FIDELITY
(REGISTERED TRADEMARK)
CONTRAFUND
SEMIANNUAL REPORT
JUNE 30, 1998
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 26 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 30 NOTES TO THE FINANCIAL STATEMENTS.
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:
As the first half of 1998 drew to a close, benign inflation, low
interest rates and moderate economic growth provided a solid
foundation for strong stock and bond performance. Investors seemed to
put concerns about the financial and economic turmoil in Asia aside
for the most part, responding instead to stronger-than-expected
corporate earnings and a sound domestic economy. The bond markets
tended to benefit from the moderate growth in the economy and a
historically low rate of inflation, as well their traditional status
as a refuge from volatility in the equity markets.
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
PERIODS ENDED JUNE 30, 1998 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
FIDELITY CONTRAFUND 17.31% 29.73% 152.70% 691.81%
FIDELITY CONTRAFUND 13.79% 25.84% 145.12% 668.05%
(INCL. 3.00% SALES CHARGE)
S&P 500 (REGISTERED TRADEMARK) 17.71% 30.16% 182.41% 448.92%
GROWTH FUNDS AVERAGE 15.10% 25.38% 141.15% 360.50%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, 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 growth funds average,
which reflects the performance of mutual funds with similar objectives
tracked by Lipper Analytical Services, Inc. The past six months
average represents a peer group of 1,012 mutual funds. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY CONTRAFUND 29.73% 20.37% 22.99%
FIDELITY CONTRAFUND 25.84% 19.64% 22.61%
(INCL. 3.00% SALES CHARGE)
S&P 500 30.16% 23.08% 18.56%
GROWTH FUNDS AVERAGE 25.38% 18.19% 16.13%
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
Contrafund S&P 500
00022 SP001
1988/06/30 9700.00 10000.00
1988/07/31 9769.29 9962.00
1988/08/31 9553.73 9623.29
1988/09/30 9946.35 10033.24
1988/10/31 10208.10 10312.17
1988/11/30 10131.11 10164.70
1988/12/31 9987.60 10342.59
1989/01/31 10650.81 11099.66
1989/02/28 10587.64 10823.28
1989/03/31 11148.21 11075.46
1989/04/30 11866.69 11650.28
1989/05/31 12482.52 12122.12
1989/06/30 12403.57 12053.02
1989/07/31 13540.50 13141.41
1989/08/31 13927.37 13398.98
1989/09/30 14195.81 13344.05
1989/10/31 13769.46 13034.46
1989/11/30 14085.28 13300.37
1989/12/31 14297.43 13619.58
1990/01/31 13539.11 12705.70
1990/02/28 13820.28 12869.61
1990/03/31 14118.50 13210.65
1990/04/30 13973.65 12880.38
1990/05/31 15294.33 14136.22
1990/06/30 15490.31 14040.10
1990/07/31 15200.61 13995.17
1990/08/31 14016.26 12730.00
1990/09/30 13428.34 12110.05
1990/10/31 13496.50 12057.98
1990/11/30 14297.43 12836.92
1990/12/31 14860.19 13195.07
1991/01/31 16307.66 13770.38
1991/02/28 17541.02 14754.96
1991/03/31 18568.81 15112.03
1991/04/30 18671.59 15148.30
1991/05/31 19862.12 15802.71
1991/06/30 18748.67 15078.94
1991/07/31 20076.24 15781.62
1991/08/31 21086.90 16155.65
1991/09/30 21146.86 15885.85
1991/10/31 21754.97 16098.72
1991/11/30 20607.27 15449.94
1991/12/31 23021.18 17217.41
1992/01/31 23677.64 16897.17
1992/02/29 24446.01 17116.83
1992/03/31 23782.57 16783.05
1992/04/30 24040.57 17276.48
1992/05/31 24298.58 17361.13
1992/06/30 23708.85 17102.45
1992/07/31 24307.79 17801.94
1992/08/31 23856.28 17437.00
1992/09/30 24261.72 17642.76
1992/10/31 24805.38 17704.51
1992/11/30 26003.26 18308.23
1992/12/31 26680.15 18533.42
1993/01/31 27525.13 18689.10
1993/02/28 27706.72 18943.27
1993/03/31 29030.75 19342.98
1993/04/30 29226.91 18874.88
1993/05/31 30384.21 19380.72
1993/06/30 30394.02 19436.93
1993/07/31 30727.48 19359.18
1993/08/31 32218.25 20092.89
1993/09/30 32286.91 19938.18
1993/10/31 32571.33 20350.90
1993/11/30 31345.37 20157.56
1993/12/31 32396.69 20401.47
1994/01/31 33415.65 21095.12
1994/02/28 33175.90 20523.44
1994/03/31 31864.09 19628.62
1994/04/30 32255.52 19879.87
1994/05/31 32075.67 20205.90
1994/06/30 30837.93 19710.85
1994/07/31 31462.09 20357.37
1994/08/31 32773.89 21192.02
1994/09/30 32340.15 20672.82
1994/10/31 33260.53 21137.95
1994/11/30 31747.72 20368.11
1994/12/31 32033.36 20670.17
1995/01/31 31514.99 21206.15
1995/02/28 32784.47 22032.55
1995/03/31 33979.90 22682.73
1995/04/30 35513.87 23350.74
1995/05/31 36370.77 24284.07
1995/06/30 38677.00 24848.19
1995/07/31 41639.13 25672.15
1995/08/31 42189.25 25736.59
1995/09/30 42961.52 26822.67
1995/10/31 42178.67 26726.92
1995/11/30 43289.47 27900.23
1995/12/31 43655.09 28437.59
1996/01/31 44642.55 29405.60
1996/02/29 44914.71 29678.19
1996/03/31 46161.34 29963.99
1996/04/30 47589.51 30405.66
1996/05/31 47988.91 31189.82
1996/06/30 47625.82 31308.66
1996/07/31 45398.84 29925.44
1996/08/31 47129.59 30556.57
1996/09/30 49066.09 32276.29
1996/10/31 50639.49 33166.47
1996/11/30 53580.56 35673.52
1996/12/31 53231.67 34966.83
1997/01/31 55302.84 37151.56
1997/02/28 53850.48 37442.83
1997/03/31 52450.93 35904.30
1997/04/30 53632.20 38047.79
1997/05/31 56855.01 40364.14
1997/06/30 59204.71 42172.45
1997/07/31 64225.10 45528.11
1997/08/31 62119.36 42977.63
1997/09/30 66266.65 45331.51
1997/10/31 64250.78 43817.44
1997/11/30 64148.06 45845.75
1997/12/31 65474.17 46632.92
1998/01/31 65291.63 47148.68
1998/02/28 69943.17 50549.04
1998/03/31 73514.86 53137.66
1998/04/30 74344.50 53672.23
1998/05/31 72769.59 52749.60
1998/06/30 76805.31 54892.29
IMATRL PRASUN SHR__CHT 19980630 19980714 162822 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Contrafund on June 30, 1988 and the current 3.00%
sales charge was paid. As the chart shows, by June 30, 1998, the value
of the investment would have grown to $76,805 - a 668.05% increase on
the initial investment. For comparison, look at how the Standard &
Poor's 500 Index did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 would have grown to
$54,892 - a 448.92% 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
While U.S. equity markets did
not perform as well in the second
quarter as they did in the first, the
Standard & Poor's 500 Index -
a measure of the U.S. stock
market - still produced a return of
17.71% for the six-month period
that ended June 30, 1998. Recent
volatility in the U.S. equity markets
was triggered in part by renewed
concerns over corporate profits
and continued problems with
Asian economies and stock
markets. In mid-June, the major
U.S. indexes along with Asian
markets continued to sell off, driven
by the fear that problems with
Asian currencies and the Japanese
economy may take longer than
expected to be resolved.
Contributing to the decline were
concerns that Asia's crisis will
inhibit the earnings growth of
American companies. In typical
fashion, however, U.S. stocks
rebounded late in the period amid
news that the economy grew
stronger than expected - 5.4%
annually - with inflation at 1.1%, a
34-year low. Overall, market
sentiment during the past
six-month period was influenced by
the same factors that have
supported U.S. stock prices over
the past year - stable growth in
the U.S. economy, low interest
rates and low inflation.
An interview with Will Danoff, Portfolio Manager of Fidelity
Contrafund
Q. HOW DID THE FUND PERFORM, WILL?
A. For the six months that ended June 30, 1998, the fund posted a
return of 17.31%. This topped the growth funds average, which returned
15.10% according to Lipper Analytical Services. The Standard & Poor's
500 Index returned 17.71% during this time. For the 12 months that
ended June 30, 1998, the fund returned 29.73%. The Lipper group and
S&P 500 index returned 25.38% and 30.16% during that time,
respectively. I'd add that the overall market environment was tougher
than the index indicated. The average stock in the S&P 500 appreciated
12%, and the Russell 3000 Index - which comprises both small and large
companies - rose only 5% during the six-month period.
Q. DID WE SEE MORE OF THE "NARROWNESS" THAT CHARACTERIZED THE STOCK
MARKET THROUGH MUCH OF 1996 AND 1997?
A. We did. Despite the strong S&P 500 showing, the larger, more
well-known companies in the index were responsible for most of the
gains. In fact, 60% of all the companies listed on the New York Stock
Exchange actually declined in value during the period. The
appreciation of the S&P 500 index surprised me, because the companies
in the index have generated earnings growth of only around 2% so far
in 1998. Thus, much of the index gain was due solely to
price-to-earnings (P/E) ratio expansion. Normally, sluggish earnings
growth produces poor results in the stock market, but the opposite
occurred for the larger companies during the last six months. This
trend made it difficult for active fund managers to top the return of
the index.
Q. CAN YOU IDENTIFY SOME OF THE FACTORS THAT HELPED THE FUND'S
PERFORMANCE DURING THE PERIOD?
A. The fund was positioned relatively well to capitalize on the strong
U.S. economy, while avoiding those industries that were vulnerable to
the severe economic weakness in Southeast Asia. For instance, several
of the fund's cable TV stocks performed well, including
Tele-Communications, Inc. and Comcast. When I bought these stocks over
a year ago, the cable TV industry was out of favor among investors.
New products - such as Internet access - and the consolidation of
subscriber territories helped turn the industry around. As prospects
brightened, I continued to increase the fund's exposure to cable
stocks during the period. Time Warner, the fund's second-largest
position at the end of the period and a leading entertainment company
with an extensive cable business, also performed well. Another example
was the fund's weighting in the retail sector, which jumped from
around 7% six months ago to around 10% at the end of June. Retail
stocks generally benefited from the healthy domestic economy and aided
fund performance. Specifically, the fund's positions in Home Depot and
the Gap performed well. Both of these companies are leaders in their
respective retailing segments and have been able to grow their store
bases by more than 20% annually. On the flip side of my strategy, the
fund had less exposure to the semiconductor sector than the index.
This below-market weighting turned out positively as the sector was
one of the hardest hit by the problems emanating from Southeast Asia.
Q. THE FUND'S TECHNOLOGY STAKE WAS INCREASED FROM AROUND 10% TO 18%
DURING THE PERIOD. WHY DID TECHNOLOGY STOCKS APPEAL TO YOU?
A. As the Asian economies continued to slow during the period, finding
companies with rapid earnings growth became more difficult. With the
help of Fidelity's able research staff, I was able to identify and
build positions in several companies that were growing their earnings
by 20% or more despite the tough global economy. Many of these
companies were in the constantly changing technology sector. The
fastest-growing and most exciting opportunities were in the Internet
and telecommunications capital equipment sub-sectors. The Internet is
still in its infancy period, but it has already changed the way people
communicate, work, shop and gather information. In fact, industry
consultants estimate that Internet usage is doubling every three
months. The fund's positions in Internet-related companies such as
America Online and Yahoo!, which have both shown strong revenue
growth, were positive contributors. The telecommunications capital
equipment industry provides the electronic infrastructure on which the
Internet operates, and I felt many of the companies in this area were
well-positioned to benefit from increased global data traffic. The
fund's investments in WorldCom, Lucent Technologies, Northern Telecom,
Alcatel and Cisco Systems performed well.
Q. AS SHAREHOLDERS SCAN THE FUND'S LIST OF INVESTMENTS, THEY MAY COME
TO THE CONCLUSION THAT THE FUND BECAME SOMEWHAT MORE GROWTH-ORIENTED
DURING THE PERIOD. WOULD THIS BE ACCURATE?
A. That would be a valid observation. Over the past six months, I've
been both surprised and frustrated by how sharply many stocks have
appreciated despite less than stellar earnings forecasts. For example,
the S&P 500 index has risen 108% in the last three years ended June
30, while earnings for the index rose only 16%. That's a significant
disparity and an indication that the vast majority of price
appreciation of the S&P 500 index during that time has been P/E
expansion, not earnings growth. In this difficult environment - in
which most stocks look expensive relative to their growth rates - I've
invested heavily in companies that were growing their earnings
rapidly. I've emphasized companies that I felt would be able to
sustain their growth rates despite the Asian crisis. In my opinion,
these types of companies better justified the high P/E flavor
prevalent in the market. For example, the fund added to its position
in Associates First Capital during the period, one of the leading
finance companies in its field. Associates' shares were just as
expensive as most banks, but the company had a superb historical
record and was growing its loan base close to 20% annually - more than
twice that of the average financial institution. While many of the
fund's holdings are not contrarian bets in the traditional sense of
the term - that is, companies that are out of favor among investors -
some holdings did reflect this approach. For instance, I bought a
stake in pharmaceutical company Warner-Lambert at a time when much of
the market was concerned about side effects of one of the company's
drug products. In the last year, Warner-Lambert has introduced two new
products with enormous potential. The company has also been able to
grow its earnings by nearly 40% - more than twice the industry growth
rate - while maintaining the same P/E multiple as the rest of the drug
industry. At the end of the period, both Associates First Capital and
Warner-Lambert were among the fund's largest 25 positions and each had
contributed positively to performance.
Q. WHICH INVESTMENTS FAILED TO MEET YOUR EXPECTATIONS OVER THE PAST
SIX MONTHS?
A. Although I did strip the fund of many of its energy-related
positions, I held onto some - and other economically sensitive stocks
- - for too long after the Asian crisis began in the summer of 1997. In
retrospect, I should have sold these groups more aggressively during
the second half of 1997. Some energy stocks that hurt performance
included Schlumberger and Diamond Offshore. Every cyclical group
performed worse than the market during the period, with the exception
being the airline industry, which benefited from falling oil prices.
Other cyclical stocks that detracted from performance included Sealed
Air, a specialty chemicals company; oil refinery Tosco; and Remec, a
supplier to the aerospace and defense industry. I've also been
disappointed with my difficulty adapting to the current expensive
level of the market and thus missing many good opportunities,
particularly in the pharmaceuticals area. The drug companies
maintained their strong earnings momentum with the help of a record
number of new product approvals and produced better-than-index returns
despite trading at high valuations during the period. The fund has
increased its commitment to the pharmaceutical sector, but its low
exposure to these stocks throughout the period detracted from
performance.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I've been surprised by the market's strength this year. Corporate
earnings growth has slowed, but stocks have continued to appreciate,
propelled by higher P/E ratios and lower interest rates. Going
forward, I'll continue to emphasize those companies with exceptional
growth opportunities that justify the high valuations in today's
market.
WILL DANOFF DISCUSSES SEVERAL
PORTFOLIO-RELATED CHANGES:
"I MADE A COUPLE OF STRATEGIC
MOVES DURING THE PERIOD THAT I FEEL
HELPED THE FUND'S OVERALL
PERFORMANCE. FIRST, I REDUCED THE
TOTAL NUMBER OF INDIVIDUAL
POSITIONS IN THE FUND FROM AROUND
600 AT THE BEGINNING OF THE PERIOD TO
APPROXIMATELY 350. TYPICALLY, THE
FUND WILL RECEIVE MOST OF ITS
PERFORMANCE BOOST OR DRAG FROM ITS
TOP HOLDINGS, AND THIS STREAMLINING OF
POSITIONS ENABLED ME TO
CONCENTRATE ON MY VERY BEST IDEAS.
"ANOTHER CHANGE I MADE WAS TO
REDUCE THE FUND'S ENERGY-RELATED
EXPOSURE CONSIDERABLY, FROM 13%
AT THE BEGINNING OF 1998 TO UNDER
1% AT THE END OF THE PERIOD. THIS
STRATEGY WAS IN LINE WITH MY
ATTEMPT TO TRY TO CONTAIN THE
FUND'S EXPOSURE TO SECTORS THAT
WERE VULNERABLE TO THE ASIAN CRISIS.
SINCE ASIA ACCOUNTS FOR CLOSE TO
20% OF WORLDWIDE OIL DEMAND, THE
ENERGY SECTOR WAS QUITE SUSCEPTIBLE
TO THE RECESSION IN JAPAN AS WELL
AS TO THE DEPRESSED ECONOMIES OF
SOUTHEAST ASIA. AS ASIAN OIL
DEMAND CONTINUED TO TAIL OFF
DURING THE PERIOD, OIL PRICES
PLUMMETED BY MORE THAN 40%.
BECAUSE OF THE EXTREMELY WEAK
PRICING ENVIRONMENT, ENERGY
STOCKS LAGGED THE S&P 500 AND
MANY STOCKS IN THE SECTOR
DECLINED."
FUND FACTS
GOAL: TO INCREASE THE VALUE OF
THE FUND'S SHARES OVER THE LONG
TERM BY INVESTING IN COMPANIES
WHOSE VALUE IS NOT FULLY
RECOGNIZED BY THE PUBLIC
FUND NUMBER: 022
TRADING SYMBOL: FCNTX
START DATE: MAY 17, 1967
SIZE: AS OF JUNE 30, 1998,
MORE THAN $35.4 BILLION
MANAGER: WILL DANOFF, SINCE
1990; MANAGER, VIP II:
CONTRAFUND, SINCE 1995;
FIDELITY SELECT RETAILING
PORTFOLIO, 1986-1989;
JOINED FIDELITY IN 1986
(CHECKMARK)
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.
INVESTMENT CHANGES
TOP TEN STOCKS AS OF JUNE 30, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
WORLDCOM, INC. 3.0 1.2
TIME WARNER, INC. 2.9 1.5
TYCO INTERNATIONAL LTD. 2.6 1.9
LUCENT TECHNOLOGIES, INC. 2.2 1.2
MICROSOFT CORP. 1.9 1.0
CVS CORP. 1.7 1.2
AMERICA ONLINE, INC. 1.5 0.1
GILLETTE CO. 1.4 0.5
CBS CORP. 1.3 1.4
AMERICAN EXPRESS CO. 1.3 0.7
TOP FIVE MARKET SECTORS AS OF JUNE 30, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
TECHNOLOGY 18.0 10.9
FINANCE 11.8 12.7
MEDIA & LEISURE 10.5 8.5
RETAIL & WHOLESALE 10.3 7.5
UTILITIES 9.5 5.3
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF JUNE 30, 1998 * AS OF DECEMBER 31, 1997 **
ROW: 1, COL: 1, VALUE: 85.0
ROW: 1, COL: 2, VALUE: 4.8
ROW: 1, COL: 3, VALUE: 1.1
ROW: 1, COL: 4, VALUE: 9.1
STOCKS 85.8%
BONDS 4.7%
SHORT-TERM
INVESTMENTS 9.5%
FOREIGN
INVESTMENTS 14.1%
STOCKS 86.0%
BONDS 4.8%
CONVERTIBLE
SECURITIES 0.1%
SHORT-TERM
INVESTMENTS 9.1%
FOREIGN
INVESTMENTS 6.9%
ROW: 1, COL: 1, VALUE: 85.8
ROW: 1, COL: 2, VALUE: 4.7
ROW: 1, COL: 3, VALUE: 0.0
ROW: 1, COL: 4, VALUE: 9.5
**
*
INVESTMENTS JUNE 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 85.7%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.2%
AEROSPACE & DEFENSE - 0.1%
Orbital Sciences Corp. (a) 766,000 $ 28,629
DEFENSE ELECTRONICS - 0.1%
Remec, Inc. (a)(d) 2,039,050 23,194
TOTAL AEROSPACE & DEFENSE 51,823
BASIC INDUSTRIES - 1.5%
CHEMICALS & PLASTICS - 1.5%
Avery Dennison Corp. 755,200 40,592
Crompton & Knowles Corp. 2,049,317 51,617
Cytec Industries, Inc. (a) 1,109,800 49,109
du Pont (E.I.) de Nemours & Co. 412,500 30,783
MacDermid, Inc. 85,700 2,421
Monsanto Co. 4,170,000 232,999
Sealed Air Corp. (a) 3,866,624 142,098
549,619
CONSTRUCTION & REAL ESTATE - 0.6%
BUILDING MATERIALS - 0.2%
Masco Corp. 1,044,200 63,174
REAL ESTATE - 0.0%
Grand Palais Management Co. LP (a)(f) 398,400 --
REAL ESTATE INVESTMENT TRUSTS - 0.4%
Crescent Real Estate Equities, Inc. 477,000 16,039
Equity Office Properties Trust 2,192,000 62,198
Starwood Hotels & Resorts Trust 1,207,568 58,341
136,578
TOTAL CONSTRUCTION & REAL ESTATE 199,752
DURABLES - 1.1%
AUTOS, TIRES, & ACCESSORIES - 0.7%
AutoZone, Inc. (a) 680,300 21,727
Breed Technologies, Inc. 1,643,700 25,169
Danaher Corp. 3,788,400 138,987
SPX Corp. (a)(d) 1,256,100 80,861
266,744
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
CONSUMER ELECTRONICS - 0.1%
General Motors Corp. Class H 443,800 $ 20,914
Gemstar International Group Ltd. (a) 837,800 31,365
52,279
TEXTILES & APPAREL - 0.3%
Jones Apparel Group, Inc. 509,000 18,610
Kellwood Co. 19,000 679
NIKE, Inc. Class B 463,700 22,576
Warnaco Group, Inc. Class A 1,209,900 51,345
93,210
TOTAL DURABLES 412,233
ENERGY - 0.8%
ENERGY SERVICES - 0.1%
ENSCO International, Inc. 696,300 12,098
Smith International, Inc. (a) 1,140,200 39,693
51,791
OIL & GAS - 0.7%
Anadarko Petroleum Corp. 302,500 20,324
British Petroleum PLC ADR 461,330 40,712
Burlington Resources, Inc. 807,508 34,773
Royal Dutch Petroleum Co. 586,900 32,169
Tosco Corp. 3,722,800 109,357
237,335
TOTAL ENERGY 289,126
FINANCE - 11.8%
BANKS - 2.6%
Banc One Corp. 3,855,710 215,197
Bank of New York Co., Inc. 1,572,900 95,455
Comerica, Inc. 691,550 45,815
Credito Italiano Ord. 8,205,000 42,540
Fifth Third Bancorp 305,700 19,259
M&T Bank Corp. 59,830 33,146
North Fork Bancorp., Inc. 3,299,789 80,639
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Providian Financial Corp. 482,800 $ 37,930
U.S. Bancorp 6,968,848 299,660
Wells Fargo & Co. 213,400 78,745
948,386
CREDIT & OTHER FINANCE - 3.0%
American Express Co. 4,086,500 465,861
Associates First Capital Corp. 5,330,249 409,763
Greenpoint Financial Corp. 2,486,900 93,570
Household International, Inc. 2,523,264 125,532
UniCapital Corp. 262,700 5,024
1,099,750
FEDERAL SPONSORED CREDIT - 1.7%
Freddie Mac 5,588,000 262,985
Fannie Mae 5,812,900 353,134
616,119
INSURANCE - 3.0%
AFLAC, Inc. 2,007,000 60,837
ACE Ltd. 1,842,600 71,861
Allmerica Financial Corp. 615,889 40,033
Allstate Corp. 2,454,800 224,768
AMBAC, Inc. 542,800 31,754
American International Group, Inc. 763,900 111,529
Aon Corp. 841,350 59,105
Berkshire Hathaway, Inc. Class A (a) 330 25,841
General Re Corp. 380,000 96,330
Hartford Financial Services Group, Inc. 82,200 9,402
Life RE Corp. 87,300 7,159
Mutual Risk Management Ltd. 663,200 24,165
Progressive Corp. 538,300 75,900
SunAmerica, Inc. 2,089,550 120,019
Torchmark Corp. 779,300 35,653
UNUM Corp. 1,439,200 79,876
1,074,232
SAVINGS & LOANS - 0.9%
Dime Bancorp., Inc. 2,309,400 69,138
Golden State Bancorp 350,900 10,439
Washington Mutual, Inc. 5,728,290 248,823
328,400
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
SECURITIES INDUSTRY - 0.6%
Travelers Group, Inc. (The) 3,888,099 $ 235,716
TOTAL FINANCE 4,302,603
HEALTH - 6.9%
DRUGS & PHARMACEUTICALS - 4.2%
American Home Products Corp. 3,774,400 195,325
Amgen, Inc. 524,200 34,270
Biogen, Inc. 566,300 27,749
Bristol-Myers Squibb Co. 1,975,800 227,094
Elan Corp. PLC ADR (a) 1,166,600 75,027
Forest Laboratories, Inc. (a) 1,398,400 49,993
Merck & Co., Inc. 1,159,700 155,110
Pfizer, Inc. 1,770,900 192,475
Quintiles Transnational Corp. (a) 337,100 16,581
Schering-Plough Corp. 2,008,700 184,047
Warner-Lambert Co. 5,212,400 361,610
Xoma, Inc. (a)(e) 1,098 4
1,519,285
MEDICAL EQUIPMENT & SUPPLIES - 1.4%
Allegiance Corp. 887,500 45,484
Becton, Dickinson & Co. 729,800 56,651
Boston Scientific Corp. 87,400 6,260
Cardinal Health, Inc. 1,549,050 145,223
Guidant Corp. 1,073,300 76,540
Omnicare, Inc. 1,101,200 41,983
Sofamor/Danek Group, Inc. (a) 826,300 71,527
Steris Corp. (a) 276,100 17,558
Sybron International Corp. (a) 1,405,500 35,489
U.S. Surgical Corp. 570,900 26,047
522,762
MEDICAL FACILITIES MANAGEMENT - 1.3%
Columbia/HCA Healthcare Corp. 2,928,200 85,284
HEALTHSOUTH Corp. (a) 2,152,500 57,445
Health Management Associates, Inc. Class A (a) 5,820,425 194,620
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL FACILITIES MANAGEMENT - CONTINUED
Oxford Health Plans, Inc. (a) 975,700 $ 14,940
Trigon Healthcare, Inc. (a) 437,900 15,847
United HealthCare Corp. 1,671,200 106,121
474,257
TOTAL HEALTH 2,516,304
HOLDING COMPANIES - 0.2%
Tele-Communications, Inc. (TCI Ventures Group),
Series A (a) 4,462,940 89,538
INDUSTRIAL MACHINERY & EQUIPMENT - 6.7%
ELECTRICAL EQUIPMENT - 2.6%
Alcatel Alsthom Compagnie Generale d'Electricite SA 1,419,510
288,234
American Power Conversion Corp. 1,719,100 51,573
General Instrument Corp. (a) 2,907,100 79,037
L-3 Communications Holdings, Inc. 450,600 14,729
Loral Space & Communications Ltd. (a)(d) 12,847,667 362,947
Philips Electronics NV 879,000 74,715
Rayovac Corp. (d) 2,673,900 60,664
931,899
INDUSTRIAL MACHINERY & EQUIPMENT - 3.0%
Illinois Tool Works, Inc. 327,900 21,867
Kaydon Corp. 1,254,100 44,285
Mannesmann AG Ord. 791,900 80,110
New Holland NV 544,100 10,678
Stanley Works 109,200 4,539
Tyco International Ltd. 14,933,610 940,817
1,102,296
POLLUTION CONTROL - 1.1%
Republic Services, Inc. 3,154,200 75,701
USA Waste Services, Inc. (a) 3,888,292 191,984
Waste Management, Inc. 3,599,100 125,969
393,654
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 2,427,849
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 10.5%
BROADCASTING - 6.5%
Citadel Communications Corp. 343,500 $ 5,496
CBS Corp. 15,316,218 486,290
Comcast Corp. Class A (d) 2,117,300 84,163
Comcast Corp. Class A special 2,579,000 104,691
Jacor Communications, Inc. Class A (a) 501,400 29,583
MediaOne Group, Inc. 2,782,900 122,274
Metromedia Fiber Network, Inc. Class A 15,200 709
NTL, Inc. (a) 914,900 48,947
Scandinavian Broadcasting Corp. (a)(d) 855,900 25,837
Scripps E.W. Co. Class A 297,400 16,301
TCA Cable TV, Inc. 640,000 38,400
Tele-Communications, Inc.:
(TCI Group), Series A (a) 8,143,430 313,013
(Liberty Media Group), Series A 257,300 9,986
Time Warner, Inc. 12,261,820 1,047,619
USA Networks, Inc. (a) 814,400 20,462
2,353,771
ENTERTAINMENT - 1.2%
Disney (Walt) Co. 1,135,400 119,288
Premier Parks, Inc. (a) 1,837,800 122,443
Viacom, Inc. (a):
Class A 1,206,000 70,551
Class B (non-vtg.) 2,034,300 118,498
430,780
LEISURE DURABLES & TOYS - 0.1%
Harley-Davidson, Inc. 473,100 18,333
Mattel, Inc. 327,400 13,853
32,186
PUBLISHING - 0.9%
ACNielsen Corp. 22,200 561
Cognizant Corp. 4,646,200 292,711
Dow Jones & Co., Inc. 78,600 4,382
Meredith Corp. 34,400 1,615
Thomson Corp. 84,700 2,464
Ziff-Davis, Inc. 1,469,200 20,385
322,118
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - 1.8%
Darden Restaurants, Inc. 3,091,700 $ 49,081
McDonald's Corp. 5,159,400 355,999
Papa John's International, Inc. (a) 1,295,500 51,091
Pizzaexpress PLC 1,491,600 21,443
ShowBiz Pizza Time, Inc. (a) 561,000 22,615
Starbucks Corp. (a) 2,490,100 133,065
Wendy's International, Inc. 1,113,900 26,177
659,471
TOTAL MEDIA & LEISURE 3,798,326
NONDURABLES - 5.3%
BEVERAGES - 1.7%
Cadbury-Schweppes PLC Ord. 5,247,304 81,165
Coca-Cola Co. (The) 4,474,600 382,578
Coca-Cola Enterprises, Inc. 1,027,400 40,325
PepsiCo, Inc. 2,336,100 96,218
600,286
FOODS - 1.4%
American Italian Pasta Co. Series A (d) 1,398,400 52,090
Campbell Soup Co. 863,900 45,895
Earthgrains Co. 425,900 23,797
Flowers Industries, Inc. 1,633,000 33,374
Heinz (H.J.) Co. 80,000 4,490
Hershey Foods Corp. 902,500 62,273
Keebler Foods Co. (a) 2,501,300 68,786
Nestle SA (Reg.) 50,365 107,538
Quaker Oats Co. 931,100 51,152
Wrigley (Wm.) Jr. Co. 734,400 71,971
521,366
HOUSEHOLD PRODUCTS - 2.2%
Colgate-Palmolive Co. 205,100 18,049
Dial Corp. 1,769,900 45,907
Gillette Co. 9,142,500 518,265
Estee Lauder Companies, Inc. 1,019,500 71,046
Unilever NV Ord. 1,785,080 141,353
794,620
TOTAL NONDURABLES 1,916,272
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
PRECIOUS METALS - 0.2%
Euro-Nevada Mining Ltd. 2,193,800 $ 29,968
Franco-Nevada Mining Corp. 2,440,500 48,469
78,437
RETAIL & WHOLESALE - 10.2%
APPAREL STORES - 1.6%
Charming Shoppes, Inc. (a)(d) 10,620,500 50,447
Gap, Inc. 4,792,500 295,338
Limited, Inc. (The) 2,580,000 85,463
TJX Companies, Inc. 6,696,600 161,555
592,803
DRUG STORES - 2.0%
CVS Corp. 16,209,420 631,154
Rite Aid Corp. 1,626,800 61,107
Walgreen Co. 453,900 18,752
711,013
GENERAL MERCHANDISE STORES - 1.5%
Costco Companies, Inc. 2,101,200 132,507
Dillards, Inc. Class A 635,000 26,313
Federated Department Stores, Inc. (a) 708,600 38,132
Kohls Corp. (a) 898,900 46,630
Proffitts, Inc. (a) 1,085,700 43,835
Stein Mart, Inc. (a)(d) 2,550,300 34,429
Wal-Mart Stores, Inc. 3,464,700 210,481
532,327
GROCERY STORES - 2.0%
Dominick's Supermarkets, Inc. (a)(d) 1,556,700 69,370
Meyer (Fred), Inc. (a) 7,088,650 301,268
Richfood Holdings, Inc. Class A 2,079,050 43,010
Safeway, Inc. (a) 7,659,200 311,634
Whole Foods Market, Inc. (a) 329,300 19,923
745,205
RETAIL & WHOLESALE, MISCELLANEOUS - 3.1%
AgriBioTech, Inc. 96,300 2,666
Best Buy Co., Inc. (a) 301,300 10,884
Boots Co. PLC Class L (The) 1,746,240 28,918
Brylane, Inc. (a) 221,900 10,207
CDnow, Inc. 61,400 1,236
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - CONTINUED
Circuit City Stores, Inc. - Circuit City Group 2,426,900 $ 113,761
Home Depot, Inc. 3,977,650 330,394
Lowe's Companies, Inc. 1,021,000 41,414
N2K, Inc. (d) 1,138,900 22,351
Office Depot, Inc. (a) 2,194,800 69,273
PETsMART, Inc. (a) 1,143,400 11,434
School Specialty, Inc. 513,775 8,413
Staples, Inc. (a) 6,619,200 191,543
Tandy Corp. 2,335,000 123,901
U.S. Office Products Co. (d) 1,438,494 28,051
Viking Office Products, Inc. (a) 3,019,100 94,724
Williams-Sonoma, Inc. 881,700 28,049
1,117,219
TOTAL RETAIL & WHOLESALE 3,698,567
SERVICES - 1.9%
ADVERTISING - 0.7%
CMG Information Services, Inc. (a) 489,100 34,604
Interpublic Group of Companies, Inc. 851,650 51,685
Lamar Advertising Co. Class A 275,300 9,876
Outdoor Systems, Inc. (a) 4,570,787 127,982
Preview Travel, Inc. 137,700 4,733
Young & Rubicam, Inc. 429,000 13,728
242,608
EDUCATIONAL SERVICES - 0.3%
Apollo Group, Inc. Class A 2,278,350 75,328
Devry, Inc. (a) 894,700 19,627
94,955
LEASING & RENTAL - 0.1%
Hertz Corp. Class A 399,800 17,716
United Rentals, Inc. 488,100 20,500
38,216
PRINTING - 0.0%
Big Flower Holdings, Inc. (a) 355,300 10,659
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
SERVICES - 0.8%
APAC Teleservices, Inc. 1,069,400 $ 6,249
Consolidation Capital Corp. 1,032,200 23,208
Hays PLC 1,957,100 32,802
Medpartners, Inc. (a) 4,723,400 37,787
Nova Corp. 262,100 9,370
PMT Services, Inc. 364,600 9,275
Robert Half International, Inc. (a) 2,031,950 113,535
Service Corp. International 361,600 15,504
ServiceMaster Co. 1,613,400 61,410
309,140
TOTAL SERVICES 695,578
TECHNOLOGY - 18.0%
COMMUNICATIONS EQUIPMENT - 5.6%
Advanced Fibre Communication, Inc. (d) 4,807,700 192,608
Ascend Communications, Inc. 1,899,800 94,159
Aspect Telecommunications Corp. (a) 469,900 12,864
Ciena Corp. (a) 1,498,700 104,347
Cisco Systems, Inc. (a) 4,024,850 370,538
Inter-Tel, Inc. 635,100 10,162
Intermedia Communications, Inc. (a) 937,714 39,325
Lucent Technologies, Inc. 9,570,900 796,179
Nokia Corp. AB sponsored ADR 262,200 19,026
Northern Telecom Ltd. 3,790,100 215,360
RELTEC Corp. (a) 230,900 10,391
Tellabs, Inc. (a) 2,592,400 185,681
2,050,640
COMPUTER SERVICES & SOFTWARE - 7.8%
Affiliated Computer Services, Inc. Class A 1,162,900 44,772
America Online, Inc. (a) 5,223,400 553,680
Aspect Development, Inc. (a) 266,600 20,162
Automatic Data Processing, Inc. 2,751,600 200,523
Axent Technologies, Inc. 120,100 3,678
Aztec Technology Partners, Inc. 313,985 2,394
BMC Software, Inc. (a) 2,036,900 105,791
BEA Systems, Inc. (a) 135,400 3,106
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
CBT Group PLC sponsored ADR 941,800 $ 50,386
CNET, Inc. (a) 555,700 37,927
Cambridge Technology Partners Massachusetts, Inc. (a) 393,300 21,484
Cap Gemini Sogeti SA 460,507 72,162
Ceridian Corp. (a) 1,954,300 114,815
CheckFree Holdings Corp. (a) 673,100 19,814
Ciber, Inc. 222,000 8,436
Computer Associates International, Inc. 502,700 27,931
DST Systems, Inc. (a) 265,900 14,890
Documentum, Inc. (a)(d) 1,090,000 52,320
ECI Telecom Ltd. 202,200 7,658
EarthLink Network, Inc. (a) 288,600 22,150
Electronic Arts, Inc. (a) 939,207 50,717
Equifax, Inc. 132,800 4,822
Fair, Isaac & Co., Inc. 60,200 2,288
HBO & Co. 2,063,600 72,742
International Network Services 4,400 180
Intuit, Inc. (a) 192,000 11,760
J.D. Edwards & Co. 908,200 38,996
Legato Systems, Inc. 360,900 14,075
Lycos, Inc. (a)(d) 1,464,700 110,402
Mercury Interactive Group Corp. 63,200 2,820
Microsoft Corp. (a) 6,457,300 699,810
Networks Associates, Inc. (a) 480,200 22,990
Paychex, Inc. 1,054,800 42,917
Policy Management Systems Corp. (a) 769,000 30,183
RealNetworks, Inc. 680,300 25,384
Sabre Group Holdings, Inc. Class A (a) 820,300 31,171
Sapient Corp. 227,800 12,016
Shared Medical Systems Corp. 77,300 5,677
Siebel Systems, Inc. (a) 150,100 4,841
SportsLine USA, Inc. 923,100 33,751
Technology Solutions, Inc. 76,300 2,418
Yahoo, Inc. (a) 1,447,450 227,973
2,832,012
COMPUTERS & OFFICE EQUIPMENT - 2.5%
Celestica, Inc. (sub-vtg.) 1,271,000 23,150
Dell Computer Corp. (a) 2,643,100 245,313
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
EMC Corp. (a) 4,090,500 $ 183,306
Gateway 2000, Inc. 218,300 11,051
MMC Networks, Inc. 235,900 7,519
Symbol Technologies, Inc. 1,856,450 70,081
Unisys Corp. (a) 10,082,100 284,819
Xerox Corp. 714,000 72,560
897,799
ELECTRONIC INSTRUMENTS - 0.8%
Thermo Instrument Systems, Inc. (a) 1,779,975 46,724
Thermo Electron Corp. (a) 5,061,500 173,040
Waters Corp. (a) 1,410,800 83,149
302,913
ELECTRONICS - 1.2%
Broadcom Corp. Class A 78,800 5,802
Intel Corp. 362,600 26,878
PMC-Sierra, Inc. (a) 515,000 24,141
Sanmina Corp. (a) 717,200 31,109
Texas Instruments, Inc. 2,143,600 124,999
Uniphase Corp. (a)(d) 1,807,100 113,452
Vitesse Semiconductor Corp. (a)(d) 3,809,800 117,628
444,009
PHOTOGRAPHIC EQUIPMENT - 0.1%
Eastman Kodak Co. 302,600 22,109
TOTAL TECHNOLOGY 6,549,482
TRANSPORTATION - 0.6%
AIR TRANSPORTATION - 0.4%
Southwest Airlines Co. 2,469,550 73,160
Viad Corp. 2,110,400 58,564
131,724
RAILROADS - 0.1%
Norfolk Southern Corp. 1,589,900 47,399
TRUCKING & FREIGHT - 0.1%
C.H. Robinson Worldwide, Inc. 953,200 23,711
Swift Transportation Co., Inc. (a) 1,548,000 30,670
54,381
TOTAL TRANSPORTATION 233,504
.COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - 9.2%
CELLULAR - 1.0%
AirTouch Communications, Inc. 2,501,200 $ 146,164
Bell Canada International, Inc. 1,192,700 28,035
Orange PLC (a) 1,965,673 20,816
SkyTel Communications, Inc. (d) 3,091,500 72,360
Teleglobe, Inc. 373,700 9,981
Vodafone Group PLC sponsored ADR 634,300 79,961
357,317
GAS - 0.6%
Enron Corp. 2,723,000 147,212
Williams Companies, Inc. 1,494,200 50,429
197,641
TELEPHONE SERVICES - 7.6%
AT&T Corp. 7,484,000 427,524
BCE, Inc. 2,191,100 93,078
E Spire Communications, Inc. (a) 1,434,000 32,355
Exodus Communications, Inc. (a) 758,100 33,925
Global Telesystems Group, Inc. (a) 927,600 45,221
MCI Communications Corp. 6,915,400 401,957
McLeodUSA, Inc. Class A (a) 2,791,600 108,523
NEXTLINK Communications, Inc. Class A (a)(d) 1,501,600 56,873
Qwest Communications International, Inc. 5,767,718 201,149
Sprint Corp. 945,000 66,623
Telefonica de Espana SA Ord. 3,017,356 139,387
U.S. LEC Corp. Class A (d) 568,200 11,861
WorldCom, Inc. (a) 22,334,915 1,081,847
Winstar Communications, Inc. (a) 1,532,600 65,806
2,766,129
TOTAL UTILITIES 3,321,087
TOTAL COMMON STOCKS
(Cost $22,602,754) 31,130,100
PREFERRED STOCKS - 0.4%
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - 0.1%
BASIC INDUSTRIES - 0.0%
CHEMICALS & PLASTICS - 0.0%
Sealed Air Corp., Series A, $2.00 472,792 $ 19,857
CONSTRUCTION & REAL ESTATE - 0.0%
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Vornado Realty Trust, Series A, $3.25 156,300 8,968
RETAIL & WHOLESALE - 0.1%
APPAREL STORES - 0.1%
TJX Companies, Inc., Series E, $7.00 52,900 28,037
TOTAL CONVERTIBLE PREFERRED STOCKS 56,862
NONCONVERTIBLE PREFERRED STOCKS - 0.3%
UTILITIES - 0.3%
TELEPHONE SERVICES - 0.3%
Telecom Italia Spa 3,137,000 15,226
Telecom Italia Mobile Spa de Risp 25,840,600 86,048
TOTAL NONCONVERTIBLE PREFERRED STOCKS 101,274
TOTAL PREFERRED STOCKS
(Cost $95,628) 158,136
U.S. TREASURY OBLIGATIONS - 4.8%
MOODY'S RATINGS (C) PRINCIPAL
(UNAUDITED) AMOUNT (000S)
7 5/8%, 2/15/25 Aaa $ 252,110 317,422
6 7/8%, 8/15/25 Aaa 261,500 302,848
6% 2/15/26 Aaa 218,000 226,788
6.75% 8/15/26 Aaa 270,600 309,794
6.5% 11/15/26 Aaa 272,000 302,048
6.625% 2/15/27 Aaa 240,500 271,577
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $1,656,653) 1,730,477
CASH EQUIVALENTS - 9.1%
SHARES VALUE (NOTE 1)
(000S)
Taxable Central Cash Fund (b) 2,156,830,933 $ 2,156,831
MATURITY
AMOUNT (000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.66%, dated
6/30/98 due 7/1/98 $ 1,163,855 1,163,672
TOTAL CASH EQUIVALENTS
(Cost $3,320,503) 3,320,503
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $27,675,538) $ 36,339,216
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.61%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(d) Affiliated company (see Note 7 of Notes to Financial Statements).
(e) 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 $4,000 or
0% of net assets.
(f) 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 COST
SECURITY DATE (000S)
Grand Palais
Managment Co. LP 7/24/96 $ -
INCOME TAX INFORMATION
At June 30 ,998, the aggregate cost of investment securities for
income tax purposes was $27,709,548,000. Net unrealized appreciation
aggregated $8,629,668,000, of which $8,942,840,000 related to
appreciated investment securities and $313,172,000 related to
depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) JUNE 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 36,339,216
AGREEMENTS OF $1,163,672) (COST $27,675,538) -
SEE ACCOMPANYING SCHEDULE
CASH 1,110
FOREIGN CURRENCY HELD AT VALUE (COST $25,291) 25,384
RECEIVABLE FOR INVESTMENTS SOLD 525,301
RECEIVABLE FOR FUND SHARES SOLD 86,411
DIVIDENDS RECEIVABLE 19,329
INTEREST RECEIVABLE 43,632
OTHER RECEIVABLES 4,386
TOTAL ASSETS 37,044,769
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 937,453
PAYABLE FOR FUND SHARES REDEEMED 74,138
ACCRUED MANAGEMENT FEE 12,817
OTHER PAYABLES AND ACCRUED EXPENSES 6,684
COLLATERAL ON SECURITIES LOANED, AT VALUE 590,813
TOTAL LIABILITIES 1,621,905
NET ASSETS $ 35,422,864
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 23,412,133
UNDISTRIBUTED NET INVESTMENT INCOME 116,245
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 3,230,761
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 8,663,725
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS, FOR 648,576 SHARES OUTSTANDING $ 35,422,864
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $54.62
($35,422,864 (DIVIDED BY) 648,576 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/97.00 OF $54.62) $56.31
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
INVESTMENT INCOME $ 117,253
DIVIDENDS (INCLUDING $363 RECEIVED FROM AFFILIATED ISSUERS)
INTEREST (INCLUDING INCOME ON SECURITIES LOANED OF $5,588) 102,613
TOTAL INCOME 219,866
EXPENSES
MANAGEMENT FEE $ 96,986
BASIC FEE
PERFORMANCE ADJUSTMENT (21,816)
TRANSFER AGENT FEES 31,645
ACCOUNTING AND SECURITY LENDING FEES 607
NON-INTERESTED TRUSTEES' COMPENSATION 84
CUSTODIAN FEES AND EXPENSES 490
REGISTRATION FEES 155
AUDIT 83
LEGAL 67
REPORTS TO SHAREHOLDERS 706
MISCELLANEOUS 169
TOTAL EXPENSES BEFORE REDUCTIONS 109,176
EXPENSE REDUCTIONS (6,850) 102,326
NET INVESTMENT INCOME 117,540
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (INCLUDING REALIZED GAIN (LOSS) OF 3,359,930
$(6,754) ON SALES OF INVESTMENTS IN AFFILIATED ISSUERS)
FOREIGN CURRENCY TRANSACTIONS 612 3,360,542
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 1,739,386
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES 156 1,739,542
NET GAIN (LOSS) 5,100,084
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 5,217,624
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 117,540 $ 254,060
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 3,360,542 2,589,111
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 1,739,542 2,841,489
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 5,217,624 5,684,660
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS - (211,835)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (45,528) (2,742,867)
TOTAL DISTRIBUTIONS (45,528) (2,954,702)
SHARE TRANSACTIONS 3,688,258 8,043,743
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 44,984 2,914,929
COST OF SHARES REDEEMED (4,221,570) (6,778,358)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (488,328) 4,180,314
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 4,683,768 6,910,272
NET ASSETS
BEGINNING OF PERIOD 30,739,096 23,828,824
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 35,422,864 $ 30,739,096
INCOME OF $116,245 AND $38,086, RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 73,072 175,809
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 940 65,437
REDEEMED (84,674) (147,380)
NET INCREASE (DECREASE) (10,662) 93,866
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEARS ENDED DECEMBER 31,
JUNE 30, 1998
(UNAUDITED) 1997 1996 1995 1994 1993
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 46.63 $ 42.15 $ 38.02 $ 30.28 $ 30.84 $ 27.47
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .18 D .42 D .46 .03 .06 .14
NET REALIZED AND 7.88 8.97 7.50 10.93 (.40) 5.66
UNREALIZED GAIN (LOSS)
TOTAL FROM INVESTMENT 8.06 9.39 7.96 10.96 (.34) 5.80
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT - (.35) (.38) (.09) - (.11)
INCOME
IN EXCESS OF NET - - - - - (.07)
INVESTMENT INCOME
FROM NET REALIZED GAIN (.07) (4.56) (3.45) (3.13) (.22) (2.25)
TOTAL DISTRIBUTIONS (.07) (4.91) (3.83) (3.22) (.22) (2.43)
NET ASSET VALUE, $ 54.62 $ 46.63 $ 42.15 $ 38.02 $ 30.28 $ 30.84
END OF PERIOD
TOTAL RETURN B, C 17.31% 23.00% 21.94% 36.28% (1.12)% 21.43%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF $ 35,423 $ 30,739 $ 23,829 $ 14,858 $ 8,694 $ 6,208
PERIOD (IN MILLIONS)
RATIO OF EXPENSES TO .67% A .70% .83% .98% 1.03% 1.08%
AVERAGE NET ASSETS
RATIO OF EXPENSES TO .63% A, E .67% E .79% E .96% E 1.00% E 1.06% E
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
RATIO OF NET INVESTMENT .73% A .91% 1.28% .44% .59% .46%
INCOME TO AVERAGE
NET ASSETS
PORTFOLIO TURNOVER RATE 209% A 144% 159% 223% 235% 255%
AVERAGE COMMISSION $ .0305 $ .0310 $ .0358
RATE F
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E 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 6 OF NOTES TO FINANCIAL STATEMENTS).
F 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 June 30, 1998 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Contrafund (the fund) is registered under the Investment
Company Act of 1940, as amended, 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 require 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
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, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. 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.
DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the
Plan) non-interested Trustees must defer receipt of a portion of, and
may elect to defer receipt of an additional portion of, their annual
compensation. Under the Plan, deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of a
cross-section of Fidelity funds, including shares of the fund.
Deferred amounts remain in the fund until distributed in accordance
with the Plan.
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.
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
2. OPERATING POLICIES -
CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
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 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.) an affiliate 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 $31,751,083,000 and $31,913,449,000, respectively, of which
U.S. government and government agency obligations aggregated
$1,547,821,0000 and $1,307,108,000, 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
.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. For the period, the
management fee was equivalent to an annualized rate of .46% 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 $3,628,000 on sales of shares of the fund of which
$3,611,000 was retained.
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 annualized 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 $4,907,000 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 $583,959,000 and $590,813,000, respectively.
6. 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 $6,132,000 under this arrangement.
6. EXPENSE REDUCTIONS -
CONTINUED
In addition, the fund has entered into 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 $1,000 and $717,000, respectively, under these
arrangements.
7. 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 VALUE
AFFILIATE COST COST INCOME
APAC Teleservices, Inc. $ - $ 23,881 $ - $ -
Advanced Fibre
Communication, Inc. 54,123 12,902 - 192,608
American Italian Pasta Co.
Series A 9,561 - - 52,090
Anaren Microwave, Inc. - 2,248 - -
Bally Total Fitness Holding
Corp. - 1,844 - -
Bedford Property Investors,
Inc. - 173 - -
Big Flower Holdings, Inc. - 11,691 - -
Breed Technologies, Inc. 13,370 16,431 - -
Charming Shoppes, Inc, 121 - - 50,447
Comcast Corp. Class A 21,654 21,370 106 84,163
Documentum, Inc. 14,789 - - 52,320
Dominick's Supermarkets,
Inc. 14,827 3,334 - 69,370
ENSCO International, Inc. 2,185 29,700 - -
Engineering Animation, Inc. 1,056 3,054 - -
Franco-Nevada Mining Corp. - - - -
Intermedia Communications,
Inc. - 6,646 - -
Kaydon Corp. 1,169 9,594 156 -
Loral Space & Communications
Ltd. 46,637 23,325 - 362,947
Lycos, Inc. 17,195 2,756 - 110,402
N2K, Inc. 11,196 2,930 - 22,351
NEXTLINK Communications, Inc.
Class A 7,427 7,626 - 56,873
Orion Network Systems, Inc. 435 6,495 - -
Quality Food Centers, Inc. - 22,008 - -
Rayovac Corp. 6,671 - - 60,664
Remec, Inc. 19,984 - - 23,194
Richfood Holdings, Inc.
Class A - 2,176 101 -
SPX Corp. 17,635 - - 80,861
Scandinavian Broadcasting
Corp. - - - 25,837
SkyTel Communications, Inc. 13,899 6,172 - 72,360
Smith International, Inc. 28,522 59,639 - -
Stein Mart, Inc. 4,829 8,882 - 34,429
Swisher International Group,
Inc. Class A - 1,384 - -
7. TRANSACTIONS WITH AFFILIATED
COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
U.S. LEC Corp. Class A $ 478 $ - $ - $ 11,861
U.S.A. Floral Products, Inc. - 6,805 - -
Uniphase Corp. 14,092 16,618 - 113,452
U.S. Office Products Co. 1,075 - - 28,051
Virgin Express Holdings PLC
sponsored ADR - - - -
Vitesse Semiconductor Corp. 5,596 2,218 - 117,628
TOTALS $ 328,526 $ 311,902 $ 363 $ 1,621,908
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 Xpress(registered trademark) provides 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.
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
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.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at
1-800-544-7272 and we'll send you an America Online CD or disk with up
to 50 free hours of Web access.
(COMPUTER_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
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
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Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
1907 West State Road 434
Longwood, FL
8880 Tamiami Trail, North
Naples, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
One North Franklin Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
INDIANA
4729 East 82nd Street
Indianapolis, IN
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1055 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
16850 SW 72 Avenue
Tigard, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
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
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
* INDEPENDENT TRUSTEES
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH FUNDS
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund
Contrafund II
Disciplined Equity Fund
Dividend Growth Fund
Emerging Growth Fund
Export and Multinational Fund
Fidelity Fifty
SM
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
Small Cap Stock Fund
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 (registered trademark) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE
