FIDELITY
CONTRAFUNDSM
ANNUAL REPORT
DECEMBER 31, 1998
(fidelity_logo_graphic)(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 27 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 31 Footnotes to the financial
statements.
REPORT OF INDEPENDENT 37 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 38
OF SPECIAL NOTE 39
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.
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.
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:
Resurgent stock market performance in the fourth quarter helped the
Dow Jones Industrial Average post a double-digit return for the fourth
year in a row - a first in the Dow's 100-plus year history. Three
interest-rate cuts made late in the year by the Federal Reserve Board
helped spark the equity rally. Meanwhile, while the majority of bonds
posted positive performance, most bond returns for 1998 trailed their
gains from 1997.
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).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY CONTRAFUND 31.57% 165.90% 762.49%
FIDELITY CONTRAFUND (INCL. 27.62% 157.92% 736.62%
3.00% SALES CHARGE)
S&P 500 (registered trademark) 28.58% 193.90% 479.73%
Growth Funds Average 22.86% 138.97% 388.00%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare the fund's returns to the performance of the
Standard & Poor's 500 Index - a 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 one year average represents a peer
group of 980 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 DECEMBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY CONTRAFUND 31.57% 21.60% 24.04%
FIDELITY CONTRAFUND (INCL. 27.62% 20.86% 23.67%
3.00% SALES CHARGE)
S&P 500 28.58% 24.06% 19.21%
Growth Funds Average 22.86% 18.63% 16.72%
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
1988/12/31 9700.00 10000.00
1989/01/31 10344.11 10732.00
1989/02/28 10282.77 10464.77
1989/03/31 10827.19 10708.60
1989/04/30 11524.98 11264.38
1989/05/31 12123.08 11720.59
1989/06/30 12046.40 11653.78
1989/07/31 13150.59 12706.12
1989/08/31 13526.32 12955.15
1989/09/30 13787.04 12902.04
1989/10/31 13372.96 12602.71
1989/11/30 13679.68 12859.81
1989/12/31 13885.73 13168.44
1990/01/31 13149.24 12284.84
1990/02/28 13422.32 12443.31
1990/03/31 13711.95 12773.06
1990/04/30 13571.27 12453.74
1990/05/31 14853.92 13667.97
1990/06/30 15044.25 13575.03
1990/07/31 14762.90 13531.59
1990/08/31 13612.65 12308.34
1990/09/30 13041.66 11708.92
1990/10/31 13107.86 11658.57
1990/11/30 13885.73 12411.72
1990/12/31 14432.28 12758.00
1991/01/31 15838.08 13314.25
1991/02/28 17035.91 14266.22
1991/03/31 18034.11 14611.46
1991/04/30 18133.93 14646.53
1991/05/31 19290.18 15279.26
1991/06/30 18208.80 14579.47
1991/07/31 19498.13 15258.87
1991/08/31 20479.70 15620.51
1991/09/30 20537.92 15359.65
1991/10/31 21128.52 15565.47
1991/11/30 20013.87 14938.18
1991/12/31 22358.27 16647.11
1992/01/31 22995.83 16337.47
1992/02/29 23742.08 16549.86
1992/03/31 23097.74 16227.13
1992/04/30 23348.31 16704.21
1992/05/31 23598.89 16786.06
1992/06/30 23026.14 16535.95
1992/07/31 23607.84 17212.27
1992/08/31 23169.33 16859.42
1992/09/30 23563.09 17058.36
1992/10/31 24091.09 17118.06
1992/11/30 25254.48 17701.79
1992/12/31 25911.88 17919.52
1993/01/31 26732.53 18070.05
1993/02/28 26908.89 18315.80
1993/03/31 28194.80 18702.26
1993/04/30 28385.30 18249.67
1993/05/31 29509.28 18738.76
1993/06/30 29518.81 18793.10
1993/07/31 29842.67 18717.93
1993/08/31 31290.51 19427.34
1993/09/30 31357.19 19277.75
1993/10/31 31633.42 19676.80
1993/11/30 30442.76 19489.87
1993/12/31 31463.81 19725.69
1994/01/31 32453.43 20396.37
1994/02/28 32220.58 19843.63
1994/03/31 30946.55 18978.44
1994/04/30 31326.70 19221.37
1994/05/31 31152.04 19536.60
1994/06/30 29949.93 19057.95
1994/07/31 30556.12 19683.05
1994/08/31 31830.15 20490.06
1994/09/30 31408.90 19988.05
1994/10/31 32302.77 20437.78
1994/11/30 30833.53 19693.44
1994/12/31 31110.94 19985.49
1995/01/31 30607.49 20503.72
1995/02/28 31840.43 21302.75
1995/03/31 33001.43 21931.39
1995/04/30 34491.23 22577.27
1995/05/31 35323.45 23479.68
1995/06/30 37563.28 24025.12
1995/07/31 40440.11 24821.79
1995/08/31 40974.38 24884.09
1995/09/30 41724.42 25934.20
1995/10/31 40964.11 25841.62
1995/11/30 42042.92 26976.06
1995/12/31 42398.02 27495.62
1996/01/31 43357.05 28431.57
1996/02/29 43621.37 28695.13
1996/03/31 44832.10 28971.47
1996/04/30 46219.14 29398.51
1996/05/31 46607.04 30156.69
1996/06/30 46254.41 30271.59
1996/07/31 44091.56 28934.19
1996/08/31 45772.47 29544.41
1996/09/30 47653.20 31207.17
1996/10/31 49181.30 32067.87
1996/11/30 52037.67 34491.88
1996/12/31 51698.83 33808.59
1997/01/31 53710.37 35920.96
1997/02/28 52299.82 36202.58
1997/03/31 50940.58 34715.01
1997/04/30 52087.83 36787.50
1997/05/31 55217.84 39027.12
1997/06/30 57499.88 40775.54
1997/07/31 62375.71 44020.05
1997/08/31 60330.60 41554.04
1997/09/30 64358.46 43829.96
1997/10/31 62400.65 42366.04
1997/11/30 62300.89 44327.16
1997/12/31 63588.80 45088.26
1998/01/31 63411.52 45586.93
1998/02/28 67929.12 48874.66
1998/03/31 71397.96 51377.53
1998/04/30 72203.71 51894.39
1998/05/31 70674.15 51002.33
1998/06/30 74593.66 53074.04
1998/07/31 74825.83 52508.80
1998/08/31 63750.13 44917.08
1998/09/30 67615.02 47794.47
1998/10/31 69868.39 51682.07
1998/11/30 74539.03 54814.52
1998/12/31 83661.80 57972.94
IMATRL PRASUN SHR__CHT 19981231 19990121 145411 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Contrafund on December 31, 1988, and the current
3.00% sales charge was paid. As the chart shows, by December 31, 1998,
the value of the investment would have grown to $83,662 - a 736.62%
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 $57,973 - a 479.73% 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
For the first time in its history, the
Dow Jones Industrial Average -
an index of 30 blue-chip stocks -
posted double-digit percentage
gains in four consecutive years,
thanks to an 18.07% increase for
the 12-month period ending
December 31, 1998. In that same
time frame, the Standard & Poor's
500 Index returned 28.58%. The
period began with the U.S.
enjoying low inflation, stable
interest rates and an
unemployment rate at its lowest
peacetime level in 41 years. But
while the equity market continued
its bull-like charge, mounting
doubts lingered in many
investors' minds about the impact
of Asia's economic woes. Those
fears soon became reality. Further
prompted by Russia's currency
devaluation and subsequent loan
defaults, the Dow suffered a
512.61 point free-fall on August
31, a loss that erased all previous
gains for the year to that point.
Faced with global economic
chaos, investors began fleeing the
equity markets in droves,
searching for safer, less volatile
havens, particularly U.S.
Treasuries. To address the lack of
confidence in domestic and global
equity markets, the U.S. Federal
Reserve Board stepped in with
three separate 0.25% interest-rate
cuts in the late fall. Those cuts
helped boost confidence in the U.S.
economy, and stocks began to
quickly ascend to their former lofty
levels, culminating in a new Dow
record of 9374.27 on November
23, 1998.
(photograph of Will Danoff)
An interview with Will Danoff,
Portfolio Manager of
Fidelity Contrafund
Q. HOW DID THE FUND PERFORM, WILL?
A. Very well. For the 12 months that ended December 31, 1998, the fund
returned 31.57%. This topped both the Standard & Poor's 500 Index -
which returned 28.58% during the same period - and the growth funds
average, which returned 22.86% according to Lipper Inc.
Q. WHAT MAIN FACTORS HELPED THE FUND OUTPERFORM ITS BENCHMARKS DURING
THE PERIOD?
A. The fund's considerable holdings in large-capitalization growth
stocks fueled performance. The market environment over the past year
has been very volatile and, in times of uncertainty, investors tend to
buy stocks of larger, more well-known companies. The market typically
assumes that a larger company has more resources with which to weather
any type of downturn. In the past year's low-inflation environment, in
fact, many companies were unable to grow their profits. Large-cap
growth stocks, however, proved to be the exception and their earnings
growth accounted for much of the market's gain in 1998. Thus, the
fund's stakes in such large-cap growth companies as Microsoft and Tyco
International benefited appropriately as each was able to grow its
profits considerably. Other large-cap growth investments that
performed well included drugstore chain CVS, which benefited from its
acquisition of Revco, and apparel chain Gap, Inc., which was boosted
by the success of its Old Navy stores. Large-cap cable TV-related
investments such as Viacom - which operates movie rental chain
Blockbuster and several popular cable channels- and Comcast also
performed well.
Q. ASIDE FROM YOUR FOCUS ON LARGE-CAP STOCKS DURING THIS VOLATILITY,
WHAT OTHER STRATEGIES DID YOU PURSUE?
A. During the first nine months of the period, when the economic
difficulties in Southeast Asia dominated investors' minds, I
positioned Contrafund defensively. I tried to emphasize companies with
minimal emerging-markets exposure and those that could benefit from a
good domestic economy. This led me to significant investments in areas
such as retail and cable TV. As the market faltered in late August and
early September, this strategy proved wise. Then the tables turned. In
late September, the Federal Reserve Board cut interest rates, and two
more subsequent cuts restored investors' optimism. Large-cap stocks
led the market's surge and the S&P 500 gained over 20% in the fourth
quarter of 1998 alone. Technology stocks - an area in which the fund
was amply represented - performed exceptionally well down the stretch.
Q. STICKING WITH TECHNOLOGY FOR A MOMENT, TECH STOCKS ACCOUNTED FOR
AROUND 25% OF THE FUND'S TOTAL INVESTMENTS AT THE CLOSE OF THE PERIOD.
WHY DID THESE STOCKS APPEAL TO YOU?
A. Regardless of the external business environment, the technology
sector typically contains companies that are growing their earnings
rapidly. The outlook for tech stocks turned more positive during the
last few months of the year as the Internet emerged as a huge trend
for both businesses and consumers. The Internet explosion has
stimulated sales of personal computers, computer hardware, and
networking equipment and key components such as semiconductors. In
addition, the Internet has triggered demand for software that enables
Internet commerce and information-sharing, and has fostered many new
companies that specialize in electronic commerce, access and
communications. As a result, many of these companies experienced
stronger-than-expected growth in 1998. Technology positions that
helped the fund's performance during the period included America
Online, Intel and Texas Instruments.
Q. YOU INCREASED THE FUND'S UTILITIES-RELATED HOLDINGS DURING THE
PERIOD, FROM AROUND 5% A YEAR AGO TO CLOSE TO 14% AT YEAR-END. WHAT
WAS THE APPEAL?
A. Telephone companies made up most of the increase in this area, as
many were able to generate good earnings growth from merger-related
cost savings and from new services such as Internet access and
wireless communications. Telephone companies also tend to be a safe
haven from turbulent economic conditions. Telephone-related stocks
that helped the fund's performance included AT&T, which was undergoing
a major revitalization led by new management, AirTouch Communications
- - a global leader in wireless communications - and MCI WorldCom, one
of the faster-growing telephone companies during the period.
Q. DID YOU FIND OPPORTUNITIES IN ANY COMPANIES OR SECTORS THAT YOU
FELT WERE OVERLOOKED OR UNDERVALUED BY THE MARKET DURING THE PERIOD?
A. One relatively overlooked area in the market was mid-sized growth
companies. Through the second half of 1998, stocks of larger,
well-known companies led the market. Names such as IBM, GE and Lucent
Technologies, for example, reached new price highs while the broader
market of small- and medium-sized companies languished. In many cases,
the share prices of these bigger stocks appreciated much faster than
their earnings grew. To illustrate the gap between larger and smaller
stocks during the period, the NASDAQ 100 Index - made up of the
largest 100 over-the-counter companies - rose 85% in 1998. In
contrast, the Russell 2000 Index - which measures the performance of
smaller stocks - actually fell 3%. I tried to take advantage of this
divergence and what I felt was the market's overly pessimistic view of
mid-cap stocks by buying or adding to positions in companies in this
area. The fund increased its investments in companies such as
information management company Unisys; Outdoor Systems, which
specializes in outdoor advertising; and Vitesse Semiconductor, which
is a leader in high-speed semiconductors used for telecommunications.
These mid-sized companies were growing faster than their larger
brethren, were not as widely held by investors and had
price-to-earnings ratios that were lower than their earnings growth
rates. In addition, I felt these companies had excellent long-term
growth potential because of their smaller size and outstanding
management.
Q. WHICH OTHER STOCKS PERFORMED WELL? WHICH PROVED DISAPPOINTING?
A. Time Warner - the fund's second-largest individual holding at the
end of the period - continued to reap the benefits of its strong media
properties, the successful testing of its cable systems for new
businesses such as Internet access and telephone service, and
management's renewed focus on improving returns. Other good performers
included pharmaceutical company Warner-Lambert and data storage
company EMC. Disappointments included Gillette - which suffered from
sales declines in several emerging markets despite the introduction of
a new razor - and France-based telecommunications company Alcatel.
Q. WHAT'S YOUR OUTLOOK?
A. The U.S. economy appears to be quite stable, but we'll need to
watch global developments carefully. The embattled Japanese economy is
still weak and many American companies have adjusted their
expectations downward to reflect problems there. Europe - which was
fairly strong in 1998 - may weaken in 1999 and the emerging markets,
while only a small part of the world economy, remain depressed. As
such, I'll try to emphasize companies that I feel are not fully
appreciated by the market, as well as those that have good growth
prospects and limited exposure to the weakening world markets.
Examples of these companies could include telecommunications and media
companies, advertising agencies, retailers, business service companies
and well-positioned technology companies. I also will look within the
small- and medium-cap stock universes for overlooked growth companies.
In particular, I'll keep an eye on companies that - either through
internal cost-cutting programs or a new product launch - are
experiencing improving fundamentals.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
WILL DANOFF ON THE RECENT
CORRELATION - OR LACK THEREOF -
BETWEEN MARKET GAINS AND
EARNINGS:
"While the S&P 500 Index - a
popular gauge of stock market
performance - rose over 28%
during the period, one underlying
concern I have involves the
correlation between the index's
gains and the overall earnings of the
companies that make up the
index.
"While the index itself was gaining
over 28%, earnings for the underlying
500 companies in the index were
relatively flat. For the past three
years, in fact, the S&P 500 has
doubled in appreciation while
reported earnings have risen only
13% annually. As a result, the
expansion of the price-to-earnings
ratio - which measures how much
an investor pays for a company's
earnings power - accounted for
much of the index's gain.
"U.S. corporate earnings are
suffering despite a robust domestic
economy, thanks in large part to
global deflation, the continuing
recession in Japan and turmoil in
the Asian and some South
American markets. For a
bottom-up, fundamental investor
who believes strongly that stock
prices follow earnings over time,
this divergence we've seen between
prices and earnings cannot
continue and is cause for
concern."
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 December
31, 1998, more than $38.6
billion
MANAGER: Will Danoff, since
1990; manager, VIP II:
Contrafund, since 1995;
Fidelity Select Retailing
Portfolio, 1986-1989;
joined Fidelity in 1986
(checkmark)
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCKS AS OF DECEMBER
31, 1998
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE STOCKS 6 MONTHS AGO
MCI WorldCom, Inc. 5.4 4.1
Time Warner, Inc. 4.2 2.9
Microsoft Corp. 3.1 1.9
Tyco International Ltd. 3.1 2.6
CVS Corp. 2.7 1.7
America Online, Inc. 2.0 1.5
McDonald's Corp. 1.8 1.0
Intel Corp. 1.8 0.1
AT&T Corp. 1.6 1.2
Lucent Technologies, Inc. 1.5 2.2
TOP FIVE MARKET SECTORS AS OF
DECEMBER 31, 1998
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE MARKET SECTORS 6
MONTHS AGO
TECHNOLOGY 24.6 18.0
UTILITIES 14.0 9.5
MEDIA & LEISURE 13.6 10.5
RETAIL & WHOLESALE 9.8 10.3
HEALTH 7.8 6.9
</TABLE>
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
AS OF DECEMBER 31, 1998 * AS OF JUNE 30, 1998 **
Row: 1, Col: 1, Value: 7.0
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 2.3
Row: 1, Col: 4, Value: 90.7
Stocks 90.5%
Bonds 2.4%
Convertible
securities 0.0%
Short-term
investments 7.1%
*FOREIGN
INVESTMENTS 2.4%
Stocks 86.0%
Bonds 4.8%
Convertible
securities 0.1%
Short-term
investments 9.1%
**FOREIGN
INVESTMENTS 6.9%
Row: 1, Col: 1, Value: 9.1
Row: 1, Col: 2, Value: 1.0
Row: 1, Col: 3, Value: 4.8
Row: 1, Col: 4, Value: 87.0
INVESTMENTS DECEMBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 90.5%
SHARES VALUE (NOTE 1) (000S)
AEROSPACE & DEFENSE - 0.1%
AEROSPACE & DEFENSE - 0.1%
Alliant Techsystems, Inc. (a) 441,400 $ 36,388
Orbital Sciences Corp. (a) 151,200 6,691
43,079
DEFENSE ELECTRONICS - 0.0%
REMEC, Inc. (a) 495,550 8,920
TOTAL AEROSPACE & DEFENSE 51,999
BASIC INDUSTRIES - 0.4%
CHEMICALS & PLASTICS - 0.4%
Crompton & Knowles Corp. 1,985,317 41,071
Great Lakes Chemical Corp. 490,700 19,628
MacDermid, Inc. 487,600 19,077
Sealed Air Corp. (a) 1,171,424 59,816
139,592
METALS & MINING - 0.0%
Martin Marietta Materials, 312,300 19,421
Inc.
TOTAL BASIC INDUSTRIES 159,013
CONSTRUCTION & REAL ESTATE -
0.2%
CONSTRUCTION - 0.1%
Centex Corp. 88,000 3,966
Jacobs Engineering Group, 504,300 20,550
Inc. (a)
Lennar Corp. 397,900 10,047
34,563
ENGINEERING - 0.0%
URS Corp. (a) 169,500 3,962
REAL ESTATE - 0.0%
Grand Palais Management Co. 398,400 -
LP (a)(e)
REAL ESTATE INVESTMENT TRUSTS
- - 0.1%
Equity Office Properties Trust 890,000 21,360
TOTAL CONSTRUCTION & REAL 59,885
ESTATE
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
DURABLES - 1.5%
AUTOS, TIRES, & ACCESSORIES -
1.2%
Arvin Industries, Inc. 680,200 $ 28,356
Copart, Inc. (a) 18,400 596
Danaher Corp. 3,002,800 163,090
LucasVarity PLC sponsored ADR 890,100 29,818
SPX Corp. (c) 3,131,947 209,840
TRW, Inc. 196,000 11,013
442,713
CONSUMER ELECTRONICS - 0.1%
Maytag Corp. 408,700 25,442
Newell Co. 553,600 22,836
48,278
HOME FURNISHINGS - 0.0%
Bombay Co., Inc. (The) (a) 961,300 5,347
Miller (Herman), Inc. 144,100 3,873
9,220
TEXTILES & APPAREL - 0.2%
Quiksilver, Inc. (a) 84,700 2,541
Shaw Industries, Inc. 1,278,500 31,004
Stride Rite Corp. 917,600 8,029
Vans, Inc. (a)(c) 768,000 5,280
Warnaco Group, Inc. Class A 1,054,000 26,614
73,468
TOTAL DURABLES 573,679
ENERGY - 1.8%
ENERGY SERVICES - 0.0%
Halliburton Co. 437,000 12,946
OIL & GAS - 1.8%
Amoco Corp. 1,576,700 93,025
British Petroleum PLC ADR 2,067,286 196,392
Chevron Corp. 892,400 74,013
Conoco, Inc. Class A (a) 420,600 8,780
Exxon Corp. 2,410,700 176,282
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Mobil Corp. 1,326,100 $ 115,536
Tosco Corp. 1,043,400 26,998
691,026
TOTAL ENERGY 703,972
FINANCE - 7.6%
BANKS - 2.0%
Allied Irish Banks PLC 553,900 9,918
AmSouth Bancorp. 505,000 23,041
Bank of Ireland, Inc. 386,600 8,423
Bank of New York Co., Inc. 3,529,800 142,074
Bank One Corp. 2,507,600 128,044
BB&T Corp. 83,400 3,362
Chase Manhattan Corp. 257,000 17,492
Comerica, Inc. 94,200 6,423
Fifth Third Bancorp 246,000 17,543
Firstar Corp. 1,541,440 143,739
M&T Bank Corp. 300 156
North Fork Bancorp, Inc. 1,307,489 31,298
U.S. Bancorp 5,317,048 188,755
Wells Fargo & Co. 1,141,600 45,593
Westamerica Bancorp. 89,200 3,278
Zions Bancorp 138,900 8,664
777,803
CREDIT & OTHER FINANCE - 2.5%
American Express Co. 1,272,000 130,062
Associates First Capital 12,683,898 537,480
Corp. Class A
Fleet Financial Group, Inc. 85,700 3,830
Fortis Amev NV 430,300 35,618
Greenpoint Financial Corp. 2,254,300 79,182
Household International, Inc. 875,264 34,682
MBNA Corp. 1,602,700 39,967
Providian Financial Corp. 1,631,250 122,344
983,165
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
FINANCE - CONTINUED
FEDERAL SPONSORED CREDIT - 2.2%
Fannie Mae 7,471,700 $ 552,906
Freddie Mac 5,043,400 324,984
877,890
INSURANCE - 0.7%
ACE Ltd. 245,800 8,465
AFLAC, Inc. 2,261,300 99,497
Allstate Corp. 512,600 19,799
American International Group, 272,750 26,354
Inc.
Medical Assurance, Inc. 98,560 3,259
Mutual Risk Management Ltd. 1,534,400 60,033
Progressive Corp. 342,300 57,977
275,384
SAVINGS & LOANS - 0.2%
Astoria Financial Corp. 475,100 21,736
Washington Mutual, Inc. 1,142,875 43,644
65,380
TOTAL FINANCE 2,979,622
HEALTH - 7.8%
DRUGS & PHARMACEUTICALS - 5.0%
Allergan, Inc. 1,254,900 81,255
Alpharma, Inc. Class A 368,400 13,009
Amgen, Inc. (a) 860,300 89,955
Andrx Corp. (a) 8,600 441
Biogen, Inc. (a) 1,150,800 95,516
Chiron Corp. (a) 1,287,900 33,727
Forest Laboratories, Inc. (a) 1,692,100 89,999
Genentech, Inc. (special) (a) 733,800 58,475
Glaxo Wellcome PLC sponsored 429,400 29,843
ADR
ICOS Corp. (a) 349,100 10,386
Immunex Corp. (a) 45,000 5,662
Lilly (Eli) & Co. 3,506,700 311,658
Merck & Co., Inc. 901,700 133,170
Pfizer, Inc. 1,711,100 214,636
Schering-Plough Corp. 6,503,700 359,329
Sepracor, Inc. (a) 328,800 28,976
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
HEALTH - CONTINUED
DRUGS & PHARMACEUTICALS -
CONTINUED
Warner-Lambert Co. 5,460,800 $ 410,584
XOMA Corp. (a)(d) 1,098 3
1,966,624
MEDICAL EQUIPMENT & SUPPLIES
- - 2.4%
Allegiance Corp. 840,900 39,207
Arterial Vascular 85,800 4,505
Engineering, Inc. (a)
Bard (C.R.), Inc. 1,946,100 96,332
Bausch & Lomb, Inc. 293,000 17,580
Baxter International, Inc. 147,500 9,486
Becton, Dickinson & Co. 3,660,100 156,241
Biomet, Inc. 577,200 23,232
Cardinal Health, Inc. 4,421,875 335,510
Guidant Corp. 881,100 97,141
Haemonetics Corp. (a) 725,700 16,510
Medtronic, Inc. 343,500 25,505
Sofamor/Danek Group, Inc. (a) 886,500 107,931
Steris Corp. (a) 92,800 2,639
Techne Corp. (a) 42,800 904
U.S. Surgical Corp. rights 171 -
6/30/00 (a)
932,723
MEDICAL FACILITIES MANAGEMENT
- - 0.4%
Hanger Orthopedic Group, Inc. 137,300 3,089
(a)
Health Management Associates, 6,442,087 139,310
Inc. Class A (a)
142,399
TOTAL HEALTH 3,041,746
INDUSTRIAL MACHINERY &
EQUIPMENT - 4.7%
ELECTRICAL EQUIPMENT - 1.0%
American Power Conversion 2,822,400 136,710
Corp. (a)
Anixter International, Inc. 19,900 404
(a)
General Instrument Corp. (a) 718,700 24,391
Loral Space & Communications 7,065,667 125,857
Ltd. (a)
Philips Electronics NV (NY 897,700 60,763
shares)
Rayovac Corp. (a)(c) 2,596,900 69,305
417,430
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
INDUSTRIAL MACHINERY &
EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY &
EQUIPMENT - 3.4%
Kaydon Corp. 239,600 $ 9,599
Mannesmann AG 938,700 108,840
Mettler-Toledo International, 99,600 2,795
Inc. (a)
Tyco International Ltd. 15,830,000 1,194,176
1,315,410
POLLUTION CONTROL - 0.3%
Republic Services, Inc. Class 2,916,800 53,779
A (a)
Waste Management, Inc. 1,387,501 64,692
118,471
TOTAL INDUSTRIAL MACHINERY & 1,851,311
EQUIPMENT
MEDIA & LEISURE - 13.6%
BROADCASTING - 8.6%
Cablevision Systems Corp. 445,200 22,343
Class A (a)
CBS Corp. 10,615,618 347,661
Chancellor Media Corp. (a) 442,000 21,161
Clear Channel Communications, 1,179,500 64,283
Inc. (a)
Comcast Corp.:
Class A (special) 4,559,400 267,580
Class A 3,262,600 187,396
Cox Communications, Inc. 1,216,400 84,084
Class A (a)
MediaOne Group, Inc. 2,693,900 126,613
Metromedia Fiber Network, 944,800 31,651
Inc. Class A (a)
SBS Broadcasting SA (a)(c) 985,700 26,614
TCA Cable TV, Inc. 971,200 34,660
Tele-Communications, Inc. 8,974,230 496,387
(TCI Group) Series A (a)
Time Warner, Inc. 26,438,195 1,640,820
USA Networks, Inc. (a) 188,500 6,244
3,357,497
ENTERTAINMENT - 2.0%
Premier Parks, Inc. (a)(c) 5,513,200 166,774
Tele-Communications, Inc.:
(Liberty Media Group) Series 629,000 28,973
A (a)
(TCI Ventures Group) Series A 3,920,340 92,373
(a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
MEDIA & LEISURE - CONTINUED
ENTERTAINMENT - CONTINUED
Viacom, Inc.:
Class A (a) 2,098,700 $ 154,386
Class B (non-vtg.) (a) 4,645,300 343,752
786,258
LEISURE DURABLES & TOYS - 0.2%
Champion Enterprises, Inc. (a) 283,500 7,761
Harley-Davidson, Inc. 532,400 25,222
Mattel, Inc. 919,100 20,967
53,950
PUBLISHING - 0.2%
Harte Hanks Communications, 790,900 22,541
Inc.
McGraw-Hill Companies, Inc. 202,700 20,650
Reader's Digest Association, 1,830,900 46,116
Inc. Class A (non-vtg.)
89,307
RESTAURANTS - 2.6%
Brinker International, Inc. 1,436,100 41,467
(a)
Darden Restaurants, Inc. 3,369,400 60,649
McDonald's Corp. 9,091,800 696,659
Papa John's International, 1,295,500 57,164
Inc. (a)
Pizzaexpress PLC 1,522,400 20,199
Ruby Tuesday, Inc. 397,600 8,449
Sodexho Marriott Services, 133,100 3,685
Inc. (a)
Starbucks Corp. (a) 589,700 33,097
Tricon Global Restaurants, 1,792,700 89,859
Inc. (a)
1,011,228
TOTAL MEDIA & LEISURE 5,298,240
NONDURABLES - 2.0%
AGRICULTURE - 0.0%
Fresh Del Monte Produce Inc. 311,300 6,751
(a)
BEVERAGES - 0.0%
Coca-Cola Co. (The) 116,400 7,784
FOODS - 1.1%
Earthgrains Co. 2,097,900 64,904
Flowers Industries, Inc. 1,784,700 42,721
Heinz (H.J.) Co. 1,552,300 87,899
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
NONDURABLES - CONTINUED
FOODS - CONTINUED
Keebler Foods Co. (a) 2,729,700 $ 102,705
Quaker Oats Co. 1,795,000 106,803
405,032
HOUSEHOLD PRODUCTS - 0.9%
Avon Products, Inc. 259,100 11,465
Clorox Co. 365,200 42,660
Dial Corp. 1,766,900 51,019
First Brands Corp. 908,400 35,825
Gillette Co. 2,977,100 143,831
Rubbermaid, Inc. 2,339,400 73,545
358,345
TOTAL NONDURABLES 777,912
PRECIOUS METALS - 0.0%
Franco Nevada Mining Corp. 460,200 8,825
Ltd.
RETAIL & WHOLESALE - 9.8%
APPAREL STORES - 1.5%
Abercrombie & Fitch Co. Class 1,153,000 81,575
A (a)
AnnTaylor Stores Corp. (a) 693,600 27,354
Charming Shoppes, Inc. (a)(c) 10,620,500 45,801
Gap, Inc. 5,584,000 314,100
TJX Companies, Inc. 3,944,300 114,385
Urban Outfitters, Inc. (a) 113,400 1,914
585,129
DRUG STORES - 3.0%
CVS Corp. 19,414,166 1,067,779
Walgreen Co. 1,939,900 113,605
1,181,384
GENERAL MERCHANDISE STORES -
0.6%
Costco Companies, Inc. (a) 1,346,300 97,186
Kohls Corp. (a) 620,100 38,097
Stein Mart, Inc. (a) 1,117,700 7,789
Wal-Mart Stores, Inc. 1,065,700 86,788
229,860
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - 2.9%
Albertson's, Inc. 1,836,000 $ 116,930
American Stores Co. 85,300 3,151
Fleming Companies, Inc. 1,062,500 11,023
Kroger Co. (a) 2,200,100 133,106
Loblaw Companies Ltd. 362,600 8,861
Meyer (Fred), Inc. (a) 4,149,950 250,034
Richfood Holdings, Inc. Class 1,263,350 26,215
A
Safeway, Inc. (a) 9,265,100 564,592
U.S. Foodservice (a) 440,400 21,580
1,135,492
RETAIL & WHOLESALE,
MISCELLANEOUS - 1.8%
Bed Bath & Beyond, Inc. (a) 647,100 22,082
Circuit City Stores, Inc. - 433,200 21,633
Circuit City Group
Home Depot, Inc. 6,716,300 410,954
InterTAN, Inc. (a)(c) 675,300 3,925
Office Depot, Inc. (a) 2,011,600 74,303
Staples, Inc. (a) 3,450,000 150,722
U.S. Office Products Co. 1,467,094 5,685
689,304
TOTAL RETAIL & WHOLESALE 3,821,169
SERVICES - 1.5%
ADVERTISING - 1.3%
CMGI, Inc. (a) 9,800 1,044
Interpublic Group of 1,489,450 118,784
Companies, Inc.
Lamar Advertising Co. Class A 2,461,000 91,672
(a)(c)
Omnicom Group, Inc. 154,600 8,967
Outdoor Systems, Inc. (a) 6,842,612 205,278
Young & Rubicam, Inc. (a) 2,227,200 72,106
497,851
SERVICES - 0.2%
Abacus Direct Corp. (a) 73,000 3,322
ACNielsen Corp. (a) 912,800 25,787
APAC Teleservices, Inc. (a) 131,100 496
RCM Technologies, Inc. (a) 17,100 453
Robert Half International, 1,325,450 59,231
Inc. (a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
SERVICES - CONTINUED
SERVICES - CONTINUED
Securitas AB Class B 300,400 $ 4,669
Telespectrum Worldwide, Inc. 753,100 7,390
(a)
101,348
TOTAL SERVICES 599,199
TECHNOLOGY - 24.6%
COMMUNICATIONS EQUIPMENT - 4.1%
3Com Corp. (a) 838,300 37,566
ADC Telecommunications, Inc. 900,800 31,303
(a)
Ascend Communications, Inc. 1,634,100 107,442
(a)
Cisco Systems, Inc. (a) 6,357,375 590,044
InterVoice, Inc. (a) 668,800 23,074
Level One Communications, 1,205,300 42,788
Inc. (a)
Lucent Technologies, Inc. 5,421,000 596,310
Newbridge Networks Corp. (a) 85,900 2,615
OY Nokia AB sponsored ADR 1,093,900 131,747
Plantronics, Inc. (a) 306,900 26,393
Tellabs, Inc. (a) 421,500 28,899
1,618,181
COMPUTER SERVICES & SOFTWARE
- - 10.1%
Acxiom Corp. (a) 446,500 13,842
America Online, Inc. 4,821,400 771,424
American Management Systems, 193,600 7,744
Inc. (a)
Aspect Development, Inc. (a) 451,400 20,003
At Home Corp. Series A (a) 64,300 4,774
Automatic Data Processing, 3,044,300 244,115
Inc.
Bisys Group, Inc. (The) (a) 282,800 14,600
BMC Software, Inc. 338,500 15,084
Cadence Design Systems, Inc. 514,900 15,318
(a)
CBT Group PLC sponsored ADR 1,274,500 18,958
(a)
Ceridian Corp. (a) 3,257,300 227,400
Citrix Systems, Inc. (a) 429,200 41,659
Clarify, Inc. (a) 523,300 12,788
Computer Sciences Corp. 257,200 16,573
Compuware Corp. (a) 1,764,400 137,844
Convergys Corp. (a) 181,700 4,066
Dendrite International, Inc. 117,300 2,929
(a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE
- - CONTINUED
DST Systems, Inc. (a) 504,100 $ 28,765
E Trade Group, Inc. (a) 42,800 2,002
ECI Telecom Ltd. 411,400 14,656
Electronics for Imaging, Inc. 759,400 30,376
(a)
Engineering Animation, Inc. 32,500 1,755
(a)
Equant NV (Reg.) (a) 204,600 13,874
Exodus Communications, Inc. 327,100 21,016
(a)
Fiserv, Inc. (a) 183,400 9,434
Gerber Scientific, Inc. 120,400 2,867
IMR Global Corp. (a) 85,700 2,523
IMS Health, Inc. 3,865,300 291,589
Informix Corp. (a) 1,777,400 17,552
International Network 169,300 11,258
Services (a)
Intuit, Inc. (a) 262,900 19,060
Iona Technologies PLC ADR (a) 21,400 813
Learning Co., Inc. (The) (a) 1,096,800 28,448
Legato Systems, Inc. (a) 583,000 38,442
Lycos, Inc. (a) 861,500 47,867
Microsoft Corp. (a) 8,755,000 1,214,209
National Computer Systems, 215,000 7,955
Inc.
NCR Corp. (a) 612,000 25,551
Networks Associates, Inc. (a) 994,900 65,912
Novell, Inc. (a) 2,540,600 46,048
Oracle Corp. (a) 1,997,000 86,121
Paychex, Inc. 21,500 1,106
Policy Management Systems 85,800 4,333
Corp. (a)
Polycom, Inc. (a) 800,900 17,820
Progress Software Corp. (a) 412,700 13,929
RealNetworks, Inc. (a) 351,200 12,599
Sabre Group Holdings, Inc. 975,250 43,399
Class A (a)
Siebel Systems, Inc. (a) 742,200 25,188
SunGard Data Systems, Inc. (a) 21,400 849
Synopsys, Inc. (a) 1,114,100 60,440
Transaction Systems 140,600 7,030
Architects, Inc. Class A (a)
VeriSign, Inc. (a) 483,800 28,605
Veritas Software Corp. (a) 21,500 1,289
Visual Networks, Inc. (a) 281,300 10,549
Wall Data, Inc. (a) 20,200 485
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE
- - CONTINUED
Whittman-Hart, Inc. (a) 218,600 $ 6,039
Wind River Systems, Inc. (a) 132,400 6,223
Yahoo!, Inc. (a) 357,400 84,681
3,921,778
COMPUTERS & OFFICE EQUIPMENT
- - 4.5%
Apple Computer, Inc. (a) 980,000 40,119
Bell & Howell Co. (a) 1,900 72
CDW Computer Centers, Inc. (a) 78,500 7,531
Dell Computer Corp. (a) 3,797,200 277,908
EMC Corp. (a) 4,398,700 373,890
Fore Systems, Inc. (a) 557,400 10,207
International Business 698,700 129,085
Machines Corp.
Lexmark International Group, 488,200 49,064
Inc. (a)
Network Appliance, Inc. 834,900 37,571
Psion PLC 191,200 1,841
Seagate Technology, Inc. (a) 2,942,600 89,014
Silicon Graphics, Inc. (a) 825,500 10,628
Sun Microsystems, Inc. (a) 1,311,300 112,280
Symbol Technologies, Inc. 2,137,250 136,650
Unisys Corp. (a) 11,303,300 389,257
Xerox Corp. 805,800 95,084
1,760,201
ELECTRONIC INSTRUMENTS - 1.3%
Applied Materials, Inc. (a) 2,050,700 87,539
Perkin-Elmer Corp. 1,171,100 114,255
Teradyne, Inc. (a) 1,043,900 44,235
Thermo Electron Corp. (a) 4,138,500 70,096
Thermo Instrument Systems, 979,075 14,747
Inc. (a)
Varian Associates, Inc. 258,000 9,772
Waters Corp. (a)(c) 1,869,200 163,088
503,732
ELECTRONICS - 4.6%
Altera Corp. (a) 462,800 28,173
AMP, Inc. 341,100 17,759
Analog Devices, Inc. (a) 379,300 11,901
Applied Micro Circuits Corp. 112,200 3,811
(a)
C-Cube Microsystems, Inc. (a) 604,200 16,389
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Celestica, Inc. (sub-vtg.) (a) 615,800 $ 15,209
Genesis Microchip, Inc. (a) 88,700 2,151
Intel Corp. 5,740,700 680,632
International Rectifier Corp. 838,000 8,171
(a)
Kent Electronics Corp. (a) 539,600 6,880
Linear Technology Corp. 890,900 79,791
Maxim Integrated Products, 911,800 39,834
Inc. (a)
Micron Technology, Inc. (a) 60,500 3,059
Motorola, Inc. 1,976,100 120,666
NeoMagic Corp. (a) 299,800 6,633
PMC-Sierra, Inc. (a) 174,900 11,041
QLogic Corp. (a) 42,400 5,549
Rambus, Inc. (a) 624,500 60,108
Sanmina Corp. (a) 158,500 9,906
Solectron Corp. (a) 61,800 5,744
STMicroelectronics NV (a) 430,700 33,622
Texas Instruments, Inc. 4,400,000 376,475
Uniphase Corp. (a) 737,300 51,150
Vitesse Semiconductor Corp. 4,162,400 189,910
(a)(c)
Xilinx, Inc. (a) 171,200 11,149
1,795,713
TOTAL TECHNOLOGY 9,599,605
TRANSPORTATION - 0.9%
AIR TRANSPORTATION - 0.5%
Southwest Airlines Co. 4,444,125 99,715
Viad Corp. 3,480,300 105,714
205,429
RAILROADS - 0.1%
Burlington Northern Santa Fe 932,400 31,469
Corp.
TRUCKING & FREIGHT - 0.3%
C.H. Robinson Worldwide, Inc. 1,166,500 30,256
Swift Transportation Co., 2,367,700 66,370
Inc. (a)(c)
96,626
TOTAL TRANSPORTATION 333,524
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
UTILITIES - 14.0%
CELLULAR - 1.3%
AirTouch Communications, Inc. 4,604,200 $ 332,078
(a)
SkyTel Communications, Inc. 2,902,270 64,213
(a)
Vodafone Group PLC sponsored 608,700 98,077
ADR
494,368
ELECTRIC UTILITY - 0.5%
CMS Energy Corp. 559,800 27,115
Entergy Corp. 1,488,400 46,326
IPALCO Enterprises, Inc. 605,000 33,540
PG&E Corp. 1,362,700 42,925
Unicom Corp. 1,350,500 52,079
201,985
TELEPHONE SERVICES - 12.2%
ALLTEL Corp. 4,070,500 243,467
Ameritech Corp. 2,389,100 151,409
AT&T Corp. 8,462,200 636,781
Bell Atlantic Corp. 3,974,600 225,807
BellSouth Corp. 4,781,400 238,472
Esprit Telecom Group PLC 341,700 15,974
sponsored ADR
Global Crossing Ltd. (a) 554,900 25,040
Global TeleSystems Group, 640,900 35,730
Inc. (a)
GTE Corp. 3,393,700 228,863
MCI WorldCom, Inc. (a) 29,500,000 2,116,620
McLeodUSA, Inc. Class A (a) 868,900 27,153
NEXTLINK Communications, Inc. 276,600 7,849
Class A (a)
Qwest Communications 6,611,158 330,558
International, Inc. (a)
SBC Communications, Inc. 4,237,310 227,226
Sprint Corp. (FON Group) 2,026,400 170,471
Telefonica de Espana SA 124,500 5,535
Telefonica de Espana SA 124,500 111
rights 12/31/99 (a)
U.S. WEST, Inc. 1,034,500 66,855
4,753,921
TOTAL UTILITIES 5,450,274
TOTAL COMMON STOCKS 35,309,975
(Cost $22,525,868)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
U.S. TREASURY OBLIGATIONS -
2.4%
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
U.S. Treasury Bond:
6.5% 11/15/26 Aaa $ 247,000 $ 287,214
6.75% 8/15/26 Aaa 229,600 275,054
6.875% 8/15/25 Aaa 239,500 290,281
7.625% 2/15/25 Aaa 63,610 83,627
TOTAL U.S. TREASURY OBLIGATIONS 936,176
(Cost $844,425)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CASH EQUIVALENTS - 7.1%
SHARES
Taxable Central Cash Fund (b) 2,330,156,380 2,330,156
MATURITY AMOUNT (000S)
Investments in repurchase $ 455,442 455,203
agreements (U.S. Treasury
obligations), in a joint
trading account at 4.72%,
dated 12/31/98 due 1/4/99
TOTAL CASH EQUIVALENTS 2,785,359
(Cost $2,785,359)
TOTAL INVESTMENT IN $ 39,031,510
SECURITIES - 100%
(Cost $26,155,652)
</TABLE>
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.80%. 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 (see Note 8 of Notes to Financial Statements).
(d) 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 $3,000 or 0.0% of net assets.
(e) Restricted securities - Investment in securities not registered
under the Securities Act of 1933 (see Note 2 of Notes to Financial
Statements).
SECURITY ACQUISTION DATE ACQUISITION COST (000S)
Grand Palais Management 7/24/96 -
Co. LP
INCOME TAX INFORMATION
At December 31, 1998, the aggregate cost of investment securities for
income tax purposes was $26,618,083,000. Net unrealized appreciation
aggregated $12,413,427,000, of which $12,622,706,000 related to
appreciated investment securities and $209,279,000 related to
depreciated investment securities.
The fund hereby designates approximately $3,163,919,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT
PER-SHARE AMOUNTS) DECEMBER
31, 1998
ASSETS
Investment in securities, at $ 39,031,510
value (including repurchase
agreements of $455,203)
(cost $26,155,652) - See
accompanying schedule
Cash 1,078
Foreign currency held at 2,414
value (cost $2,411)
Receivable for investments 95,834
sold
Receivable for fund shares 52,664
sold
Dividends receivable 19,495
Interest receivable 25,229
Other receivables 5,418
TOTAL ASSETS 39,233,642
LIABILITIES
Payable for investments $ 103,932
purchased
Payable for fund shares 211,684
redeemed
Distributions payable 55,143
Accrued management fee 13,308
Other payables and accrued 5,976
expenses
Collateral on securities 204,718
loaned, at value
TOTAL LIABILITIES 594,761
NET ASSETS $ 38,638,881
Net Assets consist of:
Paid in capital $ 25,298,121
Undistributed net investment 35,367
income
Accumulated undistributed net 429,378
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 12,876,015
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS, for 680,176 $ 38,638,881
shares outstanding
NET ASSET VALUE and $56.81
redemption price per share
($38,638,881 (divided by)
680,176 shares)
Maximum offering price per $58.57
share (100/97.00 of $56.81)
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR
ENDED DECEMBER 31, 1998
INVESTMENT INCOME $ 192,013
Dividends (including $257
received from affiliated
issuers)
Interest (including income on 244,682
securities loaned of $8,957)
TOTAL INCOME 436,695
EXPENSES
Management fee Basic fee $ 196,893
Performance adjustment (47,315)
Transfer agent fees 63,797
Accounting and security 1,189
lending fees
Non-interested trustees' 131
compensation
Custodian fees and expenses 1,599
Registration fees 839
Audit 82
Legal 175
Interest 2
Reports to shareholders 724
Miscellaneous 232
Total expenses before 218,348
reductions
Expense reductions (14,482) 203,866
NET INVESTMENT INCOME 232,829
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 3,209,474
(including realized loss of
$(70,983) on sales of
investments in affiliated
issuers)
Foreign currency transactions 898
Futures contracts (24,620) 3,185,752
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 5,951,561
Assets and liabilities in 271 5,951,832
foreign currencies
NET GAIN (LOSS) 9,137,584
NET INCREASE (DECREASE) IN $ 9,370,413
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS YEAR ENDED DECEMBER 31, 1998 YEAR ENDED DECEMBER 31, 1997
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 232,829 $ 254,060
income
Net realized gain (loss) 3,185,752 2,589,111
Change in net unrealized 5,951,832 2,841,489
appreciation (depreciation)
NET INCREASE (DECREASE) IN 9,370,413 5,684,660
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (190,451) (211,835)
From net investment income
From net realized gain (2,677,837) (2,742,867)
TOTAL DISTRIBUTIONS (2,868,288) (2,954,702)
Share transactions Net 6,953,917 8,043,743
proceeds from sales of shares
Reinvestment of distributions 2,812,601 2,914,929
Cost of shares redeemed (8,368,858) (6,778,358)
NET INCREASE (DECREASE) IN 1,397,660 4,180,314
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) 7,899,785 6,910,272
IN NET ASSETS
NET ASSETS
Beginning of period 30,739,096 23,828,824
End of period (including $ 38,638,881 $ 30,739,096
undistributed net investment
income of $35,367 and
$38,086, respectively)
OTHER INFORMATION
Shares
Sold 134,565 175,809
Issued in reinvestment of 49,673 65,437
distributions
Redeemed (163,300) (147,380)
Net increase (decrease) 20,938 93,866
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED DECEMBER 31,
1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA
Net asset value, beginning $ 46.63 $ 42.15 $ 38.02 $ 30.28 $ 30.84
of period
Income from Investment
Operations
Net investment income .36C .42 C .46 .03 .06
Net realized and 14.34 8.97 7.50 10.93 (.40)
unrealized gain (loss)
Total from investment 14.70 9.39 7.96 10.96 (.34)
operations
Less Distributions
From net investment income (.30) (.35) (.38) (.09) -
From net realized gain (4.22) (4.56) (3.45) (3.13) (.22)
Total distributions (4.52) (4.91) (3.83) (3.22) (.22)
Net asset value, end of period $ 56.81 $ 46.63 $ 42.15 $ 38.02 $ 30.28
TOTAL RETURN A, B 31.57% 23.00% 21.94% 36.28% (1.12)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 38,639 $ 30,739 $ 23,829 $ 14,858 $ 8,694
(in millions)
Ratio of expenses to average .65% .70% .83% .98% 1.03%
net assets
Ratio of expenses to average .61% D .67% D .79% D .96% D 1.00% D
net assets after expense
reductions
Ratio of net investment .70% .91% 1.28% .44% .59%
income to average net assets
Portfolio turnover rate 197% 144% 159% 223% 235%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1998
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
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
date. Non-cash dividends included in dividend income, if any, are
recorded at 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.
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 &
2. OPERATING POLICIES - CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
Research Company (FMR), may transfer uninvested cash balances into one
or more joint trading accounts. These balances are invested in one or
more repurchase agreements for U.S. Treasury or Federal Agency
obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the 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.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the stock market. Buying futures tends to increase the
fund's exposure to the underlying instrument, while selling futures
tends to decrease the fund's exposure to the underlying instrument or
hedge other fund investments. Losses may arise from changes in the
value of the underlying instruments or if the counterparties do not
perform under the contracts' terms. Gains (losses) are realized upon
the expiration or closing of the futures contracts. Futures contracts
are valued at the settlement price established each day by the board
of trade or exchange on which they are traded.
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 $60,722,455,000 and $61,719,108,000, respectively, of which
U.S. government
3. PURCHASES AND SALES OF INVESTMENTS - CONTINUED
and government agency obligations aggregated $2,530,651,000 and
$3,166,918,000, respectively.
The market value of futures contracts opened and closed during the
period amounted to $431,718,000 and $407,098,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly basic fee that is calculated on the basis of a group fee rate
plus a fixed individual fund fee rate applied to the average net
assets of the fund. The group fee rate is the weighted average of a
series of rates and is based on the monthly average net assets of all
the mutual funds advised by FMR. The rates ranged from .2500% to
.5200% for the period. The annual individual fund fee rate is .30%. In
the event that these rates were lower than the contractual rates in
effect during the period, FMR voluntarily implemented the above rates,
as they resulted in the same or a lower management fee. The basic fee
is subject to a performance adjustment (up to a maximum of
(plus/minus).20% of the fund's average net assets over the performance
period) based on the fund's investment performance as compared to the
appropriate index over a specified period of time. For the period, the
management fee was equivalent to an annual rate of .45% 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 $4,729,000 on sales of shares of the fund of which
$4,705,000 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 annual 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 $9,834,000 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
5. SECURITY LENDING - CONTINUED
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 $223,680,000. The fund
received cash collateral of $204,718,000.
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. Under the most
restrictive arrangement, the fund must pledge to the bank securities
having a market value in excess of 220% of the total bank borrowings.
The interest rate on the borrowings is the bank's base rate, as
revised from time to time. The maximum loan and the average daily loan
balance during the period for which the loan was outstanding amounted
to $11,693,000. The weighted average interest rate was 5.94%.
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 $13,024,000 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 $4,000 and $1,454,000, respectively, under these
arrangements.
8. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of
at least 5% of the voting securities. Transactions during the period
with companies which are or were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
APAC Teleservices, Inc. $ - $ 23,881 $ - $ -
Advanced Fibre Communication, Inc. 54,123 57,041 - -
American Italian Pasta Co. Series A 12,973 21,005 - -
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 - -
</TABLE>
8. TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES - CONTINUED
AMOUNTS IN THOUSANDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Charming Shoppes, Inc. $ 121 $ - $ - $ 45,801
Documentum, Inc. 24,022 28,784 - -
Dominick's Supermarkets, Inc. 14,827 24,056 - -
ENSCO International, Inc. 2,185 29,700 - -
Engineering Animation, Inc. 1,056 3,054 - -
Franco-Nevada Mining Corp. 1,876 1,517 - -
Intermedia Communications, Inc. - 6,646 - -
InterTAN, Inc. 260 - - 3,925
Kaydon Corp. 1,169 9,594 156 -
Lamar Advertising Co. Class A - - - 91,672
Loral Space & Communications Ltd. 46,637 47,386 - -
Lycos, Inc. 85,494 112,018 - -
N2K, Inc. 12,085 24,173 - -
NEXTLINK Communications, Inc. Class A 27,736 41,395 - -
Orion Network Systems, Inc. 435 6,495 - -
Premier Parks, Inc. 38,429 2,062 - 166,774
Quality Food Centers, Inc. - 22,008 - -
Rayovac Corp. 7,714 3,202 - 69,305
REMEC, Inc. 19,984 27,742 - -
Richfood Holdings, Inc. Class A - 2,176 101 -
SPX Corp. 94,492 8,114 - 209,840
SBS Broadcasting SA 2,579 - - 26,614
SkyTel Communications, Inc. 20,255 20,915 - -
Smith International, Inc. 28,522 59,639 - -
Stein Mart, Inc. 4,829 12,252 - -
Swift Transportation Co. Inc. 6,335 - - 66,370
Swisher International Group, Inc.
Class A - 1,384 - -
U.S. LEC Corp. Class A 642 3,611 - -
U.S.A. Floral Products, Inc. - 6,805 - -
Uniphase Corp. 14,092 20,205 - -
U.S. Office Products Co. 648 5,585 - -
Vans, Inc. 2,408 2,092 - 5,280
Virgin Express Holdings PLC
sponsored ADR - - - -
Vitesse Semiconductor Corp. 35,622 25,689 - 189,910
Waters Corp. 25,609 1,726 - 163,088
TOTALS $ 600,529 $ 694,339 $ 257 $ 1,038,579
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of Fidelity Contrafund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Contrafund at December 31, 1998, and the results of its
operations, the changes in its net assets and the financial highlights
for the periods indicated, in conformity with generally accepted
accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fidelity Contrafund's management; our
responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included
confirmation of securities at December 31, 1998 by correspondence with
the custodian and brokers, provide a reasonable basis for the opinion
expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 10, 1999
DISTRIBUTIONS
The Board of Trustees of Fidelity Contrafund voted to pay on February
8, 1999, to shareholders of record at the opening of business on
February 5, 1999, a distribution of $0.52 per share derived from
capital gains realized from sales of portfolio securities.
The fund hereby designates 100% of the long-term capital gain
dividends distributed during the fiscal year as 20%-rate capital gain
dividends.
OF SPECIAL NOTE
INTRODUCING FIDELITY'S NEW, REORGANIZED PROSPECTUS
Recently, the SEC issued new disclosure requirements for all mutual
fund prospectuses. While Fidelity could have complied by simply
following the new requirements, we saw a different opportunity. We saw
the chance to create a brand new prospectus: one that is better
organized, easier to use and more informative than ever.
The new format of the Fidelity mutual fund prospectus puts the
information you need to make informed investment decisions right at
your fingertips. In the opening pages, you will find the SEC-mandated
summary that highlights the fund's investment objectives, strategies
and risks. There's also an easy-to-read performance chart and fee
table right up front.
Inside, you will find additional features we've introduced to make the
fund prospectus a more useful tool. In our new Shareholder Information
section, for example, we have provided practical, beneficial
information - from how to buy or sell shares, key contact information,
investment services, ways to set up your account and more - all in one
convenient location.
We invite you to spend a moment and review our new prospectus. It is
designed to help make your investment decision easier, no matter which
of the Fidelity funds you invest in.
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
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-ANN-0299 70355
1.540009.101
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH FUNDS
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