700 126,736
Federal-Mogul Corp. 204,900 8,298
Ford Motor Co. 2,994,600 145,800
Lear Corp. (a) 1,201,400 57,067
Navistar International Corp. (a) 2,225,600 55,223
SPX Corp. (d) 1,020,800 70,435
Tower Automotive, Inc. (a) 376,600 15,841
548,244
CONSUMER DURABLES - 0.0%
Minnesota Mining & Manufacturing Co. 45,500 3,734
CONSUMER ELECTRONICS - 0.7%
Electrolux AB 227,250 15,782
Gemstar International Group Ltd. (a) 286,000 6,971
General Motors Corp. Class H 1,636,600 60,452
Maytag Co. 225,300 8,407
Philips Electronics NV 1,304,300 78,910
Philips Electronics NV (Bearer) 672,400 40,347
210,869
HOME FURNISHINGS - 0.1%
Leggett & Platt, Inc. 324,400 13,584
Linens'n Things, Inc. (a) 315,800 13,777
Miller (Herman), Inc. 128,000 6,984
34,345
TEXTILES & APPAREL - 0.6%
Adidas AG 242,600 31,295
Courtaulds Textiles PLC 150,100 883
Dexter Corp. 582,000 25,135
House of Fraser PLC Class L 10,339,500 34,239
Intimate Brands, Inc. Class A 366,600 8,821
Jones Apparel Group, Inc. (a) 483,100 20,773
Kellwood Co. 146,700 4,401
Liz Claiborne, Inc. 304,200 12,719
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
TEXTILES & APPAREL - CONTINUED
Polo Ralph Lauren Corp. Class A 606,400 $ 14,743
Unifi, Inc. 318,500 12,959
Warnaco Group, Inc. Class A 570,600 17,903
183,871
TOTAL DURABLES 981,063
ENERGY - 13.1%
ENERGY SERVICES - 7.0%
Atwood Oceanics, Inc. (a) 196,200 9,295
BJ Services Co. (a) 1,541,047 110,859
Cliffs Drilling Co. (a) 250,300 12,484
Daniel Industries, Inc. 552,100 10,628
Diamond Offshore Drilling, Inc. 3,848,596 185,214
Dresser Industries, Inc. 401,500 16,838
ENSCO International, Inc. (d) 8,175,400 273,876
Falcon Drilling, Inc. (a) 3,217,100 112,800
Global Marine, Inc. (a) 2,548,300 62,433
Halliburton Co. 4,183,200 217,265
Marine Drilling Companies, Inc. (a) 454,800 9,437
McDermott International, Inc. 2,016,400 73,851
Nabors Industries, Inc. (a) 1,134,900 35,678
Noble Drilling Corp. (a) 2,996,400 91,765
Pride International, Inc. (a) 313,500 7,916
Reading & Bates Corp (a) 1,785,100 74,751
Santa Fe International Corp. 576,000 23,436
Schlumberger Ltd. 6,266,100 504,421
Smith International, Inc. (a)(d) 2,979,000 182,836
Transocean Offshore, Inc. 642,400 30,956
Varco International, Inc. (a) 1,182,100 25,341
Weatherford Enterra, Inc. (a) 2,045,000 89,469
Western Atlas, Inc. 332,200 24,583
2,186,132
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - 6.1%
Amerada Hess Corp. 77,200 $ 4,236
Anadarko Petroleum Corp. 574,800 34,883
British Petroleum PLC ADR 3,006,357 239,569
Burlington Resources, Inc. 3,304,508 148,083
Camco International, Inc. 1,518,700 96,722
Canadian Natural Resources Ltd. (a) 900,900 19,284
Coastal Corp. (The) 1,150,000 71,228
Cooper Cameron Corp. (a) 1,577,700 96,240
EVI, Inc. (a) 175,600 9,087
Murphy Oil Corp. 1,415,300 76,692
National-Oilwell, Inc. (a) 424,600 14,516
Newfield Exploration Co. (a) 1,577,400 36,773
Occidental Petroleum Corp. 1,886,100 55,286
Ocean Energy, Inc. (a) 346,400 17,082
Oryx Energy Co. (a) 293,300 7,479
Penn West Petroleum Ltd.(a)(f) 183,700 1,985
Petrobras PN (Pfd. Reg.) 328,399,000 76,800
Phillips Petroleum Co. 733,000 35,642
Pioneer Natural Resources Co. 1,630,199 47,174
Pogo Producing Co. 1,184,900 34,955
Renaissance Energy Ltd. (a) 1,468,388 30,301
Royal Dutch Petroleum Co. 5,049,100 273,598
Santa Fe Energy Resources, Inc. 1,890,000 21,263
Tosco Corp. 4,660,800 176,237
Total SA Class B 1,163,072 126,473
USX-Marathon Group 573,400 19,352
United Meridian Corp. (a) 288,600 8,117
Unocal Corp. 1,035,057 40,173
Valero Energy Corp. 354,800 11,154
Vastar Resources, Inc. 145,500 5,202
YPF Sociedad Anonima Class D 1,666,200 56,162
1,891,748
TOTAL ENERGY 4,077,880
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - 12.7%
BANKS - 4.4%
BB&T Corp. 166,100 $ 10,641
BHI Corp. (non-vtg.) 146,000 4,490
Banc One Corp. 1,382,400 75,082
Bank of New York Co., Inc. 1,729,900 100,010
BankBoston Corp. 93,800 8,811
BankAmerica Corp. 2,814,300 205,444
Comerica, Inc. 907,600 81,911
Credit Suisse Group (Reg.) 168,700 26,078
Credito Italiano Ord. 12,611,100 39,008
Cullen Frost Bankers, Inc. 8,900 540
Fifth Third Bancorp 227,450 18,594
First Empire State Corp. 8,200 3,813
First Tennessee National Corp. 48,900 3,264
Firstar Corp. 34,700 1,473
Hong Leong Bank BHD 2,075,000 1,367
Mellon Bank Corp. 753,000 45,651
Mercantile Bancorp., Inc. 147,650 9,080
National City Corp. 1,127,578 74,138
North Fork Bancorp., Inc. 1,484,800 49,834
Norwest Corp. 914,900 35,338
Peoples Heritage Financial Group, Inc. 8,900 409
PT Bank International Indonesia 5,006,524 293
Royal Bank of Canada 151,900 8,033
Southwest Bancorporation Texas, Inc. 66,700 2,076
Standard Chartered Bank PLC 1,465,300 15,692
Sterling Bancshares, Inc. 26,500 537
Summit Bancorp 139,450 7,426
U.S. Bancorp 3,289,716 368,243
Wells Fargo & Co. 453,200 153,833
Zions Bancorp 702,300 31,867
1,382,976
CREDIT & OTHER FINANCE - 1.3%
American Express Co. 2,350,600 209,791
Associates First Capital Corp. 446,000 31,722
Beneficial Corp. 223,200 18,554
Capital Trust Class A (a) 735,900 8,279
Finova Group, Inc. 24,000 1,193
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
Fleet Financial Group, Inc. 279,400 $ 20,938
Greenpoint Financial Corp. 1,215,700 88,214
Household International, Inc. 188,288 24,018
Hong Leong Credit BHD 3,241,200 2,920
405,629
FEDERAL SPONSORED CREDIT - 1.5%
Freddie Mac 4,263,300 178,792
Fannie Mae 4,830,700 275,652
454,444
INSURANCE - 3.5%
AFLAC, Inc. 247,100 12,633
ACE Ltd. 301,700 29,114
Allmerica Financial Corp. 751,089 37,508
Allstate Corp. 2,424,200 220,299
AMBAC, Inc. 57,100 2,627
American General Corp. 489,300 26,453
American International Group, Inc. 2,440,250 265,377
Aon Corp. 326,550 19,144
Hartford Financial Services Group, Inc. 380,300 35,582
Hartford Life, Inc. Class A 26,500 1,201
MGIC Investment Corp. 201,700 13,413
Nationwide Financial Services, Inc. Class A 26,500 957
Progressive Corp. 137,100 16,435
Provident Companies, Inc. 126,800 4,898
Reliastar Financial Corp. 1,093,291 45,030
St. Paul Companies, Inc. (The) 178,000 14,607
SunAmerica, Inc. 1,450,850 62,024
Torchmark Corp. 885,700 37,255
Travelers Group, Inc. (The) 2,646,699 142,591
20th Century Industries 211,400 5,496
UNUM Corp. 1,528,200 83,096
1,075,740
SAVINGS & LOANS - 2.0%
Ahmanson (H.F.) & Co. 1,241,400 83,096
Astoria Financial Corp. 63,200 3,523
Bank United Corp. Class A 166,200 8,133
CenFed Financial Corp. 40,700 1,831
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
SAVINGS & LOANS - CONTINUED
Charter One Financial Corp. 206,489 $ 13,035
Coast Savings Financial, Inc. (a) 131,500 9,016
Dime Bancorp., Inc. 1,562,000 47,251
Downey Financial Corp. 17,300 492
FirstFed Financial Corp. (a) 13,200 512
Golden State Bancorp (a) 2,446,600 91,442
Golden West Financial Corp. 512,800 50,158
ML Bancorp, Inc. 180,000 5,400
New York Bancorp., Inc. 98,200 3,897
Ocwen Financial Corp. (a) 48,100 1,224
Sovereign Bancorp., Inc. 925,600 19,206
TCF Financial Corp. 943,800 32,030
Washington Mutual, Inc. 4,010,360 255,911
626,157
SECURITIES INDUSTRY - 0.0%
Guoco Group Ltd. 3,970,000 9,710
TOTAL FINANCE 3,954,656
HEALTH - 3.0%
DRUGS & PHARMACEUTICALS - 1.4%
American Home Products Corp. 88,200 6,747
Barr Laboratories, Inc. (a) 153,650 5,243
Bristol-Myers Squibb Co. 268,100 25,369
Elf Sanofi SA 44,500 4,950
Glaxo Wellcome PLC 115,400 2,738
Lilly (Eli) & Co. 1,480,000 103,045
Medimmune, Inc. (a) 266,400 11,422
Merck & Co., Inc. 44,100 4,686
NBTY, Inc. (a) 8,800 294
Novartis AG (Reg.) 70,360 114,058
Parexel International Corp. (a) 207,500 7,677
Pfizer, Inc. 44,100 3,288
Rhone Poulenc SA Class A 21,200 949
Sangstat Medical Corp. (a) 39,100 1,584
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
DRUGS & PHARMACEUTICALS - CONTINUED
Schering-Plough Corp. 1,478,200 $ 91,833
Warner-Lambert Co. 407,100 50,480
Watson Pharmaceuticals, Inc. (a) 167,000 5,417
439,780
MEDICAL EQUIPMENT & SUPPLIES - 0.5%
Arterial Vascular Engineering, Inc. (a) 44,100 2,866
Cardinal Health, Inc. 820,750 61,659
Guidant Corp. 71,600 4,457
McKesson Corp. 36,500 3,949
Medtronic, Inc. 696,900 36,457
Omnicare, Inc. 30,900 958
Sofamor/Danek Group, Inc. (a) 22,100 1,438
Stryker Corp. 26,500 987
Sybron International Corp. (a) 482,000 22,624
135,395
MEDICAL FACILITIES MANAGEMENT - 1.1%
Beverly Enterprises, Inc. 142,200 1,849
Carematrix Corp. (a) 355,900 10,232
HEALTHSOUTH Corp. (a) 4,981,500 138,237
Health Management Associates, Inc. Class A (a) 3,793,425 95,784
Sunrise Assisted Living, Inc. (a) 763,300 32,917
Syncor International Corp.(a) 2,200 35
Tenet Healthcare Corp. (a) 1,659,200 54,961
Trigon Healthcare, Inc. 373,200 9,750
343,765
TOTAL HEALTH 918,940
HOLDING COMPANIES - 0.5%
Consolidation Capital Corp. 1,222,600 24,834
Malaysian Plantations BHD 3,578,000 765
Norfolk Southern Corp. 3,851,600 118,677
PartnerRe Ltd. 150,200 6,966
151,242
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - 6.5%
ELECTRICAL EQUIPMENT - 2.3%
Alcatel Alsthom Compagnie Generale d'Electricite SA 3,237,390 $
411,157
AMETEK, Inc. 612,500 16,538
Antec Corp. (a) 11,400 178
COM DEV International Ltd. (a) 39,700 847
Common Development International Ltd. (a)(f) 274,100 5,848
General Electric Co. 123,900 9,091
Gilat Satellite Networks Ltd. (a) 312,400 8,942
Globecomm Systems, Inc. 373,100 4,244
Leitch Technology Corp. (a) 4,400 132
Loral Space & Communications Ltd. (a) 9,869,600 211,580
Omnipoint Corp. (a) 84,200 1,958
Roper Industries, Inc. 416,300 11,760
Scientific-Atlanta, Inc. 1,388,000 23,249
Siemens AG 388,620 23,013
Titan Corp. (a) 153,500 959
729,496
INDUSTRIAL MACHINERY & EQUIPMENT - 3.2%
Case Corp. 940,400 56,835
Illinois Tool Works, Inc. 1,217,600 73,208
Ingersoll-Rand Co. 1,631,100 66,060
Kaydon Corp. (d) 1,905,100 62,154
Kennametal, Inc. 118,727 6,152
MSC Industrial Direct, Inc. (a) 450,500 19,090
Mettler-Toledo International, Inc. 43,900 757
New Holland NV 2,727,000 72,095
Stanley Works 540,200 25,491
Tyco International Ltd. 13,319,314 600,202
982,044
POLLUTION CONTROL - 1.0%
Allied Waste Industries, Inc. 97,600 2,275
Ogden Corp. 528,800 14,906
Thermo Instrument Systems, Inc. (a) 1,058,975 36,468
USA Waste Services, Inc. (a) 6,466,392 253,806
307,455
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 2,018,995
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 8.5%
BROADCASTING - 4.9%
APT Satellite Holdings Ltd. sponsored ADR 1,545,100 $ 18,155
American Radio Systems Corp. Class A (a) 685,600 36,551
CBS Corp. 14,826,818 436,464
CD Radio, Inc. (a) 212,000 3,591
Cablevision Systems Corp. Class A (a) 45,800 4,385
Chancellor Media Corp. (a) 128,100 9,559
Clear Channel Communications, Inc. (a) 581,800 46,217
Comcast Corp.:
Class A (d) 2,165,700 69,032
Class A special 2,541,200 80,207
Cox Communications, Inc. Class A (a) 1,323,600 53,027
Cox Radio, Inc. Class A (a) 7,100 286
Jacor Communications, Inc. Class A (a) 1,789,300 95,057
Orion Network Systems, Inc. (a)(d) 868,100 14,866
PanAmSat Corp. (a) 72,000 3,105
RCN Corp. 385,900 13,217
Scandinavian Broadcasting Corp. (a) 258,100 6,323
Smartalk Teleservices, Inc. (a) 313,200 7,125
TCA Cable TV, Inc. 97,200 4,471
Tele-Communications, Inc.:
(TCI Group), Series A 3,428,930 95,796
(TCI Ventures Group), Series A 2,275,470 64,424
Time Warner, Inc. 7,372,179 457,075
Univision Communications, Inc. Class A (a) 160,800 11,226
1,530,159
ENTERTAINMENT - 1.1%
AMF Bowling, Inc. 260,800 6,520
Bally Total Fitness Holding Corp. (a)(d) 1,272,100 27,827
Cedar Fair LP (depositary unit) 18,800 486
Disney (Walt) Co. 2,365,000 234,283
King World Productions, Inc. 137,700 7,952
News Corp. Ltd. ADR 88,300 1,970
Premier Parks, Inc. (a) 733,500 29,707
Viacom, Inc. (a):
Class A 296,300 12,111
Class B (non-vtg.) 171,300 7,098
327,954
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
LEISURE DURABLES & TOYS - 0.5%
Authentic Fitness Corp. 86,600 $ 1,597
Callaway Golf Co. 426,900 12,193
Champion Enterprises, Inc. (a) 288,100 5,924
Harley-Davidson, Inc. 418,500 11,456
Hasbro, Inc. 2,144,250 67,544
Mattel, Inc. 1,511,825 56,315
155,029
LODGING & GAMING - 0.4%
Anchor Gaming (a) 431,000 24,028
Four Seasons Hotels, Inc. 1,248,000 39,285
ITT Corp. (a) 438,000 36,299
International Game Technology Corp. 195,900 4,946
La Quinta Motor Inns, Inc. 134,200 2,592
Mirage Resorts, Inc. (a) 307,200 6,989
WMS Industries, Inc. 102,000 2,155
116,294
PUBLISHING - 1.3%
ACNielsen Corp. (a) 160,900 3,922
Applied Graphics Technologies, Inc. (a) 276,500 14,724
Belo (A.H.) Corp. Class A 120,700 6,774
Central Newspapers, Inc. Class A 26,500 1,959
Cognizant Corp. 547,700 24,407
Dow Jones & Co., Inc. 884,300 47,476
Dun & Bradstreet Corp. 1,066,400 32,992
Gannett Co., Inc. 71,200 4,401
Harcourt General, Inc. 81,900 4,484
Harte Hanks Communicatons, Inc. 66,900 2,484
Hollinger International, Inc. Class A 241,500 3,381
Meredith Corp. 407,200 14,532
New York Times Co. (The) Class A 183,500 12,134
Pearson, PLC 5,559,600 72,451
Scholastic Corp. (a) 32,200 1,207
Times Mirror Co. Class A 960,800 59,089
Tribune Co. 871,500 54,251
US WEST Media Group (a) 1,353,100 39,071
Wolters Kluwer NV 93,400 12,071
411,810
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - 0.3%
CKE Restaurants, Inc. 429,800 $ 18,105
Chart House Enterprises, Inc. (a) 437,800 2,764
Famous Daves America, Inc. (a) 131,800 1,178
Fine Host Corp. (a) 120,500 738
O Charleys, Inc. (a) 259,100 4,534
Papa John's International, Inc. (a) 148,800 5,189
Star Buffet, Inc. 47,100 542
Starbucks Corp. (a) 669,800 25,704
Wendy's International, Inc. 1,228,500 29,561
88,315
TOTAL MEDIA & LEISURE 2,629,561
NONDURABLES - 3.2%
AGRICULTURE - 0.1%
Delta & Pine Land Co. 13,300 406
Pioneer Hi-Bred International, Inc. 354,000 37,967
38,373
BEVERAGES - 0.4%
Cadbury-Schweppes PLC Ord. 9,030,304 91,273
Canadaigua Wine Co. Class A (a) 21,800 1,207
Celestial Seasonings, Inc. (a) 8,800 277
PepsiCo, Inc. 789,800 28,778
121,535
FOODS - 1.4%
CPC International, Inc. 367,500 39,598
Campbell Soup Co. 397,100 23,081
Dole Food, Inc. 396,300 18,131
Flowers Industries, Inc. 350,900 7,215
General Mills, Inc. 26,500 1,898
Hershey Foods Corp. 458,200 28,380
Interstate Bakeries Corp. 428,400 16,011
Nabisco Holdings Corp. Class A 207,200 10,036
Nestle SA (Reg.) 50,365 75,410
Quaker Oats Co. 781,300 41,214
Ralston Purina Co. 159,700 14,842
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
FOODS - CONTINUED
Sara Lee Corp. 1,706,900 $ 96,120
Suiza Foods Corp. (a) 585,200 34,856
Tomkins PLC Ord. 5,865,674 27,831
Tootsie Roll Industries, Inc. 134,124 8,383
Universal Foods Corp. 26,700 1,128
444,134
HOUSEHOLD PRODUCTS - 1.1%
Dial Corp. 1,320,700 27,487
Estee Lauder Companies, Inc. 57,400 2,953
Gillette Co. 1,427,600 143,385
Metro Pacific, Inc. Class B 45,552,595 1,260
Procter & Gamble Co. 8,800 702
Unilever NV:
Ord. 2,374,980 146,495
ADR 314,600 19,643
341,925
TOBACCO - 0.2%
Consolidated Cigar Holdings, Inc. Class A (a) 474,400 13,076
Grupo Carso SA de CV Class A-1 5,154,000 34,488
Swisher International Group, Inc. Class A (d) 370,200 6,293
53,857
TOTAL NONDURABLES 999,824
PRECIOUS METALS - 0.4%
Barrick Gold Corp. 434,000 8,091
Euro-Nevada Mining Ltd. 2,867,800 38,818
Euro-Nevada Mining Ltd. (f) 143,000 1,936
Franco-Nevada Mining Corp. (d) 3,716,600 73,055
Franco-Nevada Mining Corp. (f) 324,600 6,381
Indochina Goldfields Ltd. (a) 1,099,400 2,238
Indochina Goldfields Ltd. (a)(f) 948,400 1,931
132,450
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - 7.4%
APPAREL STORES - 0.9%
Abercrombie & Fitch Co. (a) 85,300 $ 2,666
Charming Shoppes, Inc. (a)(d) 10,593,300 49,656
Gap, Inc. 2,531,700 89,717
Goody's Family Clothing (a) 702,200 19,091
Limited, Inc. (The) 1,143,000 29,147
Payless ShoeSource, Inc. (a) 31,732 2,130
Ross Stores, Inc. 42,600 1,550
TJX Companies, Inc. 2,183,200 75,048
269,005
DRUG STORES - 1.2%
CVS Corp. 5,723,904 366,688
General Nutrition Companies, Inc. (a) 160,500 5,457
372,145
GENERAL MERCHANDISE STORES - 1.6%
Costco Companies, Inc. (a) 1,464,500 65,353
Dayton Hudson Corp. 813,800 54,931
Federated Department Stores, Inc. (a) 836,800 36,035
Meyer (Fred), Inc. (a) 1,268,700 46,149
Nordstrom, Inc. 214,200 12,932
Proffitts, Inc. (a) 514,000 14,617
Stein Mart, Inc. (a)(d) 1,395,700 37,335
Wal-Mart Stores, Inc. 6,053,100 238,719
Woolworth Corp. (a) 65,800 1,341
507,412
GROCERY STORES - 1.4%
Albertson's, Inc. 26,500 1,255
Asda Group PLC 6,851,300 20,035
Dominick's Supermarkets, Inc. (a)(d) 1,309,500 47,797
Loblaw Companies Ltd. 327,900 5,941
Quality Food Centers, Inc. (a)(d) 1,253,500 83,985
Richfood Holdings, Inc. Class A (d) 2,534,750 71,607
Safeway, Inc. (a) 2,669,900 168,871
Whole Foods Market, Inc. (a) 407,200 20,818
420,309
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - 2.3%
Boots Co. PLC Class L (The) 1,746,240 $ 25,216
Brylane, Inc. 719,200 35,421
Circuit City Stores, Inc. - Circuit City Group 1,746,300 62,103
Hancock Fabrics, Inc. 375,900 5,451
Home Depot, Inc. 4,835,150 284,669
Lowe's Companies, Inc. 1,092,200 52,084
Staples, Inc. (a) 3,257,500 90,396
Tandy Corp. 274,400 10,582
Tele-Communications Liberty Media Group, Series A (a) 88,300 3,201
Toys "R" Us, Inc. (a) 597,454 18,782
U.S.A. Floral Products, Inc. (d) 650,500 10,245
U.S. Office Products Co. (a) 5,178,450 101,627
Williams-Sonoma, Inc. (a) 369,700 15,481
715,258
TOTAL RETAIL & WHOLESALE 2,284,129
SERVICES - 2.6%
ADVERTISING - 0.3%
CMG Information Services, Inc. (a) 37,400 1,131
Interpublic Group of Companies, Inc. 490,650 24,441
Lamar Advertising Co. Class A (a) 123,500 4,909
Omnicom Group, Inc. 507,200 21,493
Outdoor Systems, Inc. (a) 1,455,150 55,841
107,815
EDUCATIONAL SERVICES - 0.1%
Apollo Group, Inc. Class A (a) 420,200 19,854
LEASING & RENTAL - 0.3%
Budget Group, Inc. Class A (a) 640,400 22,134
Central Parking Corp. 69,000 3,127
Hertz Corp. Class A 1,442,900 58,077
Rental Service Corp. (a) 37,400 919
Ryder Systems, Inc. 540,100 17,688
U.S. Rentals, Inc. 8,800 207
United Rentals, Inc. 377,000 7,281
109,433
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
PRINTING - 0.2%
Big Flower Holdings, Inc. (a)(d) 1,537,900 $ 37,102
United Stationers, Inc. (a) 30,900 1,487
Valassis Communications, Inc. (a) 331,200 12,254
Wallace Computer Services, Inc. 38,600 1,501
52,344
SERVICES - 1.7%
APAC Teleservices, Inc. (a)(d) 3,044,600 41,102
AccuStaff, Inc. (a) 636,500 14,639
Block (H & R), Inc. 749,400 33,582
Borg Warner Security Corp. (a) 274,400 4,836
Cendant Corp. (a) 7,150,501 245,798
Coach USA, Inc. (a) 37,900 1,270
Devry, Inc. (a) 29,800 950
Ecolab, Inc. 913,100 50,620
Hays PLC 2,221,500 29,719
NCO Group, Inc. (a) 541,750 13,950
Rentokil Initial PLC 4,340,456 18,950
Robert Half International, Inc. (a) 506,750 20,270
Securitas AB Class B 507,075 15,339
ServiceMaster Co. 259,300 7,585
Snyder Communications, Inc. (a) 707,800 25,835
524,445
TOTAL SERVICES 813,891
TECHNOLOGY - 10.7%
COMMUNICATIONS EQUIPMENT - 3.4%
ADC Telecommunications, Inc (a). 325,100 13,573
Advanced Fibre Communication, Inc. (a)(d) 3,736,300 108,820
Applied Signal Technology, Inc. (a) 20,100 276
Aspect Telecommunications Corp. (a) 107,400 2,242
Ciena Corp. 2,929,300 179,053
Cisco Systems, Inc. (a) 734,050 40,923
Davox Corp. (a) 543,950 17,746
Ericsson (L.M.) Telephone Co. Class B ADR 66,100 2,466
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMMUNICATIONS EQUIPMENT - CONTINUED
Inter-Tel, Inc. 894,200 $ 17,325
Intermedia Communications, Inc. (a)(d) 962,607 58,478
Lucent Technologies, Inc. 4,676,300 373,519
Newbridge Networks Corp. (a) 1,149,600 40,092
Northern Telecom Ltd. 1,488,100 132,358
Tellabs, Inc. (a) 1,104,600 58,406
Teledata Communications Ltd. (a) 478,300 8,729
1,054,006
COMPUTER SERVICES & SOFTWARE - 3.7%
America Online, Inc. (a) 247,200 22,047
At Home Corp., Series A 57,600 1,447
Automatic Data Processing, Inc. 2,114,600 129,784
BMC Software, Inc. (a) 43,500 2,855
Broderbund Software, Inc. (a) 844,600 21,643
CBT Group PLC sponsored ADR (a) 99,300 8,155
CSG Systems International, Inc. (a) 20,000 800
Cambridge Technology Partners Massachusetts, Inc. (a) 47,700 1,986
Cap Gemini Sogeti SA 548,234 44,916
Ceridian Corp. (a) 1,828,600 83,773
Checkfree Corp. (a) 119,700 3,232
Ciber, Inc. (a) 112,300 6,513
Citrix Systems, Inc. (a) 530,200 40,295
CompuServe Corp. (a) 375,900 4,558
Computer Sciences Corp. (a) 79,500 6,638
Cybermedia, Inc. (a) 186,700 2,812
DST Systems, Inc. (a) 293,700 12,537
DR Solomons Group PLC sponsored ADR (a) 53,100 1,712
Electronic Arts, Inc. (a) 1,120,407 42,365
Electronic Data Systems Corp. 744,600 32,716
Engineering Animation, Inc. (a)(d) 359,600 16,542
Equifax, Inc. 1,098,600 38,932
HBO & Co. 789,300 37,886
ICG Communications, Inc. (a) 364,000 9,919
Industrial-Matematik International Corp. (a) 648,000 19,116
International Telecommunications Data Systems, Inc. (a) 4,200 134
Keane, Inc. (a) 434,800 17,664
Lycos, Inc. (a)(d) 1,123,900 46,501
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
Micro Focus Group (a) 49,800 $ 1,957
Micro Focus Group, PLC, ADR (a) 48,700 1,966
Microsoft Corp. (a) 2,437,900 315,099
Misys PLC Ord. 277,446 8,410
Networks Associates, Inc. (a) 216,900 11,469
New Era of Networks, Inc. 218,800 2,462
Open Market, Inc. (a) 388,200 3,736
PRT Group, Inc. 119,600 1,360
Pegasus Systems, Inc. 34,600 515
PeopleSoft, Inc. (a) 709,100 27,655
Quadramed Corp. (a) 30,900 850
Saville Systems Ireland PLC sponsored ADR (a) 461,200 19,140
Shared Medical Systems Corp. 76,700 5,062
SportsLine USA, Inc. 181,200 1,948
Veritas Software Corp. (a) 33,650 1,716
Visio Corp. (a) 274,300 10,526
Yahoo, Inc. (a) 979,850 67,855
1,139,204
COMPUTERS & OFFICE EQUIPMENT - 1.4%
Compaq Computer Corp. 260,100 14,679
Dell Computer Corp. (a) 229,500 19,278
Diebold, Inc. 202,500 10,252
EMC Corp. (a) 7,781,300 213,499
International Business Machines Corp. 12,800 1,338
Kronos, Inc. (a) 398,500 12,279
Pitney Bowes, Inc. 484,300 43,557
SCI Systems, Inc. (a) 90,800 3,955
Sequent Computer Systems, Inc. (a) 500,600 10,012
Symbol Technologies, Inc. 1,142,700 43,137
Unisys Corp. (a) 4,790,700 66,471
438,457
ELECTRONIC INSTRUMENTS - 0.7%
JDS Fitel, Inc. (a) 285,300 16,974
JDS Fitel, Inc. (a)(f) 177,000 10,530
KLA-Tencor Corp. 10,600 409
Lam Research Corp. (a) 201,100 5,882
Perkin-Elmer Corp. 277,100 19,691
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONIC INSTRUMENTS - CONTINUED
Tektronix, Inc. 241,800 $ 9,596
Teradyne, Inc. (a) 4,200 134
Thermo Electron Corp. (a) 2,586,400 115,095
Thermo Optek Corp. 63,500 976
Thermo Vision Corp. 8,890 72
Thermoquest Corp. (a) 192,500 3,489
Waters Corp. (a) 1,233,500 46,410
229,258
ELECTRONICS - 1.5%
Celeritek, Inc. (a) 222,000 3,108
DII Group, Inc. (a) 333,100 9,077
Etec Systems, Inc. (a) 12,900 600
Intel Corp. 1,283,800 90,187
International Rectifier Corp. (a) 31,200 369
Maxim Integrated Products, Inc. (a) 865,900 29,874
Maxwell Technologies, Inc. (a) 90,800 2,111
National Semiconductor Corp. (a) 706,500 18,325
Power Intergrations, Inc. 310,600 2,873
Semtech Corp. (a) 198,450 7,764
Solectron Corp. (a) 13,600 565
Storage Technology Corp. (a) 96,800 5,996
Texas Instruments, Inc. 4,433,400 199,503
Uniphase Corp. (a) 983,800 40,705
Vitesse Semiconductor Corp. (a) 752,100 28,392
Zero Corp. 560,100 16,593
456,042
PHOTOGRAPHIC EQUIPMENT - 0.0%
Polaroid Corp. 44,200 2,152
TOTAL TECHNOLOGY 3,319,119
TRANSPORTATION - 1.2%
AIR TRANSPORTATION - 0.7%
AMR Corp. (a) 59,200 7,607
ASA Holdings, Inc. 61,900 1,760
Comair Holdings, Inc. 73,050 1,762
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - CONTINUED
AIR TRANSPORTATION - CONTINUED
Continental Airlines, Inc. Class B (a) 1,267,000 $ 60,974
Delta Air Lines, Inc. 411,100 48,921
Southwest Airlines Co. 1,345,550 33,134
US Airways Group, Inc. (a) 383,800 23,988
Viad Corp. 1,150,500 22,219
Virgin Express Holdings PLC sponsored ADR (d) 263,900 5,476
205,841
RAILROADS - 0.1%
Bombardier, Inc. Class B 311,200 6,400
Canadian National Railway Co. 150,400 7,080
Wisconsin Central Transportation Corp. (a) 457,700 10,699
24,179
SHIPPING - 0.0%
OMI Corp. (a) 125,300 1,151
TRUCKING & FREIGHT - 0.4%
C.H. Robinson Worldwide, Inc. 618,000 13,828
CNF Transportation, Inc. 787,500 30,220
Swift Transportation Co., Inc. (a) 956,800 30,976
USFreightways Corp. 1,085,500 35,279
Yellow Corp. (a) 618,900 15,550
125,853
TOTAL TRANSPORTATION 357,024
UTILITIES - 4.8%
CELLULAR - 0.9%
AirTouch Communications, Inc. (a) 2,241,500 93,162
Mobile Telecommunications Technologies, Inc. (a) 2,456,500 54,043
Orange PLC (a) 7,692,001 33,456
Vodafone Group PLC sponsored ADR 1,404,400 101,819
282,480
ELECTRIC UTILITY - 0.3%
American Electric Power Co., Inc. 49,800 2,571
Edison International 764,700 20,790
GPU, Inc. 49,800 2,098
National Grid Co. PLC 14,349,400 68,321
93,780
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
GAS - 0.0%
El Paso Natural Gas Co. 83,900 $ 5,579
TELEPHONE SERVICES - 3.6%
ACC Corp. (a) 87,800 4,434
AT&T Corp. 5,180,200 317,287
American Communication Services, Inc. 44,000 564
Brooks Fiber Properties, Inc. (a) 1,276,300 70,197
Energis PLC (a) 5,928,800 24,908
EXCEL Communications, Inc. (a) 348,614 5,055
GST Telecommunications, Inc. (a) 88,300 1,091
GTE Corp. 132,400 6,918
LCI International, Inc. (a) 235,300 7,235
MCI Communications Corp. 851,000 36,433
McLeodUSA, Inc. Class A (a) 1,603,600 51,315
Metromedia Fiber Network, Inc. Class A (a) 930,900 15,476
NEXTLINK Communications, Inc. Class A (d) 1,507,100 32,120
Qwest Communications International, Inc. 361,400 21,503
Startec Global Communications Corp. 65,900 1,475
Tel-Save Holdings, Inc. (a) 596,700 11,859
Teleport Communications Group, Inc. Class A (a) 2,051,500 112,576
WorldCom, Inc. (a) 12,563,100 380,034
1,100,480
TOTAL UTILITIES 1,482,319
TOTAL COMMON STOCKS
(Cost $19,560,278) 26,346,790
PREFERRED STOCKS - 0.9%
CONVERTIBLE PREFERRED STOCKS - 0.2%
CONSTRUCTION & REAL ESTATE - 0.1%
REAL ESTATE INVESTMENT TRUSTS - 0.1%
Vornado Realty Trust Series A, $3.25 569,000 37,554
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
RETAIL & WHOLESALE - 0.1%
APPAREL STORES - 0.1%
TJX Companies, Inc., Series E, $7.00 73,500 $ 27,930
TOTAL CONVERTIBLE PREFERRED STOCKS 65,484
NONCONVERTIBLE PREFERRED STOCKS - 0.7%
TECHNOLOGY - 0.2%
COMPUTER SERVICES & SOFTWARE - 0.2%
SAP AG (Systeme Anwendungen Produkte) 207,300 65,930
UTILITIES - 0.5%
TELEPHONE SERVICES - 0.5%
Telecom Italia:
Spa 11,503,600 50,545
Mobile Spa de Risp 34,919,700 98,795
149,340
TOTAL NONCONVERTIBLE PREFERRED STOCKS 215,270
TOTAL PREFERRED STOCKS
(Cost $184,258) 280,754
CONVERTIBLE BONDS - 0.0%
MOODY'S RATINGS (C) PRINCIPAL
(UNAUDITED) AMOUNT (000S)
TECHNOLOGY - 0.0%
ELECTRONICS - 0.0%
Kent Electronics Corp. 4 1/2%, 9/1/04 B $ 8,010 6,528
National Semiconductor Corp.
6 1/2%, 10/1/02 (f) Ba2 6,690 6,623
TOTAL CONVERTIBLE BONDS
(Cost $13,790) 13,151
U.S. TREASURY OBLIGATIONS - 4.7%
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
7 5/8%, 2/15/25 Aaa $ 260,110 $ 315,667
6 7/8%, 8/15/25 Aaa 249,500 278,193
6% 2/15/26 Aaa 282,950 282,596
6.75% 8/15/26 Aaa 241,600 265,987
6.5% 11/15/26 Aaa 235,000 250,863
6.625% 2/15/27 Aaa 44,000 47,767
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $1,399,146) 1,441,073
CASH EQUIVALENTS - 9.5%
SHARES
Taxable Central Cash Fund (b) 2,576,652,129 2,576,652
MATURITY
AMOUNT (000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 6.40%, dated
12/31/97 due 1/2/98 $ 374,763 374,630
TOTAL CASH EQUIVALENTS
(Cost $2,951,282) 2,951,282
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $24,108,754) $ 31,033,050
LEGEND
1. Non-income producing
2. At period end, the seven-day yield of the Taxable Central Cash Fund
was 5.69%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
3. Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
4. Affiliated company (see Note 8 of Notes to Financial Statements).
5. Restricted securities - Investment in securities not registered
under the Securities Act of 1933 (see Note 2 of Notes to Financial
Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST (000S)
Grand Palais
Management Co., LP 7/24/96 $ -
6. Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At the
period end, the value of these securities amounted to $35,234,000 or
0.1% of net assets.
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of
total value of investment in securities, is as follows:
United States 85.9%
United Kingdom 3.0
Netherlands 2.1
France 2.0
Netherlands Antilles 1.6
Canada 1.7
Others (individually less than 1%) 3.7
TOTAL 100.0%
INCOME TAX INFORMATION
At December 31, 1997, the aggregate cost of investment securities for
income tax purposes was $24,197,225,000. Net unrealized appreciation
aggregated $6,835,825,000, of which $7,337,238,000 related to
appreciated investment securities and $501,413,000 related to
depreciated investment securities.
The fund hereby designates approximately $304,960,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) DECEMBER 31, 1997
7.ASSETS 8. 9.
10.INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE 11. $ 31,033,050
AGREEMENTS OF $374,630) (COST $24,108,754) -
SEE ACCOMPANYING SCHEDULE
12.CASH 13. 263
14.RECEIVABLE FOR INVESTMENTS SOLD 15. 259,879
16.RECEIVABLE FOR FUND SHARES SOLD 17. 46,022
18.DIVIDENDS RECEIVABLE 19. 22,183
20.INTEREST RECEIVABLE 21. 41,964
22.OTHER RECEIVABLES 23. 1,296
24. 25.TOTAL ASSETS 26. 31,404,657
27.LIABILITIES 28. 29.
30.PAYABLE FOR INVESTMENTS PURCHASED $ 169,760 31.
32.PAYABLE FOR FUND SHARES REDEEMED 139,852 33.
34.DISTRIBUTIONS PAYABLE 12,238 35.
36.ACCRUED MANAGEMENT FEE 11,709 37.
38.OTHER PAYABLES AND ACCRUED EXPENSES 7,335 39.
40.COLLATERAL ON SECURITIES LOANED, AT VALUE 324,667 41.
42. 43.TOTAL LIABILITIES 44. 665,561
45.46.NET ASSETS 47. $ 30,739,096
48.NET ASSETS CONSIST OF: 49. 50.
51.PAID IN CAPITAL 52. $ 23,595,503
53.UNDISTRIBUTED NET INVESTMENT INCOME 54. 38,086
55.ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 56. 181,324
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
57.NET UNREALIZED APPRECIATION (DEPRECIATION) ON 58. 6,924,183
INVESTMENTS AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
59.60.NET ASSETS, FOR 659,238 SHARES OUTSTANDING 61. $ 30,739,096
62.63.NET ASSET VALUE AND REDEMPTION PRICE PER SHARE 64. $46.63
($30,739,096 (DIVIDED BY) 659,238 SHARES)
65.MAXIMUM OFFERING PRICE PER SHARE (100/97.00 OF 66. $48.07
$46.63)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED DECEMBER 31, 1997
67.INVESTMENT INCOME 69. $ 273,329
68.DIVIDENDS (INCLUDING $6,302 RECEIVED FROM AFFILIATED
ISSUERS)
70.INTEREST (INCLUDING INCOME ON SECURITIES LOANED OF 71. 167,347
$5,911)
72. 73.TOTAL INCOME 74. 440,676
75.EXPENSES 76. 77.
78.MANAGEMENT FEE $ 166,046 79.
BASIC FEE
80. PERFORMANCE ADJUSTMENT (32,639) 81.
82.TRANSFER AGENT FEES 55,563 83.
84.ACCOUNTING AND SECURITY LENDING FEES 1,059 85.
86.NON-INTERESTED TRUSTEES' COMPENSATION 137 87.
88.CUSTODIAN FEES AND EXPENSES 1,907 89.
90.REGISTRATION FEES 2,078 91.
92.AUDIT 192 93.
94.LEGAL 124 95.
96.INTEREST 3 97.
98.REPORTS TO SHAREHOLDERS 1,199 99.
100.MISCELLANEOUS 315 101.
102. TOTAL EXPENSES BEFORE REDUCTIONS 195,984 103.
104. EXPENSE REDUCTIONS (9,368) 186,616
105.106.NET INVESTMENT INCOME 107. 254,060
108.REALIZED AND UNREALIZED GAIN (LOSS) 110. 111.
109.NET REALIZED GAIN (LOSS) ON:
112. INVESTMENT SECURITIES (INCLUDING REALIZED GAIN (LOSS) OF 2,589,554 113.
$112,629 ON SALES OF INVESTMENTS IN AFFILIATED ISSUERS)
114. FOREIGN CURRENCY TRANSACTIONS (443) 2,589,111
115.CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 116. 117.
ON:
118. INVESTMENT SECURITIES 2,841,606 119.
120. ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (117) 2,841,489
121.122.NET GAIN (LOSS) 123. 5,430,600
124.125.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 126. $ 5,684,660
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
127.INCREASE (DECREASE) IN NET ASSETS
128.OPERATIONS $ 254,060 $ 247,680
NET INVESTMENT INCOME
129. NET REALIZED GAIN (LOSS) 2,589,111 1,301,229
130. CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 2,841,489 2,377,237
131. 5,684,660 3,926,146
132.NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS
133.DISTRIBUTIONS TO SHAREHOLDERS (211,835) (205,408)
FROM NET INVESTMENT INCOME
134. FROM NET REALIZED GAIN (2,742,867) (1,597,799)
135. 136.TOTAL DISTRIBUTIONS (2,954,702) (1,803,207)
137.SHARE TRANSACTIONS 8,043,743 9,573,613
NET PROCEEDS FROM SALES OF SHARES
138. REINVESTMENT OF DISTRIBUTIONS 2,914,929 1,776,511
139. COST OF SHARES REDEEMED (6,778,358) (4,502,101)
140.141. 4,180,314 6,848,023
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS
142. 6,910,272 8,970,962
143.TOTAL INCREASE (DECREASE) IN NET ASSETS
144.NET ASSETS 145. 146.
147. BEGINNING OF PERIOD 23,828,824 14,857,862
148. $ 30,739,096 $ 23,828,824
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME OF $38,086 AND $40,761, RESPECTIVELY)
149.OTHER INFORMATION 151. 152.
150.SHARES
153. SOLD 175,809 242,915
154. ISSUED IN REINVESTMENT OF DISTRIBUTIONS 65,437 44,832
155. REDEEMED (147,380) (113,133)
156. NET INCREASE (DECREASE) 93,866 174,614
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
157. YEARS ENDED DECEMBER 31,
158. 1997 1996 1995 1994 1993
159.SELECTED PER-SHARE DATA
160.NET ASSET VALUE, BEGINNING $ 42.15 $ 38.02 $ 30.28 $ 30.84 $ 27.47
OF PERIOD
161.INCOME FROM INVESTMENT
OPERATIONS
162. NET INVESTMENT INCOME .42 C .46 .03 .06 .14
163. NET REALIZED AND 8.97 7.50 10.93 (.40) 5.66
UNREALIZED GAIN (LOSS)
164. TOTAL FROM INVESTMENT 9.39 7.96 10.96 (.34) 5.80
OPERATIONS
165.
166.LESS DISTRIBUTIONS
167. FROM NET INVESTMENT (.35) (.38) (.09) - (.11)
INCOME
168. IN EXCESS OF NET - - - - (.07)
INVESTMENT INCOME
169. FROM NET REALIZED GAIN (4.56) (3.45) (3.13) (.22) (2.25)
170. TOTAL DISTRIBUTIONS (4.91) (3.83) (3.22) (.22) (2.43)
171.NET ASSET VALUE, END OF $ 46.63 $ 42.15 $ 38.02 $ 30.28 $ 30.84
PERIOD
172.TOTAL RETURN A, B 23.00% 21.94% 36.28% (1.12)% 21.43%
173.RATIOS AND SUPPLEMENTAL
DATA
174.NET ASSETS, END OF PERIOD $ 30,739 $ 23,829 $ 14,858 $ 8,694 $ 6,208
(IN MILLIONS)
175.RATIO OF EXPENSES TO .70% .83% .98% 1.03% 1.08%
AVERAGE
NET ASSETS
176.RATIO OF EXPENSES TO .67% D .79% D .96% D 1.00% D 1.06% D
AVERAGE NET ASSETS AFTER
EXPENSE REDUCTIONS
177.RATIO OF NET INVESTMENT .91% 1.28% .44% .59% .46%
INCOME TO AVERAGE NET ASSETS
178.PORTFOLIO TURNOVER RATE 144% 159% 223% 235% 255%
179.AVERAGE COMMISSION RATE E $ .0310 $ .0358
</TABLE>
A THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
E FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Contrafund (the fund) is registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company organized as a Massachusetts business
trust and is authorized to issue an unlimited number of shares. The
financial statements have been prepared in conformity with generally
accepted accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities (including restricted
securities) for which exchange quotations are not readily available
(and in certain cases debt securities which trade on an exchange) are
valued primarily using dealer-supplied valuations or at their fair
value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less
for which quotations are not readily available are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income
receipts and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Purchases and sales of securities are translated into U.S. dollars at
the contractual currency exchange rates established at the time of
each trade.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and the
U.S. dollar amount actually received. The effects of changes in
foreign currency exchange rates on investments in securities are
included with the net realized and unrealized gain or loss on
investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
the fair market value of the securities received. Interest income is
accrued as earned. Investment income is recorded net of foreign taxes
withheld where recovery of such taxes is uncertain.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for litigation proceeds, foreign currency transactions,
passive foreign investment companies (PFIC), market discount,
partnerships, non-taxable dividends, and losses deferred due to wash
sales and excise tax regulations. The fund also utilized earnings and
profits distributed to shareholders on redemption of shares as a part
of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade. The cost of the foreign currency contracts is
included in the cost basis of the associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the
2. OPERATING POLICIES - CONTINUED
REPURCHASE AGREEMENTS -
CONTINUED
fund's investment adviser, is responsible for determining that the
value of the underlying securities remains in accordance with the
market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by Fidelity Investments Money Management, Inc.
(formerly FMR Texas, Inc.), a wholly owned subsidiary of FMR. The
Cash Fund is an open-end money market fund available only to
investment companies and other accounts managed by FMR and its
affiliates. The Cash Fund seeks preservation of capital, liquidity,
and current income by investing in U.S. Treasury securities and
repurchase agreements for these securities. Income distributions from
the Cash Fund are declared daily and paid monthly from net interest
income. Income distributions earned by the fund are recorded as
interest income in the accompanying financial statements.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, restricted securities (excluding 144A
issues) amounted to $0 or 0% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $37,119,236,000 and $36,800,892,000, respectively, of which
U.S. government and government agency obligations aggregated
$1,212,226,000 and $913,892,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly basic fee that is calculated on the basis of a group fee rate
plus a fixed individual fund fee rate applied to the average net
assets of the fund. The group fee rate is the weighted average of a
series of rates and is based on the monthly average net assets of all
the mutual funds advised by FMR. The rates ranged from .2500% to
.5200% for the period. The annual individual fund fee rate is .30%. In
the event that these rates were lower than the contractual rates in
effect during the period, FMR voluntarily implemented the above rates,
as they resulted in the same or a lower management fee. The basic fee
is subject to a performance adjustment (up to a maximum of
(plus/minus).20% of the fund's average net assets over the performance
period) based on the fund's investment performance as compared to the
appropriate index over a specified period of time.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
For the period, the management fee was equivalent to an annual rate of
.48% of average net assets after the performance adjustment.
SALES LOAD. For the period, Fidelity Distributors Corporation (FDC),
an affiliate of FMR and the general distributor of the fund, received
sales charges of $9,065,000 on sales of shares of the fund of which
$54,000 was paid to securities dealers, banks and other financial
institutions.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the fund's transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. For the period, the transfer agent fees were
equivalent to an annual rate of .20% of average net assets.
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the fund's
accounting records and administers the security lending program. The
security lending fee is based on the number and duration of lending
transactions. The accounting fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $11,278,000 for the
period.
5. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund
negotiated lenders' fees. These fees are included in interest income.
The fund receives U.S. Treasury obligations and/or cash as collateral
against the loaned securities, in an amount at least equal to 102% of
the market value of the loaned securities at the inception of each
loan. This collateral must be maintained at not less than 100% of the
market value of the loaned securities during the period of the loan.
At period end, the value of the securities loaned and the value of
collateral amounted to $ 311,790,000 and $324,667,000, respectively.
6. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. Under the most
restrictive arrangement, the fund must pledge to the bank securities
having a market value in excess of 220% of the total bank borrowings.
The interest rate on the borrowings is the bank's base rate, as
revised from time to time. The maximum loan and the average daily loan
balances during the
6. BANK BORROWINGS -
CONTINUED
period for which loans were outstanding amounted to $9,981,000 and
$8,390,000, respectively. The weighted average interest rate was
5.56%.
7. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $8,127,000 under this arrangement.
In addition, the fund has entered into an arrangements with its
custodian and transfer agent whereby credits realized as a result of
uninvested cash balances were used to reduce a portion of the fund's
expenses. During the period, the fund's custodian and transfer agent
fees were reduced by $20,000 and $1,221,000 respectively, under these
arrangements.
8. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of
at least 5% of the voting securities. Transactions during the period
with companies which are or were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND
AFFILIATE COST COST INCOME VALUE
American Exploration Co. $ - $ 641 $ - $ -
APAC Teleservices, Inc. 53,113 62,272 - 41,102
Advanced Fibre Communication, Inc. 2,814 - - 108,820
Anaren Microwave, Inc. 3,980 2,534 - 5,571
Applied Magnetics Corp. - 2,916 - -
BJ Services Co. - 1,732 - -
Bally Total Fitness Holding Corp. 4,087 191 - 27,827
Bedford Property Investors, Inc. 4,461 2,298 737 24,795
Big Flower Holdings, Inc. - 466 - 37,102
Breed Technologies, Inc. 5,491 - - 34,808
Budget Group Inc., Class A 3,259 1,255 - -
Cambrex Corp. 6,056 7,201 67 -
Camco International, Inc. - 11,971 200 -
Cato Corp. Class A - 299 36 -
Charming Shoppes, Inc. 3,540 - - 49,656
Comcast Corp. Class A. 15,341 - 46 69,032
Consolidated Cigar Holdings, Inc.
Class A 5,786 14,964 - -
Cooper Cameron Corp. - 30,589 - -
Cross-Continent Auto Retailers, Inc. - 744 - -
Dominicks Supermarket, Inc. 13,927 3,813 - 47,797
ENSCO International, Inc. 41,871 82,370 402 273,876
Engineering Animation, Inc. 3,005 1,583 - 16,542
Franco-Nevada Mining Corp. 5,457 14,654 935 73,055
8. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND
AFFILIATE COST COST INCOME VALUE
Golf Trust of America, Inc. $ 5,872 $ 5,779 $ 308 $ -
Goody's Family Clothing 6,877 12,779 - -
Integrated Health Services, Inc. 4,114 10,515 - -
Intermedia Communications, Inc. 2,786 - - 58,478
Kaydon Corp. 7,267 12,941 440 62,154
Kronos, Inc. - 8,657 - -
Lycos, Inc. 14,092 - - 46,501
Nabors Industries, Inc. - 17,944 - -
New Holland NV 10,049 3,938 1,303 -
Newfield Exploration Co. 1,062 14,932 - -
NEXTLINK Comm Inc., Class A - - - 32,120
O'Gara Co. - - - -
Orion Network Systems, Inc. 4,853 - - 14,866
Pogo Producing Co. - 10,281 86 -
ProCom Technology, Inc. - - - -
Quality Food Centers, Inc. 7,793 - - 83,985
Richfood Holdings, Inc. Class A 1,471 16,501 403 71,607
SPX Corp. 12,353 8,155 111 70,435
Smedvig As. 4,935 9,110 - -
Security-Connecticut Corp. 3,758 9,676 445 -
Semtech Corp. 4,588 3,542 - -
Silgan Holdings, Inc. 2,345 411 - -
Smartalk Teleservices, Inc. - 2,341 - -
Smith International, Inc.. 50,173 49,362 - 182,836
Starwood Lodging Trust combined
Certficate (SBI) 1,716 - 702 -
Stein Mart, Inc. 3,320 - - 37,335
Sunrise Assissted, Living, Inc. 2,239 4,015 - -
Swisher International
Group, Inc. Class A 2,697 5,905 - 6,293
Telespectrum Worldwide, Inc. 554 3,608 - -
Tongkah Holdings BHD - 3,032 - -
U.S.A. Floral Products, Inc. - - - 10,245
United Auto Group, Inc. - 553 - -
8. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND
AFFILIATE COST COST INCOME VALUE
United Meridian Corp. $ - $ 26,593 $ - $ -
Varco. International, Inc. - 5,264 - -
Vintage Petroleum, Inc. - - 24 -
Virgin Express Holdings PLC
sponsored ADR - - - 5,476
Zero Corp. 1,610 2,339 57 -
TOTALS $ 328,712 $ 490,666 $ 6,302 $ 1,492,314
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of Fidelity Contrafund:
We have audited the accompanying statement of assets and liabilities
of Fidelity Contrafund, including the schedule of portfolio
investments, as of December 31, 1997, and the related statement of
operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of the fund's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
con-
firmation of securities owned as of December 31, 1997 by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Fidelity Contrafund as of December 31,1997, the
results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then
ended, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 3, 1998
DISTRIBUTIONS
The Board of Trustees of Fidelity Contrafund voted to pay to
shareholders of record at the opening of business on record date the
following distributions derived from capital gains realized from sales
of portfolio securities, and dividends derived from net investment
income:
PAY DATE 2/10/97 1/02/98 2/09/98
RECORD DATE 2/07/97 12/26/97 2/06/98
DIVIDENDS $- $0.35 -
SHORT-TERM
CAPITAL GAINS $0.49 $1.95 $.04
LONG-TERM
CAPITAL GAINS $0.22 $1.90 $.03
LONG-TERM
CAPITAL GAIN BREAKDOWN:
28% rate 100.00% 45.18% 45.23%
20% rate 0.00% 54.82% 54.77%
PROXY VOTING RESULTS
A special meeting of the fund's shareholders was held on January 14,
1998. The results of votes taken among shareholders on proposals are
listed below.
PROPOSAL 1
To elect as Trustees the following twelve nominees.
# OF % OF
SHARES VOTED SHARES VOTED
RALPH F. COX
AFFIRMATIVE 294,493,656.953 96.586
WITHHELD 10,408,128.276 3.414
TOTAL 304,901,785.229 100.000
PHYLLIS BURKE DAVIS
AFFIRMATIVE 294,395,114.131 96.554
WITHHELD 10,506,671.098 3.446
TOTAL 304,901,785.229 100.000
ROBERT M. GATES
AFFIRMATIVE 294,241,855.563 96.504
WITHHELD 10,659,929.666 3.496
TOTAL 304,901,785.229 100.000
EDWARD C. JOHNSON 3D
AFFIRMATIVE 294,377,990.496 96.548
WITHHELD 10,523,794.733 3.452
TOTAL 304,901,785.229 100.000
E. BRADLEY JONES
AFFIRMATIVE 294,186,725.625 96.486
WITHHELD 10,715,059.604 3.514
TOTAL 304,901,785.229 100.000
DONALD J. KIRK
AFFIRMATIVE 294,569,986.113 96.611
WITHHELD 10,331,799.116 3.389
TOTAL 304,901,785.229 100.000
# OF % OF
SHARES VOTED SHARES VOTED
PETER S. LYNCH
AFFIRMATIVE 294,603,158.452 96.622
WITHHELD 10,298,626.777 3.378
TOTAL 304,901,785.229 100.000
WILLIAM O. MCCOY
AFFIRMATIVE 294,580,915.870 96.615
WITHHELD 10,320,869.359 3.385
TOTAL 304,901,785.229 100.000
GERALD C. MCDONOUGH
AFFIRMATIVE 294,380,227.260 96.549
WITHHELD 10,521,557.969 3.451
TOTAL 304,901,785.229 100.000
MARVIN L. MANN
AFFIRMATIVE 294,552,009.716 96.606
WITHHELD 10,349,775.513 3.394
TOTAL 304,901,785.229 100.000
ROBERT C. POZEN
AFFIRMATIVE 294,490,162.345 96.585
WITHHELD 10,411,622.884 3.415
TOTAL 304,901,785.229 100.000
THOMAS R. WILLIAMS
AFFIRMATIVE 294,370,758.972 96.546
WITHHELD 10,531,026.257 3.454
TOTAL 304,901,785.229 100.000
PROPOSAL 2
To ratify the selection of Coopers & Lybrand L.L.P. as independent
accountants of the trust.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 274,716,702.107 90.100
AGAINST 3,737,492.162 1.226
ABSTAIN 26,447,590.960 8.674
TOTAL 304,901,785.229 100.000
PROPOSAL 3
To amend the Declaration of Trust to provide voting rights based on a
shareholder's total dollar investment in a fund, rather than on the
number of shares owned.
# OF % OF
SHARES VOTED SHARES VOTED
OF THE TRUST OF THE TRUST
AFFIRMATIVE 252,853,932.249 83.553
AGAINST 15,299,089.735 5.055
ABSTAIN 34,474,170.256 11.392
TOTAL 302,627,192.240 100.000
NOT VOTED 2,274,592.989
PROPOSAL 4
To amend the Declaration of Trust to eliminate the requirement that
shareholders be notified in the event of an appointment of a trustee
within three months of the appointment.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 254,660,872.045 84.150
AGAINST 11,227,667.093 3.710
ABSTAIN 36,738,653.102 12.140
TOTAL 302,627,192.240 100.000
NOT VOTED 2,274,592.989
PROPOSAL 5
To amend the Declaration of Trust to clarify that the Trustees may
authorize the investment of all of a fund's assets in another open-end
investment company.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 226,779,540.757 74.937
AGAINST 39,117,088.364 12.926
ABSTAIN 36,730,563.119 12.137
TOTAL 302,627,192.240 100.000
NOT VOTED 2,274,592.989
PROPOSAL 6
To adopt a new fundamental investment policy for the fund that would
permit it to invest all of its assets in another open-end investment
company managed by FMR or an affiliate with substantially the same
investment objective and policies.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 225,595,872.570 74.546
AGAINST 39,098,725.847 12.920
ABSTAIN 37,932,593.823 12.534
TOTAL 302,627,192.240 100.000
NOT VOTED 2,274,592.989
PROPOSAL 7
To approve an amended management contract for the fund.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 251,704,618.648 82.574
AGAINST 13,851,461.525 4.544
ABSTAIN 39,266,225.056 12.882
TOTAL 304,822,305.229 100.000
NOT VOTED 79,480.000
PROPOSAL 8
To approve a new sub-advisory agreement with FMR U.K. to provide
investment advice and research services or investment management
services.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 256,794,047.576 84.222
AGAINST 13,367,624.882 4.384
ABSTAIN 34,740,112.771 11.394
TOTAL 304,901,785.229 100.000
PROPOSAL 9
To approve a new sub-advisory agreement with FMR Far East to provide
investment advice and research services or investment management
services.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 255,223,054.589 83.707
AGAINST 14,933,523.489 4.897
ABSTAIN 34,745,207.151 11.396
TOTAL 304,901,785.229 100.000
PROPOSAL 10
To amend the fundamental investment objective and replace certain
fundamental investment policies with non-fundamental policies.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 230,031,707.190 76.012
AGAINST 28,517,590.141 9.423
ABSTAIN 44,077,894.909 14.565
TOTAL 302,627,192.240 100.000
NOT VOTED 2,274,592.989
PROPOSAL 11
Diversification - To amend the fundamental investment limitation to
exclude investments in other investment companies from the limitation.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 229,682,726.197 75.896
AGAINST 33,900,860.168 11.202
ABSTAIN 39,043,605.875 12.902
TOTAL 302,627,192.240 100.000
NOT VOTED 2,274,592.989
PROPOSAL 12
Concentration - To standardize language, ratify the limitation and
modify it to exclude "securities issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities" rather than "
obligations issued or guaranteed by the U.S. government or any of its
agencies or instrumentalities" from the limitation.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 249,687,217.095 82.507
AGAINST 15,307,107.514 5.058
ABSTAIN 37,632,867.631 12.435
TOTAL 302,627,192.240 100.000
NOT VOTED 2,274,592.989
PROPOSAL 13
Commodities - To ratify the ability to invest in securities or other
instruments backed by physical commodities and the ability to own
physical commodities as the result of ownership of other securities or
instruments.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 245,074,386.206 80.982
AGAINST 19,254,363.321 6.363
ABSTAIN 38,298,442.713 12.655
TOTAL 302,627,192.240 100.000
NOT VOTED 2,274,592.989
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity TouchTone Xpressprovides a single toll-free number to access
account balances, positions, quotes and trading. It's easy to navigate
the service, and on your first call, the system will help you create a
personal identification number (PIN) for security.
SM
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
0
*
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at
1-800-544-7272 for significant savings on Web access from internetMCI.
SM
(PHONE_GRAPHIC)
FIDELITY ON-LINE XPRESS+
TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A GAIN
OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY
MARKET FUNDS WILL BE ABLE TO
MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND
IS NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and
send you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Abigail Johnson, Vice President
Will Danoff, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH FUNDS
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund
Disciplined Equity Fund
Dividend Growth Fund
Emerging Growth Fund
Export and Multinational Fund
Fidelity Fifty
Growth Company Fund
Large Cap Stock Fund
Low-Priced Stock Fund
Magellan(registered trademark) Fund
Mid-Cap Stock Fund
New Millennium(registered trademark) Fund
OTC Portfolio
Retirement Growth Fund
Small Cap Selector
Stock Selector
TechnoQuant Growth Fund
SM
Trend Fund
Value Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
TouchTone Xpress 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE
