FIDELITY
CONTRAFUND(REGISTERED TRADEMARK)
SEMIANNUAL REPORT
JUNE 30, 1999
(2_FIDELITY_LOGOS)(registered trademark)
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 30 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 34 Footnotes to the financial
statements.
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
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.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
After much speculation about the U.S. Federal Reserve Board's
near-term monetary policy, stock and bond investors breathed a sigh of
relief when the Fed shifted to a neutral position on rates following
its widely anticipated quarter-point increase in short-term rates on
June 30. This switch in bias helped the S&P 500(registered trademark)
and NASDAQ soar to record-closing highs, and sent yields on the
bellwether 30-year Treasury back below 6%.
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 an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
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. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-8888, or visit our
web site at www.fidelity.com. 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).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY CONTRAFUND 11.62% 25.18% 211.78% 675.16%
FIDELITY CONTRAFUND (INCL. 8.27% 21.43% 202.43% 651.91%
3.00% SALES CHARGE)
S&P 500 (registered trademark) 12.38% 22.76% 241.86% 459.06%
Growth Funds Average 11.65% 18.87% 182.63% 364.07%
</TABLE>
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 market capitalization-weighted
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 Inc. The past six months average represents a peer
group of 1,174 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, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY CONTRAFUND 25.18% 25.54% 22.73%
FIDELITY CONTRAFUND (INCL. 21.43% 24.77% 22.35%
3.00% SALES CHARGE)
S&P 500 22.76% 27.87% 18.78%
Growth Funds Average 18.87% 22.64% 16.15%
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 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
1989/06/30 9700.00 10000.00
1989/07/31 10589.12 10903.00
1989/08/31 10891.66 11116.70
1989/09/30 11101.59 11071.12
1989/10/31 10768.17 10814.27
1989/11/30 11015.15 11034.88
1989/12/31 11181.06 11299.72
1990/01/31 10588.03 10541.51
1990/02/28 10807.92 10677.49
1990/03/31 11041.13 10960.45
1990/04/30 10927.86 10686.44
1990/05/31 11960.67 11728.36
1990/06/30 12113.93 11648.61
1990/07/31 11887.37 11611.33
1990/08/31 10961.17 10561.67
1990/09/30 10501.40 10047.32
1990/10/31 10554.71 10004.11
1990/11/30 11181.06 10650.38
1990/12/31 11621.15 10947.52
1991/01/31 12753.13 11424.84
1991/02/28 13717.65 12241.71
1991/03/31 14521.42 12537.96
1991/04/30 14601.80 12568.05
1991/05/31 15532.83 13110.99
1991/06/30 14662.08 12510.51
1991/07/31 15700.28 13093.50
1991/08/31 16490.65 13403.81
1991/09/30 16537.54 13179.97
1991/10/31 17013.10 13356.58
1991/11/30 16115.56 12818.31
1991/12/31 18003.32 14284.73
1992/01/31 18516.70 14019.03
1992/02/29 19117.58 14201.28
1992/03/31 18598.75 13924.35
1992/04/30 18800.52 14333.73
1992/05/31 19002.29 14403.97
1992/06/30 18541.10 14189.35
1992/07/31 19009.49 14769.69
1992/08/31 18656.40 14466.91
1992/09/30 18973.46 14637.62
1992/10/31 19398.62 14688.85
1992/11/30 20335.40 15189.74
1992/12/31 20864.75 15376.58
1993/01/31 21525.56 15505.74
1993/02/28 21667.56 15716.62
1993/03/31 22703.00 16048.24
1993/04/30 22856.40 15659.87
1993/05/31 23761.45 16079.56
1993/06/30 23769.12 16126.19
1993/07/31 24029.90 16061.68
1993/08/31 25195.73 16670.42
1993/09/30 25249.42 16542.06
1993/10/31 25471.85 16884.48
1993/11/30 24513.11 16724.08
1993/12/31 25335.27 16926.44
1994/01/31 26132.14 17501.94
1994/02/28 25944.64 17027.63
1994/03/31 24918.77 16285.23
1994/04/30 25224.88 16493.68
1994/05/31 25084.23 16764.18
1994/06/30 24116.27 16353.45
1994/07/31 24604.39 16889.85
1994/08/31 25630.26 17582.33
1994/09/30 25291.06 17151.56
1994/10/31 26010.83 17537.47
1994/11/30 24827.76 16898.76
1994/12/31 25051.14 17149.37
1995/01/31 24645.75 17594.05
1995/02/28 25638.53 18279.69
1995/03/31 26573.40 18819.12
1995/04/30 27773.01 19373.35
1995/05/31 28443.14 20147.70
1995/06/30 30246.69 20615.73
1995/07/31 32563.17 21299.35
1995/08/31 32993.38 21352.81
1995/09/30 33597.32 22253.90
1995/10/31 32985.10 22174.45
1995/11/30 33853.79 23147.91
1995/12/31 34139.71 23593.74
1996/01/31 34911.94 24396.87
1996/02/29 35124.78 24623.03
1996/03/31 36099.68 24860.15
1996/04/30 37216.56 25226.59
1996/05/31 37528.91 25877.18
1996/06/30 37244.95 25975.77
1996/07/31 35503.39 24828.16
1996/08/31 36856.89 25351.79
1996/09/30 38371.29 26778.59
1996/10/31 39601.75 27517.14
1996/11/30 41901.76 29597.16
1996/12/31 41628.92 29010.84
1997/01/31 43248.64 30823.44
1997/02/28 42112.84 31065.10
1997/03/31 41018.35 29788.63
1997/04/30 41942.14 31567.01
1997/05/31 44462.49 33488.81
1997/06/30 46300.03 34989.11
1997/07/31 50226.14 37773.19
1997/08/31 48579.38 35657.14
1997/09/30 51822.70 37610.08
1997/10/31 50246.23 36353.90
1997/11/30 50165.90 38036.73
1997/12/31 51202.95 38689.82
1998/01/31 51060.20 39117.73
1998/02/28 54697.86 41938.90
1998/03/31 57491.04 44086.59
1998/04/30 58139.85 44530.10
1998/05/31 56908.21 43764.63
1998/06/30 60064.28 45542.35
1998/07/31 60251.22 45057.32
1998/08/31 51332.85 38542.93
1998/09/30 54444.94 41011.99
1998/10/31 56259.40 44347.91
1998/11/30 60020.29 47035.84
1998/12/31 67366.12 49746.04
1999/01/31 71267.45 51826.42
1999/02/28 68717.42 50215.65
1999/03/31 71266.05 52224.78
1999/04/30 72761.73 54247.45
1999/05/31 71254.09 52966.67
1999/06/30 75190.71 55906.32
IMATRL PRASUN SHR__CHT 19990630 19990720 101605 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Contrafund on June 30, 1989, and the current
3.00% sales charge was paid. As the chart shows, by June 30, 1999, the
value of the investment would have grown to $75,191 - a 651.91%
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 $55,906 - a 459.06% increase.
(checkmark)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.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Signs of continued strength and
emerging inflationary pressures
in the U.S. economy bred investor
uncertainty, which induced stock
markets to give back some of their
gains early, yet bulls won the battle
of wills over their bearish
counterparts as domestic equity
markets surged to a strong finish for
the six-
month period that ended June 30,
1999. The Dow Jones Industrial
Average - an index of 30
blue-chip stocks - locked in a
healthy return of 20.39% for the
period. The technology-laden
NASDAQ returned 22.70%,
while the Standard & Poor's 500
Index posted a return of 12.38%.
The overall market's sudden
rotation to economically sensitive
cyclical and out-of-favor value stocks
marked much of April and May.
This movement away from
large-company growth stocks and
the subsequent broadening of the
market was reflected in the rebound
of the small-cap universe, as
portrayed by the Russell 2000
Index, which handily outpaced the
larger-cap constituents of the S&P
500 by a total of 8.50% in the
second quarter. However,
indications of a moderating economy
and stronger earnings growth late
in the period fueled a rally in
growth stocks and helped them
regain center stage in June.
Generally wary investors warmly
applauded the Federal Reserve
Board's June 30 decision to
abandon its bias toward raising
interest rates and to limit its
pre-emptive strike against inflation
to a single quarter-point hike.
(photograph of Will Danoff)
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, 1999, the fund returned
11.62%. This performance lagged the 12.38% return of the Standard &
Poor's 500 Index during the same period. The fund's return was more in
line with that of the growth funds average, which returned 11.65%
according to Lipper Inc. For the 12 months that ended June 30, 1999,
the fund returned 25.18%. This performance topped the 22.76% return of
the S&P 500, as well as the 18.87% return of the Lipper peer group.
Q. CAN YOU HIGHLIGHT THE MAJOR FACTORS THAT AFFECTED THE FUND'S
PERFORMANCE DURING THE PERIOD?
A. The biggest factor was that central banks around the world lowered
interest rates during the period. In the fall of 1998 - spurred on by
various crises in emerging-market regions and the crash of a large
U.S. hedge fund - the global economy appeared to be on the verge of a
slowdown. In response, central banks began to lower interest rates
throughout the world. The U.S. Federal Reserve Board cut rates three
times in the fall. These eases flipped the investment landscape
entirely over by averting the feared slowdown and stimulating the
economy as we entered 1999. As a result, economically sensitive
sectors such as energy, paper, chemicals and some segments of
technology performed very well during the first half of 1999.
Investors in turn took profits in areas such as finance, retail and
health care, groups that historically perform well when the economy is
slowing or interest rates are falling. In terms of portfolio
strategies, my decision to sell some of the fund's technology exposure
was the biggest damper on performance during the period, as tech
stocks rose about 35% during the first six months of 1999.
Q. CAN YOU EXPAND A BIT ON TECHNOLOGY STOCKS? WHY DID THEY PERFORM SO
WELL DURING THE PERIOD AND WHAT WAS BEHIND YOUR DECISION TO TAKE
PROFITS IN SOME OF THE FUND'S TECHNOLOGY HOLDINGS?
A. The phenomenal growth of the Internet remained the big driver
behind the sector's performance. As valuations soared to what I felt
were uncomfortable levels, I reduced the fund's exposure to several
Internet-related stocks - namely America Online and Yahoo! - early in
the period. The fund no longer owned Yahoo! at the end of the period.
In particular, I was troubled by the wave of new issues and flow of
new venture capital money in the Internet area, trends that I felt
would trigger intense competition and increased pressure on profits.
In hindsight, these sales were premature as Internet stocks continued
to climb. I underestimated the emphasis that mainstream corporate
America would place on the cost-savings opportunities associated with
doing business online, as well as the popularity of the Internet with
the general public. Many Internet companies lost money during the
period, making them difficult to value, but the sector definitely
performed better than I had expected. I also trimmed some of the
fund's holdings in personal-computer stocks, based largely on my
belief that industry leader Compaq's sales and inventory problems
would hinder profit growth throughout the computer sector. My decision
to sell Dell Computer contributed positively to performance.
Q. WITH TECHNOLOGY STOCKS LEADING THE MARKET'S CHARGE DURING THE
PERIOD, DID YOU PURSUE ANY OTHER TYPES OF TECH-RELATED STRATEGIES?
A. One strategy was to try to invest in traditional technology
companies whose products enable the overall use of the Internet. One
such example was Cisco Systems, a leader in providing networking
equipment. Cisco has broadened its product offerings to address the
needs of the traditional telephone service providers, an area that has
very strong potential. Another example was Vitesse Semiconductor,
which sells specialized semiconductors to Cisco and other
communications and networking companies. Both Cisco and Vitesse -
which were among the fund's top-25 holdings at the end of the period -
had annual growth rates of more than 30% and each contributed
positively to performance. One other technology area I tried to
capitalize on was the continued explosion in wireless communications
growth. Worldwide subscribers have grown at a 30%-40% annual growth
clip over the past few years, and cellular service providers benefited
from new services such as Internet access from one's cellular phone.
Finland-based Nokia, the leading wireless handset producer, and
Vodafone AirTouch, a leading global wireless service provider, were
significant positions in the fund and each helped performance.
Q. YOU MENTIONED THAT ECONOMICALLY SENSITIVE STOCKS BEGAN TO PERFORM
WELL AS INVESTOR CONFIDENCE REBOUNDED. DID YOU TAKE ADVANTAGE?
A. I started building positions in selected economically sensitive -
or cyclical - stocks when the companies began reporting
stronger-than-expected first-quarter earnings, and, as with numerous
other investments, I felt they were undervalued by the market. Many of
these companies had reduced costs, capacity and inventories during the
Asian crisis, and their earnings surged as the Fed's interest-rate
cuts stimulated demand. Two such companies that helped the fund during
the period were Alcoa, the world's leading producer of aluminum, and
Weyerhaeuser, a leading paper and timber company. Both of these
industry leaders were pursuing aggressive cost-cutting and stringent
capital allocation programs, and they exceeded earnings expectations.
I also owned Exxon and Mobil, each of which benefited from separate
mergers, as well as British Petroleum and Amoco, which merged together
to form BP Amoco. On the negative side, I should have sold some of the
fund's thrift-related holdings sooner than I did because rising
interest rates hurt thrift margins and earnings growth. Washington
Mutual was one example of a thrift holding that detracted from
performance during the period.
Q. ONE OF YOUR MAIN STRATEGIES IS TO IDENTIFY OPPORTUNITIES THAT MAY
BE OVERLOOKED BY THE MARKET. CAN YOU GIVE ANY EXAMPLES?
A. I'd point to the telecommunications industry - particularly the
competitive local exchange carriers (CLECs) - as being a good example
of the market underestimating a trend. Over the past few years, CLECs
have been able to provide better and cheaper telephone service and
Internet access than the traditional regional Bell operating
companies. More often than not, it takes time for these opportunities
to play out. Back in 1996, when I began to add CLECs to the portfolio,
this segment of the telecom industry was relatively unknown. In the
fall of 1998, when this group was perceived to have liquidity problems
and stocks fell under pressure, I added significantly to the fund's
positions. The fund's second-largest individual position at the end of
the period, MCI WorldCom, gained considerable CLEC exposure through
two acquisitions and performed well during the period. Other strong
CLEC performers included McLeod and Nextlink.
Q. WHAT'S YOUR OUTLOOK FOR THE REMAINDER OF 1999?
A. The domestic economy and corporate profits are very strong, general
inflation remains subdued and productivity is high. Overseas, many
troubled markets have stabilized but are still not as robust as the
U.S. market. As long as inflation remains in check, the Fed should be
able to maintain interest rates at current levels and stock prices of
growing companies should continue to perform well. Of course, the
Fed's recent tightening suggests that the central bank is concerned
about the domestic economy overheating. In terms of the fund itself,
I'll continue to look for leading growth companies, new
emerging-growth companies and underappreciated turnaround stories that
I feel can sustain strong earnings growth if the economy should slow.
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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)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, 1999,
more than $43.3 billion
MANAGER: Will Danoff, since
1990; manager, VIP II:
Contrafund, since 1995;
Fidelity Select Retailing
Portfolio, 1986-1989;
joined Fidelity in 1986
WILL DANOFF DISCUSSES HIS
ATTRACTION TO MEDIA AND
ENTERTAINMENT STOCKS:
"Media and entertainment stocks
represented around 16% of the fund's
investments at the end of the period,
with many names falling into the
cable TV and radio industries.
Each of these areas experienced
positive fundamental changes
during the period, as cable TV
companies benefited from a host
of new service offerings and the
radio industry experienced strong
revenue growth due to deregulation
and a healthy economy.
"The new service offerings in the
cable sector - including improved
digital video service and enhanced
Internet access - are being rolled
out this year and should translate
into faster growth. Internet access
could provide the biggest
opportunity for cable companies, as
many could benefit from increased
electronic commerce revenues as
well as advertising and service
revenues. The fund's positions in
Time Warner, Comcast and AT&T all
helped performance during the
period.
"Radio stations, meanwhile, took
market share away from newspapers
during the period, as newspapers
continued to experience lower
readership levels. Deregulation
produced meaningful consolidation
within the sector, putting many
stations in the hands of experienced,
superior operators and allowing for
solid rate increases. The fund's
stakes in CBS and Clear Channel
Communications helped
performance."
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF JUNE 30,
1999
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE STOCKS 6 MONTHS AGO
Time Warner, Inc. 4.3 4.2
MCI WorldCom, Inc. 4.2 5.4
McDonald's Corp. 3.2 1.8
AT&T Corp. 2.1 1.6
CVS Corp. 2.0 2.7
Associates First Capital 1.7 1.4
Corp. Class A
Cisco Systems, Inc. 1.7 1.5
Vodafone AirTouch PLC 1.7 1.1
sponsored ADR
Microsoft Corp. 1.4 3.1
Unisys Corp. 1.3 1.0
TOP FIVE MARKET SECTORS AS OF
JUNE 30, 1999
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE MARKET SECTORS 6
MONTHS AGO
TECHNOLOGY 17.2 24.6
MEDIA & LEISURE 16.2 13.6
UTILITIES 12.3 14.0
FINANCE 7.3 7.6
RETAIL & WHOLESALE 7.1 9.8
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
AS OF JUNE 30, 1999 * AS OF DECEMBER 31, 1998 **
Stocks 90.1% Stocks 90.5%
Bonds 1.8% Bonds 2.4%
Short-term Investments 8.1% Short-term Investments 7.1%
* FOREIGN INVESTMENTS 9.4% ** FOREIGN INVESTMENTS 2.4%
Row: 1, Col: 1, Value: 90.09999999999999 Row: 1, Col: 1, Value: 90.5
Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 0.0 Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 1.8 Row: 1, Col: 4, Value: 2.4
Row: 1, Col: 5, Value: 0.0 Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 8.1 Row: 1, Col: 8, Value: 7.1
</TABLE>
INVESTMENTS JUNE 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 90.1%
SHARES VALUE (NOTE 1) (000S)
AEROSPACE & DEFENSE - 1.1%
AEROSPACE & DEFENSE - 0.8%
Alliant Techsystems, Inc. (a) 432,000 $ 37,368
AlliedSignal, Inc. 691,700 43,577
Cordant Technologies, Inc. 520,800 23,534
Howmet International, Inc. (a) 255,500 4,391
Northrop Grumman Corp. 82,300 5,458
Rockwell International Corp. 299,400 18,189
Textron, Inc. 866,400 71,316
United Technologies Corp. 1,880,200 134,787
338,620
DEFENSE ELECTRONICS - 0.3%
Raytheon Co. Class B 1,694,300 119,236
SHIP BUILDING & REPAIR - 0.0%
General Dynamics Corp. 303,600 20,797
TOTAL AEROSPACE & DEFENSE 478,653
BASIC INDUSTRIES - 4.9%
CHEMICALS & PLASTICS - 0.8%
Crompton & Knowles Corp. 2,123,617 41,543
Dow Chemical Co. 158,000 20,046
E.I. du Pont de Nemours and 381,100 26,034
Co.
Fuller (H.B.) Co. 496,862 33,973
Geon Co. 1,146,300 36,968
MacDermid, Inc. 127,700 5,938
Praxair, Inc. 128,800 6,303
Rohm & Haas Co. 134,900 5,784
Spartech Corp. 83,100 2,628
Union Carbide Corp. 3,247,200 158,301
W.R. Grace & Co. (a) 67,700 1,244
Witco Corp. 439,400 8,788
347,550
IRON & STEEL - 0.1%
AK Steel Holding Corp. 1,434,000 32,265
Armco, Inc. (a) 2,263,800 14,998
47,263
METALS & MINING - 1.2%
Alcan Aluminium Ltd. 327,200 10,458
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
BASIC INDUSTRIES - CONTINUED
METALS & MINING - CONTINUED
Alcoa, Inc. 2,463,600 $ 152,435
Broken Hill Proprietary Co. 10,399,750 121,437
Ltd. (The)
Commscope, Inc. (a) 1,127,600 34,674
Falconbridge Ltd. 527,800 7,524
Inco Ltd. 3,315,500 59,614
Inco Ltd. Class VBN Shares 320,800 2,423
Reynolds Metals Co. 177,900 10,496
Rio Tinto PLC (Reg.) 7,220,964 121,129
520,190
PACKAGING & CONTAINERS - 0.2%
Ball Corp. 1,218 59
Corning, Inc. 982,500 68,898
Tupperware Corp. 357,200 9,109
78,066
PAPER & FOREST PRODUCTS - 2.6%
Boise Cascade Corp. 1,036,400 44,436
Bowater, Inc. 1,335,100 63,083
Champion International Corp. 2,304,500 110,328
Georgia-Pacific Corp. 4,858,500 230,171
International Paper Co. 2,497,429 126,120
Kimberly-Clark Corp. 1,513,500 86,270
Mead Corp. 126,600 5,286
Sealed Air Corp. (a) 637,275 41,343
Smurfit-Stone Container Corp. 565,800 11,634
(a)
Temple-Inland, Inc. 1,052,800 71,854
UPM-Kymmene Corp. 655,800 20,352
Weyerhaeuser Co. 3,884,900 267,087
Willamette Industries, Inc. 1,786,500 82,291
1,160,255
TOTAL BASIC INDUSTRIES 2,153,324
CONSTRUCTION & REAL ESTATE -
0.5%
BUILDING MATERIALS - 0.3%
ACX Technologies, Inc. (a) 59,100 960
American Standard Companies, 46,900 2,251
Inc. (a)
Fortune Brands, Inc. 1,909,600 79,010
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
CONSTRUCTION & REAL ESTATE -
CONTINUED
BUILDING MATERIALS - CONTINUED
Masco Corp. 636,100 $ 18,367
Tecumseh Products Co. Class A 50,800 3,077
York International Corp. 157,800 6,756
110,421
CONSTRUCTION - 0.1%
Jacobs Engineering Group, 842,800 32,026
Inc. (a)
REAL ESTATE - 0.0%
Grand Palais Management Co. 398,400 0
LP (d)
REAL ESTATE INVESTMENT TRUSTS
- - 0.1%
Cousins Properties, Inc. 48,300 1,633
Equity Office Properties Trust 1,599,200 40,980
Highwoods Properties, Inc. 130,800 3,589
Public Storage, Inc. 339,300 9,500
Spieker Properties, Inc. 39,700 1,543
Starwood Hotels & Resorts 61,000 1,864
Worldwide, Inc.
59,109
TOTAL CONSTRUCTION & REAL 201,556
ESTATE
DURABLES - 3.3%
AUTOS, TIRES, & ACCESSORIES -
1.5%
Copart, Inc. (a) 127,800 2,716
Danaher Corp. 1,923,400 111,798
Eaton Corp. 321,600 29,587
Ford Motor Co. 1,209,000 68,233
Group 1 Automotive, Inc. (a) 757,400 16,000
Kroll-O'Gara Co. (a) 33,700 744
Midas, Inc. (c) 1,682,600 47,744
Navistar International Corp. 1,260,800 63,040
(a)
PACCAR, Inc. 637,400 34,021
SPX Corp. (c) 3,131,947 261,518
Tower Automotive, Inc. (a) 691,500 17,590
Toyota Motor Corp. 373,000 11,785
664,776
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
DURABLES - CONTINUED
CONSUMER DURABLES - 0.2%
Boyds Collection, Ltd. 2,353,000 $ 40,736
Minnesota Mining & 500,600 43,521
Manufacturing Co.
84,257
CONSUMER ELECTRONICS - 0.2%
Sony Corp. 564,600 62,318
HOME FURNISHINGS - 0.3%
Bombay Co., Inc. (The) (a)(c) 2,215,500 17,032
Linens'n Things, Inc. (a) 1,925,100 84,223
Newell Rubbermaid, Inc. 442,448 20,574
121,829
TEXTILES & APPAREL - 1.1%
Jason, Inc. (a) 16,900 135
Jones Apparel Group, Inc. (a) 3,655,571 125,432
NIKE, Inc. Class B 1,804,200 114,228
Polo Ralph Lauren Corp. Class 338,700 6,435
A (a)
Quiksilver, Inc. (c) 1,186,550 30,924
Reebok International Ltd. (a) 176,800 3,293
Shaw Industries, Inc. (a) 955,600 15,767
Tommy Hilfiger (a) 1,855,500 136,379
Vans, Inc. (a) 101,200 1,159
Warnaco Group, Inc. Class A 2,189,300 58,564
492,316
TOTAL DURABLES 1,425,496
ENERGY - 4.9%
ENERGY SERVICES - 0.0%
Global Marine, Inc. (a) 1,650,800 25,484
OIL & GAS - 4.9%
Alberta Energy Co. Ltd. 1,301,300 42,081
Amerada Hess Corp. 940,170 55,940
Anadarko Petroleum Corp. 1,737,300 63,954
Atlantic Richfield Co. 2,700,800 225,686
BP Amoco PLC sponsored ADR 4,994,583 541,912
Burlington Resources, Inc. 648,100 28,030
Canadian Natural Resources 323,400 6,412
Ltd. (a)
Chevron Corp. 740,000 70,439
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Elf Aquitaine SA sponsored ADR 360,000 $ 26,483
Exxon Corp. 4,313,000 332,640
Mobil Corp. 2,819,300 279,111
Rio Alto Exploration Ltd. (a) 2,985,600 45,620
Royal Dutch Petroleum Co. (NY 3,180,500 191,625
Registry Gilder 1.25)
Santa Fe Snyder Corp. (a) 752,460 5,738
Shell Transport & Trading Co. 4,948,200 38,246
PLC (Reg.)
Total Fina SA sponsored ADR 758,600 48,882
Unocal Corp. 1,991,000 78,893
Vastar Resources, Inc. 1,008,600 52,888
2,134,580
TOTAL ENERGY 2,160,064
FINANCE - 7.3%
BANKS - 1.8%
AmSouth Bancorp. 953,900 22,119
Bank of America Corp. 105,400 7,727
Bank of New York Co., Inc. 4,767,800 174,919
BankBoston Corp. 2,434,100 124,443
BB&T Corp. 128,900 4,729
Chase Manhattan Corp. 2,043,500 177,018
Firstar Corp. 509,600 14,269
M&T Bank Corp. 20,790 11,435
Marshall & Ilsley Corp. 408,500 26,297
Mellon Bank Corp. 293,500 10,676
Northern Trust Corp. 147,800 14,337
Regions Financial Corp. 340,000 13,069
State Street Corp. 401,300 34,261
U.S. Bancorp 1,510,748 51,365
Wells Fargo & Co. 2,261,700 96,688
Zions Bancorp 124,600 7,912
791,264
CREDIT & OTHER FINANCE - 2.7%
American Express Co. 1,041,900 135,577
Associates First Capital 17,051,272 755,584
Corp. Class A
Citigroup, Inc. 473,100 22,472
Concord EFS, Inc. (a) 822,100 34,785
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE -
CONTINUED
Fleet Financial Group, Inc. 931,600 $ 41,340
Greenpoint Financial Corp. 268,600 8,813
Household International, Inc. 1,947,800 92,277
MBNA Corp. 2,206,800 67,583
1,158,431
FEDERAL SPONSORED CREDIT - 1.1%
Fannie Mae 5,351,260 365,892
Freddie Mac 2,208,620 128,100
493,992
INSURANCE - 1.1%
AFLAC, Inc. 1,555,400 74,465
Allstate Corp. 2,586,900 92,805
American International Group, 1,241,150 145,292
Inc.
Berkshire Hathaway, Inc. 42 2,894
Class A (a)
CIGNA Corp. 791,400 70,435
Horace Mann Educators Corp. 287,100 7,806
Mutual Risk Management Ltd. 2,320,600 77,450
(c)
471,147
SAVINGS & LOANS - 0.3%
Astoria Financial Corp. 1,137,300 49,970
Golden West Financial Corp. 752,400 73,735
Washington Mutual, Inc. 740,275 26,187
149,892
SECURITIES INDUSTRY - 0.3%
Daiwa Securities Co. Ltd. 7,542,000 49,772
Nikko Securities Co. Ltd. 10,205,000 65,746
Nomura Securities Co. Ltd. 2,531,000 29,585
145,103
TOTAL FINANCE 3,209,829
HEALTH - 5.1%
DRUGS & PHARMACEUTICALS - 3.3%
Allergan, Inc. 1,787,700 198,435
Amgen, Inc. (a) 1,177,900 71,705
Bausch & Lomb, Inc. 850,800 65,086
Biogen, Inc. (a) 1,548,400 99,581
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
HEALTH - CONTINUED
DRUGS & PHARMACEUTICALS -
CONTINUED
Centocor, Inc. (a) 536,300 $ 25,005
Forest Laboratories, Inc. (a) 559,900 25,895
Genzyme Corp. 447 2
Genzyme Corp. (General 2,500 121
Division)
Immunex Corp. (a) 880,000 112,145
Lilly (Eli) & Co. 1,599,300 114,550
PE Corp. (Biosystems Group) 2,119,320 243,192
Pharmacia & Upjohn, Inc. 421,800 23,964
Schering-Plough Corp. 4,378,700 232,071
Shire Pharmaceuticals Group 786,800 6,565
PLC (a)
Warner-Lambert Co. 3,470,000 240,731
1,459,048
MEDICAL EQUIPMENT & SUPPLIES
- - 1.6%
Bard (C.R.), Inc. 1,859,900 88,926
Baxter International, Inc. 611,700 37,084
Becton, Dickinson & Co. 2,607,250 78,218
Biomet, Inc. 1,263,900 50,240
Boston Scientific Corp. (a) 2,347,000 103,121
Cardinal Health, Inc. 2,644,967 169,609
Guidant Corp. 1,033,040 53,137
Medtronic, Inc. 295,700 23,028
Smith & Nephew Associates Co. 7,056,125 21,480
Stryker Corp. 779,600 46,873
Sybron International, Inc. (a) 430,400 11,863
U.S. Surgical Corp. rights 171 0
6/30/00 (a)
Varian Medical Systems, Inc. 256,300 6,472
690,051
MEDICAL FACILITIES MANAGEMENT
- - 0.2%
Health Management Associates, 523,187 5,886
Inc. Class A (a)
United HealthCare Corp. 1,088,300 68,155
74,041
TOTAL HEALTH 2,223,140
INDUSTRIAL MACHINERY &
EQUIPMENT - 3.2%
ELECTRICAL EQUIPMENT - 1.4%
Allen Telecom, Inc. (a) 1,253,200 13,472
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
INDUSTRIAL MACHINERY &
EQUIPMENT - CONTINUED
ELECTRICAL EQUIPMENT -
CONTINUED
American Power Conversion 1,557,700 $ 31,349
Corp. (a)
ANTEC Corp. (a) 63,200 2,026
Emerson Electric Co. 154,800 9,733
General Instrument Corp. (a) 1,349,000 57,333
Koninklijke (Royal) Philips 1,105,468 111,514
Electronics NV sponsored ADR
L-3 Communications Holdings, 1,401,700 67,720
Inc. (a)
Loral Space & Communications 5,561,367 100,105
Ltd. (a)
Pittway Corp. Class A 37,200 1,272
Rayovac Corp. (a)(c) 2,576,900 58,463
Research in Motion Ltd. (a) 1,024,500 20,697
Roper Industries, Inc. 817,800 26,170
Siemens AG 1,730,300 134,225
634,079
INDUSTRIAL MACHINERY &
EQUIPMENT - 1.3%
ASM Lithography Holding NV (a) 164,700 9,779
Briggs & Stratton Corp. 26,000 1,502
Illinois Tool Works, Inc. 144,000 11,808
Ingersoll-Rand Co. 109,500 7,076
ITT Industries, Inc. 1,747,400 66,620
Manitowoc Co., Inc. 53,600 2,231
Mettler-Toledo International, 797,900 19,798
Inc. (a)
Milacron, Inc. 15,000 278
Terex Corp. (a) 563,000 17,136
Tyco International Ltd. 4,415,463 418,365
554,593
POLLUTION CONTROL - 0.5%
IT Group, Inc. (The) (a) 758,100 12,177
Republic Services, Inc. Class 4,492,300 111,184
A
Safety-Kleen Corp. (a) 1,298,500 23,535
Waste Management, Inc. 1,078,401 57,964
204,860
TOTAL INDUSTRIAL MACHINERY & 1,393,532
EQUIPMENT
MEDIA & LEISURE - 16.2%
BROADCASTING - 8.1%
American Tower Corp. Class A 4,858,800 116,611
(a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
AT&T Corp. (Liberty Media 5,200,092 $ 191,103
Group) Class A (a)
Cablevision Systems Corp. 134,200 9,394
Class A (a)
Capital Radio PLC 918,740 12,165
CBS Corp. (a) 11,386,518 494,602
Citadel Communications Corp. 1,433,700 51,882
Clear Channel Communications, 1,144,000 78,865
Inc. (a)
Comcast Corp.:
Class A 1,296,600 46,434
Class A (special) 6,333,780 243,455
Cox Communications, Inc. 1,460,200 53,754
Class A (a)
E.W. Scripps Co. Class A 28,200 1,341
Entercom Communications Corp. 1,111,000 47,495
Infinity Broadcasting Corp. 864,600 25,722
Class A
MediaOne Group, Inc. 1,560,600 116,070
Metro Networks, Inc. (a) 88,100 4,702
NTL, Inc. (a) 175,900 15,160
SBS Broadcasting SA (a)(c) 1,315,800 42,435
TCA Cable TV, Inc. 141,000 7,826
Television Francaise 1 SA 5,337 1,248
(T.F.1)
TeleWest Communications PLC 29,200 1,336
sponsored ADR (a)
Time Warner, Inc. 25,345,721 1,862,903
United Pan-Europe 1,045,050 56,863
Communications NV
Univision Communications, 501,400 33,092
Inc. Class A (a)
USA Networks, Inc. (a) 774,690 31,084
Westwood One, Inc. (a) 151,700 5,414
3,550,956
ENTERTAINMENT - 2.2%
Dover Downs Entertainment, 687,200 12,155
Inc. (c)
King World Productions, Inc. 1,140,400 39,700
(a)
MGM Grand, Inc. (a) 427,600 20,952
Park Place Entertainment 2,766,000 26,796
Corp.
Premier Parks, Inc. (a)(c) 5,513,900 202,636
Royal Carribean Cruises Ltd. 101,100 4,423
SFX Entertainment, Inc. Class 1,180,300 75,539
A (a)
Viacom, Inc.:
Class A (a) 3,580,200 157,976
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
MEDIA & LEISURE - CONTINUED
ENTERTAINMENT - CONTINUED
Viacom, Inc.: - continued
Class B (non-vtg.) (a) 9,301,200 $ 409,253
Zomax, Inc. (a) 12,600 554
949,984
LEISURE DURABLES & TOYS - 0.3%
Brass Eagle, Inc. (a) 74,500 1,397
Champion Enterprises, Inc. (a) 228,900 4,263
Harley-Davidson, Inc. 148,900 8,096
Hasbro, Inc. 3,459,500 96,650
Mattel, Inc. 1,234,440 32,636
143,042
LODGING & GAMING - 0.5%
Four Seasons Hotels, Inc. 70,900 3,117
Harrah's Entertainment, Inc. 989,600 21,771
(a)
Marriott International, Inc. 2,069,800 77,359
Class A
Millennium & Copthorne Hotels 1,893,047 17,694
PLC
Promus Hotel Corp. (a) 2,127,000 65,937
Sun International Hotels Ltd. 433,800 19,413
(a)
205,291
PUBLISHING - 0.7%
Harte Hanks Communications, 1,808,350 49,051
Inc.
McGraw-Hill Companies, Inc. 343,400 18,522
Meredith Corp. 329,900 11,423
PRIMEDIA, Inc. (a) 538,300 9,117
Reader's Digest Association, 4,339,560 172,498
Inc. Class A (non-vtg.)
Tribune Co. 671,400 58,496
319,107
RESTAURANTS - 4.4%
Allied Domecq PLC 8,449,300 81,562
Brinker International, Inc. 2,564,100 69,711
(a)
CEC Entertainment, Inc. (a) 807,900 34,134
Darden Restaurants, Inc. 3,584,300 78,183
McDonald's Corp. 34,417,600 1,421,877
Outback Steakhouse, Inc. (a) 2,097,750 82,468
Papa John's International, 1,482,500 66,249
Inc. (a)
Pizzaexpress PLC 1,522,400 22,092
Starbucks Corp. (a) 61,400 2,306
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - CONTINUED
Tricon Global Restaurants, 849,500 $ 45,979
Inc. (a)
Wendy's International, Inc. 1,020,400 28,890
1,933,451
TOTAL MEDIA & LEISURE 7,101,831
NONDURABLES - 2.0%
FOODS - 1.3%
Earthgrains Co. (c) 3,498,000 90,292
Flowers Industries, Inc. 2,492,700 54,060
Heinz (H.J.) Co. 1,115,800 55,929
Keebler Foods Co. (a) 3,289,100 99,906
Nabisco Group Holdings Corp. 1,333,600 26,089
Nabisco Holdings Corp. Class A 94,900 4,104
Quaker Oats Co. 2,163,400 143,596
Sysco Corp. 1,757,600 52,398
Tyson Foods, Inc. 726,500 16,346
Weston George Ltd. 64,900 2,884
545,604
HOUSEHOLD PRODUCTS - 0.7%
Avon Products, Inc. 1,600,400 88,822
Clorox Co. 125,381 13,392
Colgate-Palmolive Co. 1,168,800 115,419
Dial Corp. 1,133,600 42,156
Estee Lauder Companies, Inc. 562,100 28,175
Playtex Products, Inc. (a) 1,539,700 23,962
311,926
TOBACCO - 0.0%
RJ Reynolds Tobacco Holdings, 422,200 13,299
Inc.
TOTAL NONDURABLES 870,829
PRECIOUS METALS - 0.7%
Barrick Gold Corp. 6,795,560 131,944
Euro-Nevada Mining Corp. Ltd. 1,396,000 16,797
Franco Nevada Mining Corp. 1,448,900 22,684
Ltd.
Newmont Mining Corp. 1,400,000 27,825
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
PRECIOUS METALS - CONTINUED
Placer Dome, Inc. 6,803,005 $ 79,532
Stillwater Mining Co. (a) 1,332,760 43,565
322,347
RETAIL & WHOLESALE - 7.1%
APPAREL STORES - 0.9%
AnnTaylor Stores Corp. (a) 544,600 24,507
Charming Shoppes, Inc. (a)(c) 10,620,500 64,719
Claire's Stores, Inc. 616,700 15,803
Gap, Inc. 2,865,350 144,342
Talbots, Inc. 372,900 14,217
TJX Companies, Inc. 3,511,200 116,967
Venator Group, Inc. (a) 1,040,800 10,863
391,418
DRUG STORES - 2.2%
CVS Corp. 17,367,866 881,419
Walgreen Co. 2,040,500 59,940
941,359
GENERAL MERCHANDISE STORES -
0.4%
Costco Companies, Inc. (a) 1,413,800 113,192
Dayton Hudson Corp. 373,600 24,284
Dollar General Corp. 732,775 21,250
Kohls Corp. (a) 234,800 18,124
Tuesday Morning Corp. (a) 532,500 13,579
190,429
GROCERY STORES - 1.0%
Fleming Companies, Inc. (c) 2,116,936 24,609
Kroger Co. (a) 255,400 7,135
Loblaw Companies Ltd. 281,900 7,198
Safeway, Inc. (a) 7,084,550 350,685
U.S. Foodservice (a) 1,631,700 69,551
459,178
RETAIL & WHOLESALE,
MISCELLANEOUS - 2.6%
Action Performance Companies, 1,458,500 48,131
Inc. (a)(c)
Bed Bath & Beyond, Inc. (a) 2,894,200 111,427
Best Buy Co., Inc. (a) 84,500 5,704
Circuit City Stores, Inc. - 697,100 64,830
Circuit City Group
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE,
MISCELLANEOUS - CONTINUED
Home Depot, Inc. 6,554,900 $ 422,381
InterTAN, Inc. (a) 776,700 15,922
Office Depot, Inc. (a) 11,699,200 258,114
PETsMART, Inc. (a) 2,099,000 21,515
Staples, Inc. (a) 2,560,850 79,226
Sunglass Hut International, 3,445,200 59,214
Inc. (a)(c)
Tandy Corp. 841,200 41,114
1,127,578
TOTAL RETAIL & WHOLESALE 3,109,962
SERVICES - 2.7%
ADVERTISING - 1.9%
Interpublic Group of 2,426,650 210,209
Companies, Inc.
Lamar Advertising Co. Class A 3,036,900 124,323
(a)(c)
Outdoor Systems, Inc. (a)(c) 9,423,201 343,947
Saatchi & Saatchi PLC 3,518,300 11,909
WPP Group PLC 2,663,300 22,537
Young & Rubicam, Inc. 3,052,900 138,716
851,641
LEASING & RENTAL - 0.1%
Hanover Compressor Co. (a) 304,500 9,782
Hertz Corp. Class A 239,900 14,874
24,656
PRINTING - 0.1%
Reynolds & Reynolds Co. Class 985,700 22,979
A
SERVICES - 0.6%
ACNielsen Corp. (a) 2,247,100 67,975
Block (H&R), Inc. 2,498,800 124,940
Catalina Marketing Corp. (a) 427,100 39,293
CGI Group, Inc. Class A (sub. 81,200 1,721
vtg.) (a)
Dun & Bradstreet Corp. 109,900 3,895
NOVA Corp. 168,900 4,223
Regis Corp. 141,500 2,715
Securitas AB Class B 939,900 14,136
Streamline.com, Inc. 151,900 1,225
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
SERVICES - CONTINUED
SERVICES - CONTINUED
Suez Lyonnaise des Eaux 24,900 $ 4,505
Telespectrum Worldwide, Inc. 1,294,000 10,029
(a)(c)
274,657
TOTAL SERVICES 1,173,933
TECHNOLOGY - 17.2%
COMMUNICATIONS EQUIPMENT - 3.7%
ADC Telecommunications, Inc. 1,912,300 87,129
(a)
Ciena Corp. (a) 595,000 17,962
Cisco Systems, Inc. (a) 11,444,130 737,431
Copper Mountain Networks, 42,200 3,260
Inc.
DSP Communications, Inc. (a) 840,400 24,267
InterVoice, Inc. (a) 1,125,400 16,248
Lucent Technologies, Inc. 4,143,700 279,441
Microwave Power Devices, Inc. 12,600 194
(a)
Nokia AB sponsored ADR 2,344,800 214,696
Northern Telecom Ltd. 1,144,790 98,615
PulsePoint Communications 301,800 1,801
(a)(c)
Tellabs, Inc. (a) 1,827,400 123,464
1,604,508
COMPUTER SERVICES & SOFTWARE
- - 7.9%
Acxiom Corp. (a) 1,434,300 35,768
Adobe Systems, Inc. 1,656,000 136,051
Affiliated Computer Services, 379,900 19,232
Inc. Class A (a)
America Online, Inc. 47,600 5,260
Ariba, Inc. 11,600 1,128
Ask Jeeves, Inc. 7,800 109
Automatic Data Processing, 7,317,900 321,988
Inc.
AVT Corp. (a) 84,200 3,189
Bell & Howell Co. (a) 697,300 26,367
Bisys Group, Inc. (The) (a) 319,800 18,708
Ceridian Corp. (a)(c) 7,838,000 256,205
Check Point Software 84,500 4,531
Technologies Ltd. (a)
Citrix Systems, Inc. (a) 84,300 4,763
Clarent Corp. 28,200 423
Clarify, Inc. (a)(c) 1,271,600 52,454
Computer Sciences Corp. (a) 402,900 27,876
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE
- - CONTINUED
Dendrite International, Inc. 98,000 $ 3,540
(a)
DST Systems, Inc. (a) 66,900 4,206
Electronic Data Systems Corp. 3,583,100 202,669
Equant NV (Reg.) 780,400 73,455
Fiserv, Inc. (a) 378,250 11,844
Galileo International, Inc. 1,122,700 59,994
IMS Health, Inc. 4,439,100 138,722
Informix Corp. (a) 6,019,700 51,356
International Business 779,100 100,699
Machines Corp.
Intuit, Inc. (a) 1,502,000 135,368
Micromuse, Inc. (a) 628,300 31,336
Microsoft Corp. (a) 6,523,300 588,320
National Computer Systems, 968,700 32,694
Inc.
National Instrument Corp. (a) 224,400 9,060
NCR Corp. (a) 3,124,900 152,534
Novell, Inc. (a) 3,775,200 100,043
Orckit Communications Ltd. (a) 141,800 3,510
Polycom, Inc. (a)(c) 2,198,400 85,738
Rational Software Corp. (a) 2,265,600 74,623
Sabre Group Holdings, Inc. 264,350 18,174
Class A (a)
Software.com, Inc. 23,900 554
Sykes Enterprises, Inc. (a) 908,400 30,318
Synopsys, Inc. (a) 374,300 20,657
Unisys Corp. (a)(c) 14,005,734 545,348
USWEB Corp. (a) 241,800 5,365
VeriSign, Inc. (a) 207,300 17,880
Veritas Software Corp. (a) 206,400 19,595
Verity, Inc. (a) 50,600 2,742
Visual Networks, Inc. (a) 429,900 13,757
3,448,153
COMPUTERS & OFFICE EQUIPMENT
- - 1.8%
Apple Computer, Inc. (a) 663,700 30,738
Comdisco, Inc. 156,600 4,013
Comverse Technology, Inc. (a) 562,150 42,442
Gateway, Inc. (a) 54,000 3,186
Hewlett-Packard Co. 3,025,000 304,013
Lexmark International Group, 269,800 17,824
Inc. Class A (a)
Network Appliance, Inc. (a) 16,900 944
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT
- - CONTINUED
Redback Networks, Inc. 338,400 $ 42,490
Safeguard Scientifics, Inc. 337,000 20,894
(a)
Silicon Graphics, Inc. (a) 679,400 11,125
Sun Microsystems, Inc. (a) 762,800 52,538
Symbol Technologies, Inc. 3,440,325 126,862
Xerox Corp. 2,422,900 143,103
800,172
ELECTRONIC INSTRUMENTS - 0.9%
Applied Materials, Inc. (a) 235,900 17,427
Hach Co. 81,900 1,484
Teradyne, Inc. (a) 330,900 23,742
Thermo Electron Corp. (a) 5,766,800 115,696
Thermo Instrument Systems, 1,100,675 18,574
Inc. (a)
Trimble Navigation Ltd. (a) 220,400 2,838
Waters Corp. (a)(c) 4,314,600 229,213
408,974
ELECTRONICS - 2.9%
Analog Devices, Inc. (a) 1,380,000 69,259
Celestica, Inc. (sub-vtg.) 673,200 29,318
Conexant Systems, Inc. 1,058,400 61,453
Galileo Technology Ltd. (a) 42,200 1,912
hi/fn, Inc. 15,600 1,188
Intel Corp. 2,863,400 170,372
Linear Technology Corp. 1,585,900 106,652
LSI Logic Corp. (a) 634,400 29,262
Microchip Technology, Inc. (a) 25,400 1,203
Motorola, Inc. 2,866,100 271,563
National Semiconductor Corp. 819,300 20,739
(a)
Sanmina Corp. (a) 88,100 6,685
STMicroelectronics NV 83,800 5,814
Texas Instruments, Inc. 1,169,800 169,621
Vitesse Semiconductor Corp. 4,507,300 303,961
(a)(c)
1,249,002
PHOTOGRAPHIC EQUIPMENT - 0.0%
Imation Corp. (a) 59,100 1,466
TOTAL TECHNOLOGY 7,512,275
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
TRANSPORTATION - 1.6%
AIR TRANSPORTATION - 0.7%
Mesa Air Group, Inc. (a) 121,800 $ 915
Northwest Airlines Corp. 223,600 7,267
Class A (a)
Ryanair Holdings PLC 102,000 5,406
sponsored ADR (a)
Southwest Airlines Co. 5,747,125 178,879
Viad Corp. 3,963,000 122,605
315,072
RAILROADS - 0.3%
Bombardier, Inc. Class B 2,148,000 33,042
Burlington Northern Santa Fe 1,001,100 31,034
Corp.
Union Pacific Corp. 1,259,300 73,433
137,509
TRUCKING & FREIGHT - 0.6%
American Freightways Corp. (a) 1,313,800 25,701
C.H. Robinson Worldwide, Inc. 1,799,800 66,143
Eagle USA Airfreight, Inc. (a) 138,000 5,856
Expeditors International of 846,600 23,070
Washington, Inc.
Swift Transportation Co., 4,743,800 104,364
Inc. (a)(c)
USFreightways Corp. 190,000 8,799
233,933
TOTAL TRANSPORTATION 686,514
UTILITIES - 12.3%
CELLULAR - 3.3%
Advanced Radio Telecom Corp. 82,200 1,182
(a)
ALLTEL Corp. 2,764,600 197,669
Associated Group, Inc. Class 677,200 44,103
A (a)
Mannesmann AG 1,621,840 244,443
Nextel Communications, Inc. 919,200 46,132
Class A (a)
Orange PLC ADR (a) 1,282,900 96,859
Sprint Corp. Series 1 (PCS 719,600 41,107
Group) (a)
Teligent, Inc. Class A (a) 228,600 13,673
Vodafone AirTouch PLC 3,697,449 728,397
sponsored ADR
VoiceStream Wireless Corp. 674,600 19,184
1,432,749
ELECTRIC UTILITY - 0.1%
Calpine Corp. (a) 369,300 19,942
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
UTILITIES - CONTINUED
ELECTRIC UTILITY - CONTINUED
Entergy Corp. 60,700 $ 1,897
Illinova Corp. 1,025,000 27,931
PG&E Corp. 169,000 5,493
55,263
GAS - 0.1%
Dynegy, Inc. 539,300 10,988
Enron Corp. 665,000 54,364
65,352
TELEPHONE SERVICES - 8.7%
Ameritech Corp. 1,517,700 111,551
AT&T Corp. 16,583,990 925,594
BCE, Inc. 630,600 30,933
BellSouth Corp. 134,200 6,291
Cincinnati Bell, Inc. 1,127,500 28,117
Commonwealth Telephone 163,200 6,599
Enterprises, Inc. (a)
Covad Communications Group, 238,400 12,710
Inc.
Energis PLC (a) 1,865,181 44,512
Global TeleSystems Group, 84,314 6,829
Inc. (a)
MCI WorldCom, Inc. (a) 21,317,650 1,834,650
McLeodUSA, Inc. Class A (a) 654,030 35,972
NEXTLINK Communications, Inc. 574,100 42,699
Class A (a)
Nippon Telegraph & Telephone 13,271 154,359
Corp.
NorthPoint Communication 218,200 7,964
Holdings, Inc.
Qwest Communications 6,684,716 221,013
International, Inc. (a)
SBC Communications, Inc. 2,932,310 170,074
Telecom Italia Spa 12,302,900 129,411
WinStar Communications, Inc. 395,100 19,261
(a)
3,788,539
WATER - 0.1%
Azurix Corp. 1,688,700 33,774
TOTAL UTILITIES 5,375,677
TOTAL COMMON STOCKS 39,398,962
(Cost $28,216,643)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
U.S. TREASURY OBLIGATIONS -
1.8%
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
U.S. Treasury Bonds:
6.125% 11/15/27 Aaa $ 101,000 $ 100,321
6.375% 8/15/27 Aaa 319,000 326,876
6.5% 11/15/26 Aaa 31,000 32,206
6.75% 8/15/26 Aaa 56,600 60,597
6.875% 8/15/25 Aaa 239,500 259,632
7.625% 2/15/25 Aaa 19,610 23,131
TOTAL U.S. TREASURY OBLIGATIONS 802,763
(Cost $814,348)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CASH EQUIVALENTS - 8.1%
MATURITY AMOUNT (000S)
Investments in repurchase
agreements (U.S. Treasury
obligations), in a joint
trading account at:
1.5%, dated 6/30/99 due 7/1/99 $ 42,291 42,289
4.84%, dated 6/30/99 due 1,047,801 1,047,660
7/1/99
SHARES
Taxable Central Cash Fund (b) 2,433,326,876 2,433,327
TOTAL CASH EQUIVALENTS 3,523,276
(Cost $3,523,276)
TOTAL INVESTMENT IN $ 43,725,001
SECURITIES - 100%
(Cost $32,554,267)
</TABLE>
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.84%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Affiliated company
(d) Restricted securities - Investment in securities not registered
under the Securities Act of 1933.
Additional information on each holding is as follows:
SECURITY ACQUISITION DATE ACQUISITION COST (000S)
Grand Palais Management 7/24/96 $ 0
Co. LP
INCOME TAX INFORMATION
At June 30, 1999, the aggregate cost of investment securities for
income tax purposes was $32,869,078,000. Net unrealized appreciation
aggregated $10,855,923,000, of which $11,383,757,000 related to
appreciated investment securities and $527,834,000 related to
depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT
PER-SHARE AMOUNTS) JUNE 30, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 43,725,001
value (including repurchase
agreements of $1,089,949)
(cost $32,554,267) - See
accompanying schedule
Receivable for investments 785,561
sold
Receivable for fund shares 33,684
sold
Dividends receivable 20,203
Interest receivable 26,215
Other receivables 3,729
TOTAL ASSETS 44,594,393
LIABILITIES
Payable to custodian bank $ 42
Payable for investments 681,294
purchased
Payable for fund shares 256,374
redeemed
Accrued management fee 15,358
Other payables and accrued 5,993
expenses
Collateral on securities 253,481
loaned, at value
TOTAL LIABILITIES 1,212,542
NET ASSETS $ 43,381,851
Net Assets consist of:
Paid in capital $ 26,410,275
Undistributed net investment 86,825
income
Accumulated undistributed net 5,714,185
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 11,170,566
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 690,352 $ 43,381,851
shares outstanding
NET ASSET VALUE and $62.84
redemption price per share
($43,381,851 (divided by)
690,352 shares)
Maximum offering price per $64.78
share (100/97.00 of $62.84)
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS SIX
MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
INVESTMENT INCOME $ 112,813
Dividends (including $292
received from affiliated
issuers)
Interest (including income on 99,950
securities loaned of $3,120)
TOTAL INCOME 212,763
EXPENSES
Management fee Basic fee $ 119,907
Performance adjustment (27,162)
Transfer agent fees 38,747
Accounting and security 730
lending fees
Non-interested trustees' 126
compensation
Custodian fees and expenses 648
Registration fees 665
Audit 96
Legal 30
Interest 5
Total expenses before 133,792
reductions
Expense reductions (7,685) 126,107
NET INVESTMENT INCOME 86,656
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 6,136,838
(including realized gain of
$15,666 on sales of
investments in affiliated
issuers)
Foreign currency transactions (278) 6,136,560
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (1,705,111)
Assets and liabilities in (338) (1,705,449)
foreign currencies
NET GAIN (LOSS) 4,431,111
NET INCREASE (DECREASE) IN $ 4,517,767
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, 1998
1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 86,656 $ 232,829
income
Net realized gain (loss) 6,136,560 3,185,752
Change in net unrealized (1,705,449) 5,951,832
appreciation (depreciation)
NET INCREASE (DECREASE) IN 4,517,767 9,370,413
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders - (190,451)
From net investment income
From net realized gain (354,637) (2,677,837)
TOTAL DISTRIBUTIONS (354,637) (2,868,288)
Share transactions Net 4,110,021 6,953,917
proceeds from sales of shares
Reinvestment of distributions 349,090 2,812,601
Cost of shares redeemed (3,879,271) (8,368,858)
NET INCREASE (DECREASE) IN 579,840 1,397,660
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) 4,742,970 7,899,785
IN NET ASSETS
NET ASSETS
Beginning of period 38,638,881 30,739,096
End of period (including $ 43,381,851 $ 38,638,881
undistributed net investment
income of $86,825 and
$35,367, respectively)
OTHER INFORMATION
Shares
Sold 69,048 134,565
Issued in reinvestment of 6,073 49,673
distributions
Redeemed (64,945) (163,300)
Net increase (decrease) 10,176 20,938
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED JUNE 30, 1999 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 56.81 $ 46.63 $ 42.15 $ 38.02 $ 30.28 $ 30.84
period
Income from Investment
Operations
Net investment income .13 D .36 D .42 D .46 .03 .06
Net realized and unrealized 6.42 14.34 8.97 7.50 10.93 (.40)
gain (loss)
Total from investment 6.55 14.70 9.39 7.96 10.96 (.34)
operations
Less Distributions
From net investment income - (.30) (.35) (.38) (.09) -
From net realized gain (.52) (4.22) (4.56) (3.45) (3.13) (.22)
Total distributions (.52) (4.52) (4.91) (3.83) (3.22) (.22)
Net asset value, end of $ 62.84 $ 56.81 $ 46.63 $ 42.15 $ 38.02 $ 30.28
period
TOTAL RETURN B, C 11.62% 31.57% 23.00% 21.94% 36.28% (1.12)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 43,382 $ 38,639 $ 30,739 $ 23,829 $ 14,858 $ 8,694
(in millions)
Ratio of expenses to average .66% A .65% .70% .83% .98% 1.03%
net assets
Ratio of expenses to average .62% A, E .61% E .67% E .79% E .96% E 1.00% E
net assets after expense
reductions
Ratio of net investment .43% A .70% .91% 1.28% .44% .59%
income to average net assets
Portfolio turnover rate 220% A 197% 144% 159% 223% 235%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
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.
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1999 (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. Effective at the close of
business on April 3, 1998, the fund was closed to new accounts. 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
and settlement date 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 the fair market value of the
securities received. Interest income
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
is accrued as earned. Investment income is recorded net of foreign
taxes withheld where recovery of such taxes is uncertain.
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. Deferred amounts are treated as though equivalent dollar
amounts had been invested in shares of the fund or are invested in a
cross-section of other Fidelity funds. Deferred amounts remain in the
fund until distributed in accordance with the Plan.
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, futures transactions, foreign
currency transactions, passive foreign investment companies (PFIC),
market discount, partnerships, non-taxable dividends and losses
deferred due to wash sales. 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.
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.
2. OPERATING POLICIES - CONTINUED
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., 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 0.0% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $40,894,331,000 and $41,370,471,000, respectively, of which
U.S. government and government agency obligations aggregated
$688,365,000 and $749,077,000, 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
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 $2,509,000 on sales of shares of the fund of which
$2,494,000 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 .19% 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 $4,184,000 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.
The market value of the loaned securities is determined at the close
of business of the fund and any additional required collateral is
delivered to the fund on the next business day. At period end, the
value of the securities loaned amounted to $249,296,000. The fund
received cash collateral of $253,481,000.
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. The interest
rate on the borrowings is the bank's base rate, as revised from time
to time. The average daily loan balances during the period for which
loans were outstanding amounted to $7,374,000. The weighted average
interest rate was 5.1%.
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 $6,888,000 under this arrangement.
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 $10,000 and $787,000, 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:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF TRANSACTIONS WITH
AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS
AFFILIATE PURCHASE COST SALES COST DIVIDEND INCOME VALUE
Action Performance Companies, $ 21,321 $ $3,824 $ - $ 48,131
Inc.
Bombay Co., Inc. (The) 1,621 - - 17,032
Ceridian Corp. 36,464 19,721 - 256,205
Charming Shoppes, Inc. - - - 64,719
Clarify, Inc. 5,040 3,698 - 52,454
Dover Downs Entertainment, 1,271 - 30 12,155
Inc.
Earthgrains Co. 31,413 - 228 90,292
Fleming Companies, Inc. 976 - - 24,609
InterTAN, Inc. 793 1,007 - -
Lamar Advertising Co. Class A 21,519 876 - 124,323
Midas, Inc. 21,621 - 34 47,744
Mutual Risk Management Ltd. 4,860 - - 77,450
Outdoor Systems, Inc. 4,302 - - 343,947
Polycom, Inc. 29,306 21,859 - 85,738
Premier Parks, Inc. 22 - - 202,636
PulsePoint Communications 172 - - 1,801
Quiksilver, Inc. 13,879 12,600 - 30,924
Rayovac Corp. 6,751 6,906 - 58,463
SPX Corp. - - - 261,518
SBS Broadcasting SA 9,596 - - 42,435
Sunglass Hut International, 12,109 1,023 - 59,214
Inc.
Swift Transportation Co., Inc. 24,140 - - 104,364
Telespectrum Worldwide, Inc. 2,804 3,801 - 10,029
Unisys Corp. 17,078 - - 545,348
Vans, Inc. - 1,378 - -
Vitesse Semiconductor Corp. 90,448 70,833 - 303,961
Waters Corp. 62,464 36,579 - 229,213
TOTALS $ 419,970 $ 184,105 $ 292 $ 3,094,705
</TABLE>
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 Automated Service Telephone 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)FIDELITY AUTOMATED
SERVICE TELEPHONE
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 EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)
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.
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 P. Johnson, Vice President
Will Danoff, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy 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
CON-SANN-0899 82009
1.705711.101
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
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