UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-1400
Fidelity Contrafund
(Exact name of registrant as specified in charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address of principal executive offices) (Zip code)
Eric D. Roiter, Secretary
82 Devonshire St.
Boston, Massachusetts 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-563-7000
Date of fiscal year end: | December 31 |
Date of reporting period: | December 31, 2005 |
Item 1. Reports to Stockholders
![](https://capedge.com/proxy/N-CSR/0000795422-06-000011/adnwinsghtannx1x1.jpg)
Fidelity® Advisor New Insights Fund - Class A, Class T, Class B and Class C |
Annual Report December 31, 2005 |
Contents | ||||
Chairman’s Message | 4 | Ned Johnson’s message to shareholders. | ||
Performance | 5 | How the fund has done over time. | ||
Management’s Discussion | 7 | The manager’s review of fund | ||
performance, strategy and outlook. | ||||
Shareholder Expense | 8 | An example of shareholder expenses. | ||
Example | ||||
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 | 39 | Notes to the financial statements. | ||
Report of Independent | 47 | |||
Registered Public | ||||
Accounting Firm | ||||
Trustees and Officers | 48 | |||
Distributions | 58 | |||
Proxy Voting Results | 59 | |||
Board Approval of | 60 | |||
Investment Advisory | ||||
Contracts and | ||||
Management Fees |
To view a fund’s proxy voting guidelines and proxy voting record for the 12 month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission’s (SEC) web site at www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines. 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. |
Annual Report 2
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. A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N Q. Forms N Q are available on the SEC’s web site at http://www.sec.gov. A fund’s Forms N Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund’s portfolio hold ings, view the most recent quarterly holdings report, semiannual report, or annual report on Fidelity’s web site at http://www.advisor.fidelity.com. NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE Neither the fund nor Fidelity Distributors Corporation is a bank. |
3 Annual Report
Chairman’s Message
(photograph of Edward C. Johnson 3d)
Dear Shareholder:
During the past year or so, much has been reported about the mutual fund industry, and much of it has been more critical than I believe is warranted. Allegations that some companies have been less than forthright with their shareholders have cast a shadow on the entire industry. I continue to find these reports disturbing, and assert that they do not create an accurate picture of the industry overall. Therefore, I would like to remind every one where Fidelity stands on these issues. I will say two things specifically regarding allegations that some mutual fund companies were in violation of the Securities and Exchange Commission’s forward pricing rules or were involved in so called “market timing” activities.
First, Fidelity has no agreements that permit customers who buy fund shares after 4 p.m. to obtain the 4 p.m. price. This is not a new policy. This is not to say that some one could not deceive the company through fraudulent acts. However, we are extremely diligent in preventing fraud from occurring in this manner and in every other. But I underscore again that Fidelity has no so called “agreements” that sanction illegal practices.
Second, Fidelity continues to stand on record, as we have for years, in opposition to predatory short term trading that adversely affects shareholders in a mutual fund. Back in the 1980s, we initiated a fee which is returned to the fund and, therefore, to investors to discourage this activity. Further, we took the lead several years ago in developing a Fair Value Pricing Policy to prevent market timing on foreign securities in our funds. I am confident we will find other ways to make it more difficult for predatory traders to operate. However, this will only be achieved through close cooperation among regulators, legislators and the industry.
Yes, there have been unfortunate instances of unethical and illegal activity within the mutual fund industry from time to time. That is true of any industry. When this occurs, confessed or convicted offenders should be dealt with appropriately. But we are still concerned about the risk of over regulation and the quick application of simplistic solutions to intricate problems. Every system can be improved, and we support and applaud well thought out improvements by regulators, legislators and industry representatives that achieve the common goal of building and protecting the value of investors’ holdings.
For nearly 60 years, Fidelity has worked very hard to improve its products and service to justify your trust. When our family founded this company in 1946, we had only a few hundred customers. Today, we serve more than 18 million customers including individual investors and participants in retirement plans across America.
Let me close by saying that we do not take your trust in us for granted, and we realize that we must always work to improve all aspects of our service to you. In turn, we urge you to continue your active participation with your financial matters, so that your interests can be well served.
Best regards,
/s/ Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report 4
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class’ dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund’s returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemp tion of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns | ||||
Periods ended December 31, 2005 | Past 1 | Life of | ||
year | fundA | |||
Class A (incl. 5.75% sales charge) | 12.17% | 20.68% | ||
Class T (incl. 3.50% sales charge) | 14.54% | 21.60% | ||
Class B (incl. contingent deferred | ||||
sales charge)B | 13.05% | 21.73% | ||
Class C (incl. contingent deferred | ||||
sales charge)C | 17.11% | 22.74% |
A From July 31, 2003. B Class B shares’ contingent deferred sales charges included in the past one year and life of fund total return figures are 5% and 3%, respectively. C Class C shares’ contingent deferred sales charge included in the past one year and life of fund total return figures are 1% and 0%, respectively. |
5 Annual Report
Performance continued
$10,000 Life of Fund
Let’s say hypothetically that $10,000 was invested in Fidelity® Advisor New Insights Fund Class T on July 31, 2003, when the fund started, and the current 3.50% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor’s 500SM Index performed over the same period.
![](https://capedge.com/proxy/N-CSR/0000795422-06-000011/adnwinsghtannx6x1.jpg)
Annual Report 6
Management’s Discussion of Fund Performance
Comments from William Danoff, Portfolio Manager of Fidelity® Advisor New Insights Fund
U.S. equity benchmarks generally had positive results for the 12 months ending Decem ber 31, 2005, the third consecutive year that stocks finished in the black. Energy and utilities were the two best performing sectors, contributing greatly to the 4.91% gain of the Standard & Poor’s 500SM Index. Elsewhere, the NASDAQ Composite® Index returned 2.13%, while the Dow Jones Industrial AverageSM rose 1.72% . The U.S. economy did not decelerate as much as many had predicted, despite eight short term interest rate hikes, record high energy prices and the devastation caused by Hurricane Katrina. Meanwhile, corporate America notched its 14th consecutive quarter of double digit earnings gains through the third quarter of the year, an unprecedented streak in market history. From a style perspec tive, large cap stocks ended the six year reign of small caps by a narrow margin, but mid caps finished well ahead of both categories. The gap between growth and value stocks also was relatively narrow, with value gaining a slight edge.
For the year ending December 31, 2005, the fund’s Class A Class T, Class B and Class C shares returned 19.01%, 18.70%, 18.05% and 18.11%, respectively (excluding sales charges). These returns were comfortably ahead of both the S&P 500® index and the LipperSM Growth Funds Average, which returned 6.53% . A continued emphasis on fast growing companies in expanding areas of the global economy, such as the Internet, wireless communications, health care and the emerging markets, helped drive overall performance, as did our commitment to the booming energy sector. The fund’s performance accelerated in the second half of 2005, aided by its bias toward growth oriented stocks, as well as by its overweighting versus the index in the materials sector, which rallied sharply during the past six months. Among the fund’s biggest contributors were Internet search firm Google; biotechnology leader Genentech; semiconductor provider Marvell Technology; Latin American telecommunication services operator America Movil; and Apple Computer. Detracting from the fund’s returns were such stocks as Research In Motion, the Canadian maker of the BlackBerry handheld messaging device; eBay, the online auction company, which hurt performance because of untimely trading; and an underweighting in the red hot utilities sector.
The views expressed in this statement 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.
7 Annual Report 7 |
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, and (2) ongoing costs, including management fees, distribution and/or service (12b 1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2005 to December 31, 2005).
Actual Expenses |
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Annual Report |
8 |
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Expenses Paid | ||||||||||||
Beginning | Ending | During Period* | ||||||||||
Account Value | Account Value | July 1, 2005 to | ||||||||||
July 1, 2005 | December 31, 2005 | December 31, 2005 | ||||||||||
Class A | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,141.20 | $ | 6.31 | ||||||
HypotheticalA | $ | 1,000.00 | $ | 1,019.31 | $ | 5.96 | ||||||
Class T | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,139.60 | $ | 7.39 | ||||||
HypotheticalA | $ | 1,000.00 | $ | 1,018.30 | $ | 6.97 | ||||||
Class B | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,136.20 | $ | 10.66 | ||||||
HypotheticalA | $ | 1,000.00 | $ | 1,015.22 | $ | 10.06 | ||||||
Class C | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,136.80 | $ | 10.18 | ||||||
HypotheticalA | $ | 1,000.00 | $ | 1,015.68 | $ | 9.60 | ||||||
Institutional Class | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,143.10 | $ | 4.54 | ||||||
HypotheticalA | $ | 1,000.00 | $ | 1,020.97 | $ | 4.28 | ||||||
A 5% return per year before expenses |
* Expenses are equal to each Class’ annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one half year period).
Annualized | ||
Expense Ratio | ||
Class A | 1.17% | |
Class T | 1.37% | |
Class B | 1.98% | |
Class C | 1.89% | |
Institutional Class | 84% |
9 Annual Report
Investment Changes | ||||
Top Ten Stocks as of December 31, 2005 | ||||
% of fund’s | % of fund’s net assets | |||
net assets | 6 months ago | |||
Google, Inc. Class A (sub. vtg.) | 4.3 | 3.0 | ||
Yahoo!, Inc. | 3.5 | 1.6 | ||
Marvell Technology Group Ltd. | 2.8 | 2.3 | ||
Apple Computer, Inc. | 2.7 | 1.0 | ||
Aetna, Inc. | 2.3 | 1.6 | ||
Genentech, Inc. | 2.3 | 3.3 | ||
UnitedHealth Group, Inc. | 2.2 | 1.1 | ||
Hewlett Packard Co. | 2.0 | 1.0 | ||
Samsung Electronics Co. Ltd. | 1.9 | 0.8 | ||
Berkshire Hathaway, Inc. Class A | 1.8 | 1.5 | ||
25.8 | ||||
Top Five Market Sectors as of December 31, 2005 | ||||
% of fund’s | % of fund’s net assets | |||
net assets | 6 months ago | |||
Information Technology | 25.4 | 16.6 | ||
Financials | 15.7 | 11.7 | ||
Health Care | 14.5 | 15.1 | ||
Energy | 9.0 | 13.6 | ||
Materials | 6.9 | 6.3 |
![](https://capedge.com/proxy/N-CSR/0000795422-06-000011/adnwinsghtannx10x1.jpg)
Annual Report 10
Investments December 31, 2005
Showing Percentage of Net Assets
Common Stocks 89.9%
Shares | Value (Note 1) | |||||
(000s) | ||||||
CONSUMER DISCRETIONARY – 5.2% | ||||||
Auto Components 0.1% | ||||||
Johnson Controls, Inc. | 4,400 | $ | 321 | |||
Midas, Inc. (a) | 100,000 | 1,836 | ||||
2,157 | ||||||
Automobiles – 0.5% | ||||||
Honda Motor Co. Ltd. | 9,100 | 527 | ||||
Toyota Motor Corp. | 419,400 | 21,939 | ||||
22,466 | ||||||
Distributors – 0.0% | ||||||
Li & Fung Ltd. | 772,000 | 1,489 | ||||
Diversified Consumer Services – 0.1% | ||||||
Education Management Corp. (a) | 51,300 | 1,719 | ||||
Laureate Education, Inc. (a) | 34,700 | 1,822 | ||||
3,541 | ||||||
Hotels, Restaurants & Leisure 1.5% | ||||||
Ambassadors Group, Inc. | 26,038 | 596 | ||||
Aristocrat Leisure Ltd. | 557,300 | 5,037 | ||||
Cosi, Inc. (a) | 30,500 | 253 | ||||
Domino’s Pizza, Inc. | 64,100 | 1,551 | ||||
Four Seasons Hotels, Inc. (ltd. vtg.) (d) | 28,000 | 1,393 | ||||
Hilton Group PLC | 43,870 | 275 | ||||
Kerzner International Ltd. (a) | 14,000 | 963 | ||||
Las Vegas Sands Corp. | 126,900 | 5,009 | ||||
Life Time Fitness, Inc. (a) | 31,300 | 1,192 | ||||
Panera Bread Co. Class A (a) | 183,464 | 12,050 | ||||
Ruth’s Chris Steak House, Inc. | 15,400 | 279 | ||||
Shuffle Master, Inc. (a)(d) | 25,600 | 644 | ||||
Starbucks Corp. (a) | 320,500 | 9,618 | ||||
Station Casinos, Inc. | 306,100 | 20,754 | ||||
Texas Roadhouse, Inc. Class A (a) | 75,000 | 1,166 | ||||
Wynn Resorts Ltd. (a)(d) | 75,800 | 4,158 | ||||
64,938 | ||||||
Household Durables – 0.3% | ||||||
Fourlis Holdings SA | 500,000 | 6,783 | ||||
Garmin Ltd. (d) | 25,300 | 1,679 | ||||
Matsushita Electric Industrial Co. Ltd. | 137,000 | 2,655 | ||||
Technical Olympic USA, Inc. | 9,800 | 207 | ||||
11,324 |
See accompanying notes which are an integral part of the financial statements.
11 Annual Report
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
CONSUMER DISCRETIONARY – continued | ||||||
Internet & Catalog Retail 0.2% | ||||||
Blue Nile, Inc. (a)(d) | 53,700 | $ | 2,165 | |||
Coldwater Creek, Inc. (a) | 55,500 | 1,694 | ||||
Expedia, Inc. (a) | 186,850 | 4,477 | ||||
NutriSystem, Inc. (a) | 22,700 | 818 | ||||
VistaPrint Ltd. | 58,600 | 1,333 | ||||
10,487 | ||||||
Media – 0.7% | ||||||
Getty Images, Inc. (a) | 37,700 | 3,365 | ||||
Harte-Hanks, Inc. | 42,900 | 1,132 | ||||
Interactive Data Corp. | 19,500 | 443 | ||||
McGraw Hill Companies, Inc. | 63,300 | 3,268 | ||||
Pearson PLC | 95,900 | 1,135 | ||||
Pixar (a) | 106,900 | 5,636 | ||||
Reuters Group PLC | 258,800 | 1,918 | ||||
Sirius Satellite Radio, Inc. (a)(d) | 1,492,300 | 9,998 | ||||
The Weinstein Co. Holdings, LLC Class A 1 (h) | 2,267 | 2,267 | ||||
29,162 | ||||||
Multiline Retail – 0.2% | ||||||
Marks & Spencer Group PLC | 639,000 | 5,555 | ||||
Target Corp. | 87,000 | 4,782 | ||||
10,337 | ||||||
Specialty Retail – 1.3% | ||||||
Abercrombie & Fitch Co. Class A | 34,700 | 2,262 | ||||
Bakers Footwear Group, Inc. (a)(e) | 463,600 | 7,130 | ||||
Best Buy Co., Inc. | 32,150 | 1,398 | ||||
Chico’s FAS, Inc. (a) | 52,500 | 2,306 | ||||
Circuit City Stores, Inc. | 218,600 | 4,938 | ||||
Hennes & Mauritz AB (H&M) (B Shares) | 12,950 | 440 | ||||
Office Depot, Inc. (a) | 285,200 | 8,955 | ||||
Staples, Inc. | 305,300 | 6,933 | ||||
The Children’s Place Retail Stores, Inc. (a) | 7,800 | 385 | ||||
TJX Companies, Inc. | 236,500 | 5,494 | ||||
Too, Inc. (a) | 11,200 | 316 | ||||
Urban Outfitters, Inc. (a) | 416,000 | 10,529 | ||||
Volcom, Inc. | 28,200 | 959 | ||||
Wet Seal, Inc. Class A (a)(d) | 497,300 | 2,208 | ||||
Zumiez, Inc. | 12,700 | 549 | ||||
54,802 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
12 |
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
CONSUMER DISCRETIONARY – continued | ||||||
Textiles, Apparel & Luxury Goods – 0.3% | ||||||
Asics Corp. | 297,000 | $ | 3,154 | |||
Burberry Group PLC | 91,700 | 678 | ||||
Coach, Inc. (a) | 101,300 | 3,377 | ||||
Deckers Outdoor Corp. (a) | 15,000 | 414 | ||||
Geox Spa | 35,400 | 389 | ||||
Polo Ralph Lauren Corp. Class A | 47,500 | 2,667 | ||||
Puma AG | 1,500 | 438 | ||||
11,117 | ||||||
TOTAL CONSUMER DISCRETIONARY | 221,820 | |||||
CONSUMER STAPLES 4.8% | ||||||
Beverages – 2.0% | ||||||
Diageo PLC sponsored ADR | 160,000 | 9,328 | ||||
Hansen Natural Corp. (a) | 363,900 | 28,679 | ||||
Jones Soda Co. (a) | 310,890 | 1,679 | ||||
PepsiCo, Inc. | 606,900 | 35,856 | ||||
The Coca-Cola Co. | 163,000 | 6,571 | ||||
82,113 | ||||||
Food & Staples Retailing – 0.7% | ||||||
Tesco PLC | 52,985 | 302 | ||||
Wal-Mart de Mexico SA de CV Series V | 393,739 | 2,185 | ||||
Walgreen Co. | 303,600 | 13,437 | ||||
Whole Foods Market, Inc. | 180,770 | 13,990 | ||||
29,914 | ||||||
Food Products 0.7% | ||||||
Goodman Fielder Ltd. | 750,000 | 1,150 | ||||
Groupe Danone | 22,700 | 2,372 | ||||
Hershey Co. | 75,300 | 4,160 | ||||
Kellogg Co. | 20,800 | 899 | ||||
Lindt & Spruengli AG | 93 | 1,554 | ||||
Nestle SA (Reg.) | 22,935 | 6,860 | ||||
Sara Lee Corp. | 112,100 | 2,119 | ||||
TreeHouse Foods, Inc. (a) | 151,500 | 2,836 | ||||
Wm. Wrigley Jr. Co. | 115,100 | 7,653 | ||||
29,603 | ||||||
Household Products – 1.4% | ||||||
Procter & Gamble Co. | 1,034,867 | 59,898 |
See accompanying notes which are an integral part of the financial statements.
13 Annual Report
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
CONSUMER STAPLES – continued | ||||||
Personal Products 0.0% | ||||||
Herbalife Ltd. | 28,200 | $ | 917 | |||
TOTAL CONSUMER STAPLES | 202,445 | |||||
ENERGY 9.0% | ||||||
Energy Equipment & Services – 1.4% | ||||||
ENSCO International, Inc. | 79,900 | 3,544 | ||||
Halliburton Co. | 128,400 | 7,956 | ||||
Hydril Co. (a) | 5,100 | 319 | ||||
Noble Corp. | 20,000 | 1,411 | ||||
Schlumberger Ltd. (NY Shares) | 439,900 | 42,736 | ||||
Smith International, Inc. | 82,844 | 3,074 | ||||
59,040 | ||||||
Oil, Gas & Consumable Fuels – 7.6% | ||||||
BG Group PLC sponsored ADR | 157,200 | 7,808 | ||||
Bill Barrett Corp. | 66,100 | 2,552 | ||||
Blackrock Ventures, Inc. (a) | 433,600 | 4,289 | ||||
BP PLC sponsored ADR | 49,500 | 3,179 | ||||
Burlington Resources, Inc. | 96,500 | 8,318 | ||||
Canadian Natural Resources Ltd. | 84,700 | 4,199 | ||||
Canadian Oil Sands Trust unit | 31,600 | 3,425 | ||||
CNX Gas Corp. (a)(f) | 17,900 | 376 | ||||
CONSOL Energy, Inc. | 106,700 | 6,955 | ||||
Devon Energy Corp. | 164,400 | 10,282 | ||||
EnCana Corp. | 1,700,900 | 76,899 | ||||
Encore Acquisition Co. (a) | 30,138 | 966 | ||||
EOG Resources, Inc. | 346,400 | 25,415 | ||||
Exxon Mobil Corp. | 477,400 | 26,816 | ||||
Highpine Oil & Gas Ltd. | 36,300 | 646 | ||||
Murphy Oil Corp. | 374,500 | 20,219 | ||||
Peabody Energy Corp. | 3,000 | 247 | ||||
PetroChina Co. Ltd. sponsored ADR | 123,700 | 10,138 | ||||
Petroleo Brasileiro SA Petrobras sponsored ADR | 54,000 | 3,849 | ||||
Plains Exploration & Production Co. (a) | 48,500 | 1,927 | ||||
Quicksilver Resources, Inc. (a) | 102,350 | 4,300 | ||||
Range Resources Corp. | 117,150 | 3,086 | ||||
Sasol Ltd. sponsored ADR | 94,200 | 3,357 | ||||
Talisman Energy, Inc. | 88,300 | 4,679 | ||||
Total SA sponsored ADR | 24,400 | 3,084 | ||||
Ultra Petroleum Corp. (a) | 223,100 | 12,449 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
14 |
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
ENERGY – continued | ||||||
Oil, Gas & Consumable Fuels – continued | ||||||
Valero Energy Corp. | 1,369,634 | $ | 70,673 | |||
XTO Energy, Inc. | 96,400 | 4,236 | ||||
324,369 | ||||||
TOTAL ENERGY | 383,409 | |||||
FINANCIALS – 15.7% | ||||||
Capital Markets 1.3% | ||||||
Charles Schwab Corp. | 591,800 | 8,682 | ||||
E*TRADE Financial Corp. (a) | 79,300 | 1,654 | ||||
Goldman Sachs Group, Inc. | 141,600 | 18,084 | ||||
Lazard Ltd. Class A | 26,400 | 842 | ||||
Legg Mason, Inc. | 28,000 | 3,351 | ||||
Lehman Brothers Holdings, Inc. | 168,700 | 21,622 | ||||
Nuveen Investments, Inc. Class A | 8,600 | 367 | ||||
54,602 | ||||||
Commercial Banks – 3.8% | ||||||
Allied Irish Banks PLC | 348,800 | 7,492 | ||||
Anglo Irish Bank Corp. PLC | 984,800 | 14,946 | ||||
Banco Itau Holding Financeira SA sponsored ADR (non-vtg.) | 111,000 | 2,666 | ||||
Bank of America Corp. | 783,900 | 36,177 | ||||
Bank of the Ozarks, Inc. | 39,100 | 1,443 | ||||
Center Financial Corp., California | 50,000 | 1,258 | ||||
HDFC Bank Ltd. | 85,593 | 1,348 | ||||
HDFC Bank Ltd. sponsored ADR | 35,900 | 1,827 | ||||
HSBC Holdings PLC sponsored ADR | 4,200 | 338 | ||||
M&T Bank Corp. | 131,900 | 14,384 | ||||
Mitsubishi UFJ Financial Group, Inc. | 45 | 616 | ||||
PrivateBancorp, Inc. | 101,000 | 3,593 | ||||
Royal Bank of Scotland Group PLC | 270,700 | 8,179 | ||||
Shinhan Financial Group Co. Ltd. | 48,530 | 1,977 | ||||
Uniao de Bancos Brasileiros SA (Unibanco) GDR | 188,700 | 11,996 | ||||
Wells Fargo & Co. | 857,000 | 53,845 | ||||
162,085 | ||||||
Consumer Finance – 1.6% | ||||||
American Express Co. | 842,900 | 43,376 | ||||
SLM Corp. | 476,600 | 26,256 | ||||
69,632 |
See accompanying notes which are an integral part of the financial statements.
15 Annual Report
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
FINANCIALS – continued | ||||||
Diversified Financial Services – 1.2% | ||||||
Chicago Mercantile Exchange Holdings, Inc. Class A | 6,300 | $ | 2,315 | |||
JPMorgan Chase & Co. | 701,600 | 27,847 | ||||
Moody’s Corp. | 333,400 | 20,477 | ||||
50,639 | ||||||
Insurance – 6.5% | ||||||
ACE Ltd. | 102,000 | 5,451 | ||||
Admiral Group PLC | 535,600 | 4,195 | ||||
AFLAC, Inc. | 118,800 | 5,515 | ||||
Allstate Corp. | 385,400 | 20,839 | ||||
American Equity Investment Life Holding Co. | 50,000 | 653 | ||||
American International Group, Inc. | 226,100 | 15,427 | ||||
Assurant, Inc. | 101,100 | 4,397 | ||||
Assured Guaranty Ltd. | 56,500 | 1,435 | ||||
Axis Capital Holdings Ltd. | 187,500 | 5,865 | ||||
Berkshire Hathaway, Inc. Class A (a) | 874 | 77,454 | ||||
Everest Re Group Ltd. | 220,700 | 22,147 | ||||
Fidelity National Financial, Inc. | 12,900 | 475 | ||||
Genworth Financial, Inc. Class A (non-vtg.) | 58,600 | 2,026 | ||||
HCC Insurance Holdings, Inc. | 31,800 | 944 | ||||
Loews Corp. | 86,600 | 8,214 | ||||
Markel Corp. (a) | 1,300 | 412 | ||||
Mercury General Corp. | 17,600 | 1,025 | ||||
MetLife, Inc. | 497,900 | 24,397 | ||||
MetLife, Inc. unit | 80,000 | 2,204 | ||||
Millea Holdings, Inc. | 36 | 620 | ||||
PartnerRe Ltd. | 4,700 | 309 | ||||
ProAssurance Corp. (a) | 5,000 | 243 | ||||
Progressive Corp. | 115,300 | 13,465 | ||||
Prudential Financial, Inc. | 180,200 | 13,189 | ||||
RLI Corp. | 38,700 | 1,930 | ||||
StanCorp Financial Group, Inc. | 44,800 | 2,238 | ||||
The Chubb Corp. | 138,600 | 13,534 | ||||
The St. Paul Travelers Companies, Inc. | 236,800 | 10,578 | ||||
W.R. Berkley Corp. | 190,674 | 9,080 | ||||
White Mountains Insurance Group Ltd. | 11,083 | 6,190 | ||||
Willis Group Holdings Ltd. | 50,000 | 1,847 | ||||
276,298 | ||||||
Real Estate 0.5% | ||||||
CB Richard Ellis Group, Inc. Class A (a) | 101,400 | 5,967 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
16 |
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
FINANCIALS – continued | ||||||
Real Estate continued | ||||||
CBL & Associates Properties, Inc. | 33,400 | $ | 1,320 | |||
Equity Residential (SBI) | 28,200 | 1,103 | ||||
General Growth Properties, Inc. | 24,200 | 1,137 | ||||
Global Signal, Inc. | 69,900 | 3,017 | ||||
Mitsui Fudosan Co. Ltd. | 112,000 | 2,275 | ||||
Vornado Realty Trust | 52,600 | 4,391 | ||||
19,210 | ||||||
Thrifts & Mortgage Finance – 0.8% | ||||||
Golden West Financial Corp., Delaware | 532,800 | 35,165 | ||||
Hudson City Bancorp, Inc. | 75,000 | 909 | ||||
36,074 | ||||||
TOTAL FINANCIALS | 668,540 | |||||
HEALTH CARE – 14.5% | ||||||
Biotechnology – 3.8% | ||||||
Actelion Ltd. (Reg.) (a) | 191,934 | 15,878 | ||||
Amgen, Inc. (a) | 61,900 | 4,881 | ||||
Amylin Pharmaceuticals, Inc. (a) | 10,600 | 423 | ||||
Anadys Pharmaceuticals, Inc. (a) | 83,900 | 738 | ||||
Arena Pharmaceuticals, Inc. (a) | 113,400 | 1,613 | ||||
Biogen Idec, Inc. (a) | 6,100 | 277 | ||||
BioMarin Pharmaceutical, Inc. (a) | 15,600 | 168 | ||||
Celgene Corp. (a) | 97,500 | 6,318 | ||||
Cephalon, Inc. (a) | 7,100 | 460 | ||||
Exelixis, Inc. (a) | 47,700 | 449 | ||||
Genentech, Inc. (a) | 1,054,400 | 97,532 | ||||
Genmab AS (a) | 18,600 | 398 | ||||
Genzyme Corp. (a) | 75,200 | 5,323 | ||||
Gilead Sciences, Inc. (a) | 238,300 | 12,542 | ||||
GTx, Inc. (a) | 25,000 | 189 | ||||
ICOS Corp. (a) | 35,100 | 970 | ||||
Idenix Pharmaceuticals, Inc. (a) | 43,900 | 751 | ||||
MannKind Corp. (a)(d) | 209,106 | 2,354 | ||||
MannKind Corp. warrants 8/3/10 (a)(h) | 29,881 | 154 | ||||
Medarex, Inc. (a) | 147,300 | 2,040 | ||||
MedImmune, Inc. (a) | 59,200 | 2,073 | ||||
Myogen, Inc. (a) | 20,900 | 630 | ||||
Neurocrine Biosciences, Inc. (a) | 6,700 | 420 |
See accompanying notes which are an integral part of the financial statements.
17 Annual Report
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
HEALTH CARE – continued | ||||||
Biotechnology – continued | ||||||
Protein Design Labs, Inc. (a) | 6,500 | $ | 185 | |||
Seattle Genetics, Inc. (a) | 25,800 | 122 | ||||
Tanox, Inc. (a) | 49,700 | 814 | ||||
Techne Corp. (a) | 27,100 | 1,522 | ||||
Theravance, Inc. (a) | 37,500 | 845 | ||||
United Therapeutics Corp. (a) | 6,100 | 422 | ||||
ViaCell, Inc. | 87,800 | 493 | ||||
160,984 | ||||||
Health Care Equipment & Supplies – 3.4% | ||||||
Alcon, Inc. | 64,900 | 8,411 | ||||
Aspect Medical Systems, Inc. (a) | 4,800 | 165 | ||||
C.R. Bard, Inc. | 35,400 | 2,334 | ||||
China Medical Technologies, Inc. sponsored ADR (d) | 78,500 | 2,500 | ||||
Conceptus, Inc. (a) | 76,200 | 962 | ||||
DENTSPLY International, Inc. | 35,700 | 1,917 | ||||
DJ Orthopedics, Inc. (a) | 111,400 | 3,072 | ||||
Foxhollow Technologies, Inc. (a) | 101,400 | 3,021 | ||||
Gen-Probe, Inc. (a) | 61,600 | 3,005 | ||||
Hospira, Inc. (a) | 53,800 | 2,302 | ||||
Intuitive Surgical, Inc. (a) | 168,900 | 19,807 | ||||
IRIS International, Inc. (a) | 545,400 | 11,922 | ||||
Kyphon, Inc. (a) | 138,300 | 5,647 | ||||
LifeCell Corp. (a) | 36,800 | 702 | ||||
Medtronic, Inc. | 261,106 | 15,032 | ||||
Mentor Corp. | 16,100 | 742 | ||||
Millipore Corp. (a) | 3,500 | 231 | ||||
NeuroMetrix, Inc. (a) | 28,700 | 783 | ||||
NMT Medical, Inc. (a) | 36,200 | 579 | ||||
Nobel Biocare Holding AG (Switzerland) | 18,935 | 4,165 | ||||
NuVasive, Inc. (a) | 67,300 | 1,218 | ||||
ResMed, Inc. (a) | 82,000 | 3,141 | ||||
Respironics, Inc. (a) | 13,100 | 486 | ||||
Somanetics Corp. (a) | 58,146 | 1,861 | ||||
St. Jude Medical, Inc. (a) | 748,100 | 37,555 | ||||
Syneron Medical Ltd. (a) | 63,700 | 2,022 | ||||
Thermo Electron Corp. (a) | 233,300 | 7,029 | ||||
Varian Medical Systems, Inc. (a) | 34,600 | 1,742 | ||||
Viasys Healthcare, Inc. (a) | 38,900 | 1,000 | ||||
143,353 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
18 |
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
HEALTH CARE – continued | ||||||
Health Care Providers & Services – 5.2% | ||||||
Aetna, Inc. | 1,039,000 | $ | 97,988 | |||
American Healthways, Inc. (a) | 2,600 | 118 | ||||
Caremark Rx, Inc. (a) | 104,500 | 5,412 | ||||
Cerner Corp. (a) | 14,600 | 1,327 | ||||
Chemed Corp. New | 7,600 | 378 | ||||
Health Net, Inc. (a) | 123,000 | 6,341 | ||||
Merge Technologies, Inc. (a) | 108,400 | 2,714 | ||||
Patterson Companies, Inc. (a) | 70,300 | 2,348 | ||||
UnitedHealth Group, Inc. | 1,478,200 | 91,855 | ||||
VCA Antech, Inc. (a) | 15,200 | 429 | ||||
WebMD Health Corp. Class A | 5,200 | 151 | ||||
WellPoint, Inc. (a) | 135,200 | 10,788 | ||||
219,849 | ||||||
Pharmaceuticals – 2.1% | ||||||
Allergan, Inc. | 26,300 | 2,839 | ||||
Atherogenics, Inc. (a) | 100,000 | 2,001 | ||||
Forest Laboratories, Inc. (a) | 9,800 | 399 | ||||
IVAX Corp. (a) | 97,900 | 3,067 | ||||
Kos Pharmaceuticals, Inc. (a) | 44,100 | 2,281 | ||||
New River Pharmaceuticals, Inc. (a) | 4,700 | 244 | ||||
Novartis AG sponsored ADR | 173,000 | 9,079 | ||||
Roche Holding AG (participation certificate) | 376,553 | 56,540 | ||||
Salix Pharmaceuticals Ltd. (a) | 40,100 | 705 | ||||
Sanofi-Aventis sponsored ADR | 70,600 | 3,099 | ||||
Schering-Plough Corp. | 210,800 | 4,395 | ||||
Teva Pharmaceutical Industries Ltd. sponsored ADR | 160,600 | 6,907 | ||||
91,556 | ||||||
TOTAL HEALTH CARE | 615,742 | |||||
INDUSTRIALS – 5.2% | ||||||
Aerospace & Defense – 0.1% | ||||||
Precision Castparts Corp. | 58,500 | 3,031 | ||||
United Technologies Corp. | 33,500 | 1,873 | ||||
4,904 | ||||||
Air Freight & Logistics – 0.5% | ||||||
C.H. Robinson Worldwide, Inc. | 464,072 | 17,185 |
See accompanying notes which are an integral part of the financial statements.
19 Annual Report
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
INDUSTRIALS – continued | ||||||
Air Freight & Logistics – continued | ||||||
United Parcel Service, Inc. Class B | 47,500 | $ | 3,570 | |||
UTI Worldwide, Inc. | 13,600 | 1,263 | ||||
22,018 | ||||||
Airlines – 0.3% | ||||||
Gol Linhas Aereas Inteligentes SA sponsored ADR | 73,000 | 2,059 | ||||
JetBlue Airways Corp. (a) | 25,200 | 388 | ||||
Republic Airways Holdings, Inc. (a) | 152,400 | 2,316 | ||||
Ryanair Holdings PLC sponsored ADR (a) | 113,200 | 6,338 | ||||
Southwest Airlines Co. | 22,100 | 363 | ||||
US Airways Group, Inc. (a) | 80,400 | 2,986 | ||||
14,450 | ||||||
Commercial Services & Supplies – 0.4% | ||||||
Advisory Board Co. (a) | 8,500 | 405 | ||||
Corporate Executive Board Co. | 40,100 | 3,597 | ||||
Equifax, Inc. | 27,800 | 1,057 | ||||
Monster Worldwide, Inc. (a) | 44,700 | 1,825 | ||||
PHH Corp. (a) | 14,970 | 419 | ||||
Resources Connection, Inc. (a) | 111,900 | 2,916 | ||||
Robert Half International, Inc. | 123,500 | 4,679 | ||||
14,898 | ||||||
Construction & Engineering – 0.2% | ||||||
Jacobs Engineering Group, Inc. (a) | 95,900 | 6,509 | ||||
URS Corp. (a) | 42,000 | 1,580 | ||||
8,089 | ||||||
Electrical Equipment – 0.7% | ||||||
Cooper Industries Ltd. Class A | 154,500 | 11,279 | ||||
Energy Conversion Devices, Inc. (a)(d) | 103,600 | 4,222 | ||||
Evergreen Solar, Inc. (a) | 456,800 | 4,865 | ||||
Motech Industries, Inc. | 316,935 | 4,364 | ||||
NEOMAX Co. Ltd. | 35,000 | 1,152 | ||||
SolarWorld AG | 29,800 | 3,986 | ||||
Ultralife Batteries, Inc. (a) | 53,100 | 637 | ||||
30,505 | ||||||
Industrial Conglomerates – 0.1% | ||||||
Hutchison Whampoa Ltd. | 257,000 | 2,448 | ||||
Raven Industries, Inc. | 1,842 | 53 | ||||
2,501 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
20 |
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
INDUSTRIALS – continued | ||||||
Machinery – 2.2% | ||||||
A.S.V., Inc. (a) | 53,000 | $ | 1,324 | |||
Bucyrus International, Inc. Class A | 24,918 | 1,313 | ||||
Caterpillar, Inc. | 425,600 | 24,587 | ||||
Cummins, Inc. | 62,300 | 5,590 | ||||
Danaher Corp. | 549,800 | 30,668 | ||||
FreightCar America, Inc. | 174,700 | 8,400 | ||||
IDEX Corp. | 58,100 | 2,388 | ||||
Joy Global, Inc. | 222,275 | 8,891 | ||||
PACCAR, Inc. | 159,350 | 11,032 | ||||
94,193 | ||||||
Marine – 0.0% | ||||||
American Commercial Lines, Inc. | 12,500 | 379 | ||||
Road & Rail 0.3% | ||||||
Canadian National Railway Co. | 102,800 | 8,236 | ||||
Knight Transportation, Inc. | 39,930 | 828 | ||||
Landstar System, Inc. | 88,100 | 3,677 | ||||
12,741 | ||||||
Trading Companies & Distributors – 0.4% | ||||||
Fastenal Co. | 170,000 | 6,662 | ||||
Mitsui & Co. Ltd. | 801,000 | 10,292 | ||||
16,954 | ||||||
TOTAL INDUSTRIALS | 221,632 | |||||
INFORMATION TECHNOLOGY – 25.4% | ||||||
Communications Equipment – 1.6% | ||||||
Comverse Technology, Inc. (a) | 172,500 | 4,587 | ||||
Corning, Inc. (a) | 335,400 | 6,594 | ||||
CSR PLC (a) | 202,600 | 3,265 | ||||
ECI Telecom Ltd. (a) | 215,800 | 1,616 | ||||
F5 Networks, Inc. (a) | 34,700 | 1,984 | ||||
Foxconn International Holdings Ltd. | 478,000 | 780 | ||||
Ixia (a) | 513,500 | 7,590 | ||||
JDS Uniphase Corp. (a) | 147,000 | 347 | ||||
Motorola, Inc. | 880,600 | 19,893 | ||||
Nice Systems Ltd. sponsored ADR (a) | 12,000 | 578 | ||||
Nokia Corp. sponsored ADR | 138,200 | 2,529 | ||||
Nortel Networks Corp. (a) | 1,031,300 | 3,156 |
See accompanying notes which are an integral part of the financial statements.
21 Annual Report
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
INFORMATION TECHNOLOGY – continued | ||||||
Communications Equipment – continued | ||||||
QUALCOMM, Inc. | 334,200 | $ | 14,397 | |||
Sycamore Networks, Inc. (a) | 87,200 | 377 | ||||
67,693 | ||||||
Computers & Peripherals – 5.2% | ||||||
Apple Computer, Inc. (a) | 1,588,400 | 114,190 | ||||
EMC Corp. (a) | 218,600 | 2,977 | ||||
Hewlett-Packard Co. | 3,016,100 | 86,351 | ||||
Logitech International SA sponsored ADR (a) | 77,800 | 3,639 | ||||
Network Appliance, Inc. (a) | 416,400 | 11,243 | ||||
Seagate Technology | 61,800 | 1,235 | ||||
219,635 | ||||||
Electronic Equipment & Instruments – 0.6% | ||||||
Agilent Technologies, Inc. (a) | 89,800 | 2,989 | ||||
Amphenol Corp. Class A | 40,400 | 1,788 | ||||
Cogent, Inc. (a) | 7,100 | 161 | ||||
FLIR Systems, Inc. (a) | 1,982 | 44 | ||||
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 1,442,104 | 7,908 | ||||
Hoya Corp. | 10,800 | 388 | ||||
LoJack Corp. (a) | 300,000 | 7,239 | ||||
Mettler-Toledo International, Inc. (a) | 54,900 | 3,030 | ||||
National Instruments Corp. | 110,800 | 3,551 | ||||
Nidec Corp. | 3,900 | 332 | ||||
27,430 | ||||||
Internet Software & Services – 8.4% | ||||||
Akamai Technologies, Inc. (a) | 553,100 | 11,023 | ||||
Equinix, Inc. (a) | 10,377 | 423 | ||||
Google, Inc. Class A (sub. vtg.) (a) | 445,700 | 184,892 | ||||
iVillage, Inc. (a) | 328,200 | 2,632 | ||||
Websense, Inc. (a) | 21,343 | 1,401 | ||||
WebSideStory, Inc. (a) | 417,300 | 7,566 | ||||
Yahoo!, Inc. (a) | 3,814,000 | 149,433 | ||||
357,370 | ||||||
IT Services – 2.1% | ||||||
Accenture Ltd. Class A | 161,600 | 4,665 | ||||
CheckFree Corp. (a) | 82,500 | 3,787 | ||||
Cognizant Technology Solutions Corp. Class A (a) | 157,700 | 7,940 | ||||
First Data Corp. | 71,000 | 3,054 | ||||
Fiserv, Inc. (a) | 68,700 | 2,973 | ||||
Global Payments, Inc. | 244,300 | 11,387 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
22 |
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
INFORMATION TECHNOLOGY – continued | ||||||
IT Services – continued | ||||||
Heartland Payment Systems, Inc. | 3,200 | $ | 69 | |||
Infosys Technologies Ltd. sponsored ADR | 220,900 | 17,862 | ||||
MoneyGram International, Inc. | 29,200 | 762 | ||||
MPS Group, Inc. (a) | 28,600 | 391 | ||||
Paychex, Inc. | 106,300 | 4,052 | ||||
SRA International, Inc. Class A (a) | 201,561 | 6,156 | ||||
TALX Corp. | 275,000 | 12,570 | ||||
VeriFone Holdings, Inc. | 459,100 | 11,615 | ||||
Wright Express Corp. | 17,000 | 374 | ||||
87,657 | ||||||
Semiconductors & Semiconductor Equipment – 5.9% | ||||||
Advanced Analogic Technologies, Inc. | 37,200 | 515 | ||||
ATI Technologies, Inc. (a) | 47,300 | 806 | ||||
Broadcom Corp. Class A (a) | 168,600 | 7,949 | ||||
FormFactor, Inc. (a) | 137,000 | 3,347 | ||||
Freescale Semiconductor, Inc. Class A (a) | 12,100 | 305 | ||||
Hittite Microwave Corp. | 3,600 | 83 | ||||
Lam Research Corp. (a) | 62,500 | 2,230 | ||||
Marvell Technology Group Ltd. (a) | 2,147,600 | 120,459 | ||||
MathStar, Inc. | 10,000 | 57 | ||||
MediaTek, Inc. | 66,000 | 778 | ||||
Monolithic Power Systems, Inc. (a) | 106,400 | 1,595 | ||||
National Semiconductor Corp. | 535,100 | 13,902 | ||||
NVIDIA Corp. (a) | 217,400 | 7,948 | ||||
O2Micro International Ltd. sponsored ADR (a) | 3,000 | 31 | ||||
Powertech Technology, Inc. | 373,000 | 1,227 | ||||
Q Cells AG | 4,900 | 286 | ||||
Samsung Electronics Co. Ltd. | 124,325 | 81,320 | ||||
Siliconware Precision Industries Co. Ltd. sponsored ADR (d) | 67,700 | 470 | ||||
SiRF Technology Holdings, Inc. (a) | 252,900 | 7,536 | ||||
250,844 | ||||||
Software 1.6% | ||||||
Activision, Inc. (a) | 69,321 | 952 | ||||
Adobe Systems, Inc. | 232,706 | 8,601 | ||||
Altiris, Inc. (a) | 61,900 | 1,045 | ||||
Autodesk, Inc. (a) | 183,200 | 7,868 | ||||
Blackboard, Inc. (a) | 32,600 | 945 | ||||
Citrix Systems, Inc. (a) | 43,200 | 1,243 | ||||
FileNET Corp. (a) | 112,895 | 2,918 |
See accompanying notes which are an integral part of the financial statements.
23 Annual Report
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
INFORMATION TECHNOLOGY – continued | ||||||
Software – continued | ||||||
Intuit, Inc. (a) | 142,977 | $ | 7,621 | |||
JAMDAT Mobile, Inc. (a) | 16,400 | 436 | ||||
JDA Software Group, Inc. (a) | 400,000 | 6,804 | ||||
McAfee, Inc. (a) | 227,300 | 6,167 | ||||
NAVTEQ Corp. (a) | 136,530 | 5,990 | ||||
NDS Group PLC sponsored ADR (a) | 21,200 | 872 | ||||
Quality Systems, Inc. | 23,758 | 1,824 | ||||
Red Hat, Inc. (a) | 123,174 | 3,355 | ||||
Salesforce.com, Inc. (a) | 214,900 | 6,888 | ||||
SAP AG sponsored ADR | 100,900 | 4,548 | ||||
THQ, Inc. (a) | 6,150 | 147 | ||||
68,224 | ||||||
TOTAL INFORMATION TECHNOLOGY | 1,078,853 | |||||
MATERIALS 6.9% | ||||||
Chemicals – 0.7% | ||||||
Agrium, Inc. | 101,200 | 2,230 | ||||
Bayer AG | 192,000 | 8,018 | ||||
Celanese Corp. Class A | 81,100 | 1,551 | ||||
Chemtura Corp. | 11,128 | 141 | ||||
Monsanto Co. | 10,200 | 791 | ||||
Nalco Holding Co. (a) | 72,500 | 1,284 | ||||
Praxair, Inc. | 323,300 | 17,122 | ||||
31,137 | ||||||
Construction Materials 0.2% | ||||||
Eagle Materials, Inc. | 17,500 | 2,141 | ||||
Rinker Group Ltd. | 362,181 | 4,370 | ||||
6,511 | ||||||
Containers & Packaging – 0.1% | ||||||
Crown Holdings, Inc. (a) | 173,100 | 3,381 | ||||
Owens Illinois, Inc. (a) | 139,300 | 2,931 | ||||
6,312 | ||||||
Metals & Mining – 5.9% | ||||||
Aber Diamond Corp. | 1,800 | 67 | ||||
Agnico-Eagle Mines Ltd. | 137,300 | 2,719 | ||||
Alamos Gold, Inc. (a) | 1,010,000 | 5,708 | ||||
Anglo American PLC ADR (d) | 438,700 | 15,258 | ||||
Aquarius Platinum Ltd. (Australia) | 598,000 | 4,825 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
24 |
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
MATERIALS – continued | ||||||
Metals & Mining – continued | ||||||
Bema Gold Corp. (a) | 1,356,200 | $ | 3,931 | |||
BHP Billiton Ltd. sponsored ADR | 938,500 | 31,365 | ||||
Companhia Vale do Rio Doce sponsored ADR | 126,500 | 5,204 | ||||
Compania de Minas Buenaventura SA sponsored ADR | 65,000 | 1,840 | ||||
Compass Minerals International, Inc. | 49,900 | 1,225 | ||||
Eldorado Gold Corp. (a) | 608,400 | 2,978 | ||||
Falconbridge Ltd. | 116,600 | 3,460 | ||||
First Quantum Minerals Ltd. | 183,500 | 5,880 | ||||
Freeport-McMoRan Copper & Gold, Inc. Class B | 66,300 | 3,567 | ||||
Gabriel Resources Ltd. (a) | 498,900 | 1,219 | ||||
Gerdau SA sponsored ADR | 212,200 | 3,539 | ||||
Glamis Gold Ltd. (a) | 768,800 | 21,142 | ||||
Goldcorp, Inc. | 797,175 | 17,760 | ||||
IPSCO, Inc. | 134,800 | 11,214 | ||||
Ivanhoe Mines Ltd. (a) | 565,600 | 4,062 | ||||
Lihir Gold Ltd. (a) | 377,800 | 604 | ||||
Meridian Gold, Inc. (a) | 40,000 | 877 | ||||
Minefinders Corp. Ltd. (a) | 162,300 | 824 | ||||
New Gold, Inc. (a) | 324,100 | 2,175 | ||||
Newmont Mining Corp. | 879,100 | 46,944 | ||||
Nucor Corp. | 119,300 | 7,960 | ||||
Phelps Dodge Corp. | 29,700 | 4,273 | ||||
POSCO sponsored ADR | 111,500 | 5,520 | ||||
Rio Tinto PLC (Reg.) | 592,800 | 27,089 | ||||
Shore Gold, Inc. (a) | 15,100 | 100 | ||||
Southern Copper Corp. | 23,600 | 1,581 | ||||
Teck Cominco Ltd. Class B (sub. vtg.) | 84,500 | 4,510 | ||||
United States Steel Corp. | 8,400 | 404 | ||||
249,824 | ||||||
TOTAL MATERIALS | 293,784 | |||||
TELECOMMUNICATION SERVICES – 3.0% | ||||||
Diversified Telecommunication Services – 0.1% | ||||||
PT Telkomunikasi Indonesia Tbk sponsored ADR | 16,500 | 394 | ||||
Telewest Global, Inc. (a) | 151,415 | 3,607 | ||||
Telkom SA Ltd. | 17,500 | 373 | ||||
4,374 |
See accompanying notes which are an integral part of the financial statements.
25 Annual Report
Investments continued | ||||||||
Common Stocks continued | ||||||||
Shares | Value (Note 1) | |||||||
(000s) | ||||||||
TELECOMMUNICATION SERVICES – continued | ||||||||
Wireless Telecommunication Services – 2.9% | ||||||||
America Movil SA de CV Series L sponsored ADR | 2,186,600 | $ | 63,980 | |||||
American Tower Corp. Class A (a) | 331,427 | 8,982 | ||||||
China Mobile (Hong Kong) Ltd. sponsored ADR | 136,700 | 3,286 | ||||||
Investcom LLC GDR | 38,400 | 540 | ||||||
Leap Wireless International, Inc. (a) | 10,800 | 409 | ||||||
Nextel Partners, Inc. Class A (a) | 551,978 | 15,422 | ||||||
NII Holdings, Inc. (a) | 608,947 | 26,599 | ||||||
Rogers Communications, Inc. Class B (non-vtg.) | 43,700 | 1,849 | ||||||
Turkcell Iletisim Hizmet AS sponsored ADR | 11,000 | 169 | ||||||
Vimpel Communications sponsored ADR (a) | 58,400 | 2,583 | ||||||
123,819 | ||||||||
TOTAL TELECOMMUNICATION SERVICES | 128,193 | |||||||
UTILITIES – 0.2% | ||||||||
Gas Utilities 0.2% | ||||||||
Questar Corp. | 29,100 | 2,203 | ||||||
Southern Union Co. | 204,075 | 4,822 | ||||||
7,025 | ||||||||
Independent Power Producers & Energy Traders – 0.0% | ||||||||
AES Corp. (a) | 150,400 | 2,381 | ||||||
Water Utilities 0.0% | ||||||||
Companhia de Saneamento Basico do Estado de Sao Paulo | ||||||||
(SABESP) sponsored ADR | 28,100 | 474 | ||||||
TOTAL UTILITIES | 9,880 | |||||||
TOTAL COMMON STOCKS | ||||||||
(Cost $3,273,427) | 3,824,298 | |||||||
Nonconvertible Preferred Stocks 0.0% | ||||||||
CONSUMER DISCRETIONARY – 0.0% | ||||||||
Automobiles – 0.0% | ||||||||
Porsche AG (non-vtg.) | 1,178 | 846 | ||||||
TOTAL NONCONVERTIBLE PREFERRED STOCKS | ||||||||
(Cost $871) | 846 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
26 |
U.S. Treasury Obligations 0.1% | ||||||||||
Principal | Value (Note 1) | |||||||||
Amount (000s) | (000s) | |||||||||
U.S. Treasury Notes: | ||||||||||
4.25% 8/15/14 | $ | 2,600 | $ | 2,572 | ||||||
4.75% 5/15/14 | 2,700 | 2,766 | ||||||||
TOTAL U.S. TREASURY OBLIGATIONS | ||||||||||
(Cost $5,376) | 5,338 | |||||||||
Floating Rate Loans 0.0% | ||||||||||
CONSUMER DISCRETIONARY – 0.0% | ||||||||||
Media – 0.0% | ||||||||||
Charter Communications Operating LLC Tranche B, term | ||||||||||
loan 7.5% 4/7/11 (g) | 818 | 820 | ||||||||
TOTAL FLOATING RATE LOANS | ||||||||||
(Cost $805) | 820 | |||||||||
Money Market Funds 11.0% | ||||||||||
Shares | ||||||||||
Fidelity Cash Central Fund, 4.28% (b) | 431,339,011 | 431,339 | ||||||||
Fidelity Securities Lending Cash Central Fund, | ||||||||||
4.35% (b)(c) | 35,274,425 | 35,274 | ||||||||
TOTAL MONEY MARKET FUNDS | ||||||||||
(Cost $466,613) | 466,613 | |||||||||
TOTAL INVESTMENT PORTFOLIO 101.0% | ||||||||||
(Cost $3,747,092) | 4,297,915 | |||||||||
NET OTHER ASSETS – (1.0)% | (42,857) | |||||||||
NET ASSETS 100% | $ | 4,255,058 |
Legend (a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund’s holdings as of its most recent quarter end is available upon request. |
See accompanying notes which are an integral part of the financial statements.
27 Annual Report
Investments continued
(c) Investment made with cash collateral received from securities on loan. (d) Security or a portion of the security is on loan at period end. (e) Affiliated company (f) 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 $376,000 or 0.0% of net assets. (g) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. (h) Restricted securities – Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $2,421,000 or 0.1% of net assets. |
Additional information on each holding is as follows:
Acquisition | Acquisition | |||||
Security | Date | Cost (000s) | ||||
MannKind Corp. | ||||||
warrants 8/3/10 | 8/3/05 | $ | 1 | |||
The Weinstein Co. | ||||||
Holdings, LLC | ||||||
Class A 1 | 10/19/05 | 2,267 |
Affiliated Central Funds
Information regarding income received by the fund from the affiliated Central funds during the period is as follows:
Fund | Income received | |||
(amounts in thousands) | ||||
Fidelity Cash Central Fund | $ | 10,040 | ||
Fidelity Securities Lending Cash Central Fund | 550 | |||
Total | $ | 10,590 |
Other Affiliated Issuers
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:
Value, | ||||||||||||||||||||
Affiliate | beginning of | Sales | Dividend | Value, end of | ||||||||||||||||
(amounts in thousands) | period | Purchases | Proceeds | Income | period | |||||||||||||||
Bakers Footwear | ||||||||||||||||||||
Group, Inc. | $ | 1,061 | $ | 5,460 | $ | — | $ | — | $ | 7,130 |
See accompanying notes which are an integral part of the financial statements.
Annual Report 28
Other Information
Distribution of investments by country of issue, as a percentage of total net assets, is as follows:
United States of America | 75.4% | |
Canada | 5.2% | |
Bermuda | 4.2% | |
Switzerland | 2.5% | |
United Kingdom | 2.1% | |
Korea (South) | 2.0% | |
Mexico | 1.6% | |
Japan | 1.0% | |
Netherlands Antilles | 1.0% | |
Others (individually less than 1%) . | 5.0% | |
100.0% |
See accompanying notes which are an integral part of the financial statements.
29 Annual Report
Financial Statements | ||||||||||
Statement of Assets and Liabilities | ||||||||||
Amounts in thousands (except per share amounts) | December 31, 2005 | |||||||||
Assets | ||||||||||
Investment in securities, at value (including securities | ||||||||||
loaned of $34,259) See accompanying schedule: | ||||||||||
Unaffiliated issuers (cost $3,274,017) | $ | 3,824,172 | ||||||||
Affiliated Central Funds (cost $466,613) | 466,613 | |||||||||
Other affiliated issuers (cost $6,462) | 7,130 | |||||||||
Total Investments (cost $3,747,092) | $ | 4,297,915 | ||||||||
Receivable for investments sold | 5,131 | |||||||||
Receivable for fund shares sold | 39,274 | |||||||||
Dividends receivable | 3,623 | |||||||||
Interest receivable | 1,835 | |||||||||
Prepaid expenses | 10 | |||||||||
Other affiliated receivables | 2 | |||||||||
Other receivables | 440 | |||||||||
Total assets | 4,348,230 | |||||||||
Liabilities | ||||||||||
Payable for investments purchased | $ | 48,929 | ||||||||
Payable for fund shares redeemed | 3,928 | |||||||||
Accrued management fee | 1,933 | |||||||||
Distribution fees payable | 1,837 | |||||||||
Other affiliated payables | 811 | |||||||||
Other payables and accrued expenses | 460 | |||||||||
Collateral on securities loaned, at value | 35,274 | |||||||||
Total liabilities | 93,172 | |||||||||
Net Assets | $ | 4,255,058 | ||||||||
Net Assets consist of: | ||||||||||
Paid in capital | $ | 3,696,619 | ||||||||
Accumulated net investment loss | (34) | |||||||||
Accumulated undistributed net realized gain (loss) on | ||||||||||
investments and foreign currency transactions | 7,661 | |||||||||
Net unrealized appreciation (depreciation) on | ||||||||||
investments and assets and liabilities in foreign | ||||||||||
currencies | 550,812 | |||||||||
Net Assets | $ | 4,255,058 | ||||||||
See accompanying notes which are an integral part of the financial statements. | ||||||||||
Annual Report | 30 |
Statement of Assets and Liabilities continued | ||||
Amounts in thousands (except per share amounts) | December 31, 2005 | |||
Calculation of Maximum Offering Price | ||||
Class A: | ||||
Net Asset Value and redemption price per share | ||||
($1,019,057 ÷ 61,217 shares) | $ | 16.65 | ||
Maximum offering price per share (100/94.25 of $16.65) | $ | 17.67 | ||
Class T: | ||||
Net Asset Value and redemption price per share | ||||
($1,392,718 ÷ 84,042 shares) | $ | 16.57 | ||
Maximum offering price per share (100/96.50 of $16.57) | $ | 17.17 | ||
Class B: | ||||
Net Asset Value and offering price per share ($339,225 | ||||
÷ 20,748 shares)A | $ | 16.35 | ||
Class C: | ||||
Net Asset Value and offering price per share | ||||
($1,006,236 ÷ 61,474 shares)A | $ | 16.37 | ||
Institutional Class: | ||||
Net Asset Value, offering price and redemption price per | ||||
share ($497,822 ÷ 29,674 shares) | $ | 16.78 | ||
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. |
See accompanying notes which are an integral part of the financial statements.
31 Annual Report
Financial Statements continued | ||||||
Statement of Operations | ||||||
Amounts in thousands | Year ended December 31, 2005 | |||||
Investment Income | ||||||
Dividends | $ | 16,413 | ||||
Interest | 867 | |||||
Income from affiliated Central Funds | 10,590 | |||||
Total income | 27,870 | |||||
Expenses | ||||||
Management fee | $ | 12,559 | ||||
Transfer agent fees | 5,421 | |||||
Distribution fees | 12,231 | |||||
Accounting and security lending fees | 699 | |||||
Independent trustees’ compensation | 9 | |||||
Custodian fees and expenses | 288 | |||||
Registration fees | 848 | |||||
Audit | 56 | |||||
Legal | 14 | |||||
Miscellaneous | 13 | |||||
Total expenses before reductions | 32,138 | |||||
Expense reductions | (970) | 31,168 | ||||
Net investment income (loss) | (3,298) | |||||
Realized and Unrealized Gain (Loss) | ||||||
Net realized gain (loss) on: | ||||||
Investment securities: | ||||||
Unaffiliated issuers (net of foreign taxes of $1) | 15,492 | |||||
Foreign currency transactions | (54) | |||||
Total net realized gain (loss) | 15,438 | |||||
Change in net unrealized appreciation (depreciation) on: | ||||||
Investment securities (net of increase in deferred for- | ||||||
eign taxes of $11) | 426,571 | |||||
Assets and liabilities in foreign currencies | (4) | |||||
Total change in net unrealized appreciation | ||||||
(depreciation) | 426,567 | |||||
Net gain (loss) | 442,005 | |||||
Net increase (decrease) in net assets resulting from | ||||||
operations | $ | 438,707 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
32 |
Statement of Changes in Net Assets | ||||||||
Year ended | Year ended | |||||||
December 31, | December 31, | |||||||
Amounts in thousands | 2005 | 2004 | ||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | (3,298) | $ | (2,694) | ||||
Net realized gain (loss) | 15,438 | (4,061) | ||||||
Change in net unrealized appreciation (depreciation) . | 426,567 | 109,094 | ||||||
Net increase (decrease) in net assets resulting | ||||||||
from operations | 438,707 | 102,339 | ||||||
Distributions to shareholders from net investment income . | — | (206) | ||||||
Share transactions - net increase (decrease) | 2,787,029 | 729,179 | ||||||
Total increase (decrease) in net assets | 3,225,736 | 831,312 | ||||||
Net Assets | ||||||||
Beginning of period | 1,029,322 | 198,010 | ||||||
End of period (including accumulated net investment | ||||||||
loss of $34 and accumulated net investment loss of | ||||||||
$560, respectively) | $ | 4,255,058 | $ | 1,029,322 |
See accompanying notes which are an integral part of the financial statements.
33 Annual Report
Financial Highlights Class A | ||||||||||||
Years ended December 31, | 2005 | 2004 | 2003F | |||||||||
Selected Per Share Data | ||||||||||||
Net asset value, beginning of period | $ 13.99 | $ 11.79 | $ 10.00 | |||||||||
Income from Investment Operations | ||||||||||||
Net investment income (loss)E | 02 | (.03) | (.04) | |||||||||
Net realized and unrealized gain (loss) | 2.64 | 2.24 | 1.87 | |||||||||
Total from investment operations | 2.66 | 2.21 | 1.83 | |||||||||
Distributions from net investment income | — | (.01) | (.03) | |||||||||
Distributions from net realized gain | — | — | (.01) | |||||||||
Total distributions | — | (.01) | (.04) | |||||||||
Net asset value, end of period | $ 16.65 | $ 13.99 | $ 11.79 | |||||||||
Total ReturnB,C,D | 19.01% | 18.76% | 18.23% | |||||||||
Ratios to Average Net AssetsG | ||||||||||||
Expenses before reductions | 1.17% | 1.22% | 1.39%A | |||||||||
Expenses net of fee waivers, if any | 1.17% | 1.22% | 1.39%A | |||||||||
Expenses net of all reductions | 1.13% | 1.17% | 1.28%A | |||||||||
Net investment income (loss) | 13% | (.26)% | (.81)%A | |||||||||
Supplemental Data | ||||||||||||
Net assets, end of period (in millions) | $ 1,019 | $ 230 | $ 37 | |||||||||
Portfolio turnover rate | 65% | 87% | 77%A |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F For the period July 31, 2003 (commencement of operations) to December 31, 2003. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start up periods may not be representative of longer term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
34 |
Financial Highlights Class T | ||||||||||||
Years ended December 31, | 2005 | 2004 | 2003F | |||||||||
Selected Per Share Data | ||||||||||||
Net asset value, beginning of period | $ 13.96 | $ 11.78 | $ 10.00 | |||||||||
Income from Investment Operations | ||||||||||||
Net investment income (loss)E | (.01) | (.06) | (.05) | |||||||||
Net realized and unrealized gain (loss) | 2.62 | 2.25 | 1.86 | |||||||||
Total from investment operations | 2.61 | 2.19 | 1.81 | |||||||||
Distributions from net investment income | — | (.01) | (.02) | |||||||||
Distributions from net realized gain | — | — | (.01) | |||||||||
Total distributions | — | (.01) | (.03) | |||||||||
Net asset value, end of period | $ 16.57 | $ 13.96 | $ 11.78 | |||||||||
Total ReturnB,C,D | 18.70% | 18.60% | 18.08% | |||||||||
Ratios to Average Net AssetsG | ||||||||||||
Expenses before reductions | 1.38% | 1.43% | 1.62%A | |||||||||
Expenses net of fee waivers, if any | 1.38% | 1.43% | 1.62%A | |||||||||
Expenses net of all reductions | 1.34% | 1.39% | 1.51%A | |||||||||
Net investment income (loss) | (.08)% | (.48)% | (1.04)%A | |||||||||
Supplemental Data | ||||||||||||
Net assets, end of period (in millions) | $ 1,393 | $ 325 | $ 62 | |||||||||
Portfolio turnover rate | 65% | 87% | 77%A |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F For the period July 31, 2003 (commencement of operations) to December 31, 2003. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start up periods may not be representative of longer term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. |
See accompanying notes which are an integral part of the financial statements.
35 Annual Report
Financial Highlights Class B | ||||||||||||
Years ended December 31, | 2005 | 2004 | 2003F | |||||||||
Selected Per Share Data | ||||||||||||
Net asset value, beginning of period | $ 13.85 | $ 11.76 | $ 10.00 | |||||||||
Income from Investment Operations | ||||||||||||
Net investment income (loss)E | (.10) | (.13) | (.07) | |||||||||
Net realized and unrealized gain (loss) | 2.60 | 2.23 | 1.85 | |||||||||
Total from investment operations | 2.50 | 2.10 | 1.78 | |||||||||
Distributions from net investment income | — | (.01) | (.01) | |||||||||
Distributions from net realized gain | — | — | (.01) | |||||||||
Total distributions | — | (.01) | (.02) | |||||||||
Net asset value, end of period | $ 16.35 | $ 13.85 | $ 11.76 | |||||||||
Total ReturnB,C,D | 18.05% | 17.87% | 17.75% | |||||||||
Ratios to Average Net AssetsG | ||||||||||||
Expenses before reductions | 1.98% | 2.02% | 2.19%A | |||||||||
Expenses net of fee waivers, if any | 1.98% | 2.02% | 2.19%A | |||||||||
Expenses net of all reductions | 1.94% | 1.97% | 2.08%A | |||||||||
Net investment income (loss) | (.68)% | (1.06)% | (1.61)%A | |||||||||
Supplemental Data | ||||||||||||
Net assets, end of period (in millions) | $ 339 | $ 109 | $ 27 | |||||||||
Portfolio turnover rate | 65% | 87% | 77%A |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F For the period July 31, 2003 (commencement of operations) to December 31, 2003. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start up periods may not be representative of longer term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
36 |
Financial Highlights Class C | ||||||||||||
Years ended December 31, | 2005 | 2004 | 2003F | |||||||||
Selected Per Share Data | ||||||||||||
Net asset value, beginning of period | $ 13.86 | $ 11.76 | $ 10.00 | |||||||||
Income from Investment Operations | ||||||||||||
Net investment income (loss)E | (.09) | (.12) | (.07) | |||||||||
Net realized and unrealized gain (loss) | 2.60 | 2.23 | 1.85 | |||||||||
Total from investment operations | 2.51 | 2.11 | 1.78 | |||||||||
Distributions from net investment income | — | (.01) | (.01) | |||||||||
Distributions from net realized gain | — | — | (.01) | |||||||||
Total distributions | — | (.01) | (.02) | |||||||||
Net asset value, end of period | $ 16.37 | $ 13.86 | $ 11.76 | |||||||||
Total ReturnB,C,D | 18.11% | 17.95% | 17.77% | |||||||||
Ratios to Average Net AssetsG | ||||||||||||
Expenses before reductions | 1.89% | 1.94% | 2.14%A | |||||||||
Expenses net of fee waivers, if any | 1.89% | 1.94% | 2.14%A | |||||||||
Expenses net of all reductions | 1.85% | 1.89% | 2.03%A | |||||||||
Net investment income (loss) | (.59)% | (.98)% | (1.55)%A | |||||||||
Supplemental Data | ||||||||||||
Net assets, end of period (in millions) | $ 1,006 | $ 246 | $ 49 | |||||||||
Portfolio turnover rate | 65% | 87% | 77%A |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F For the period July 31, 2003 (commencement of operations) to December 31, 2003. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start up periods may not be representative of longer term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. |
See accompanying notes which are an integral part of the financial statements.
37 Annual Report
Financial Highlights Institutional Class | ||||||||||||
Years ended December 31, | 2005 | 2004 | 2003E | |||||||||
Selected Per Share Data | ||||||||||||
Net asset value, beginning of period | $ 14.05 | $ 11.79 | $ 10.00 | |||||||||
Income from Investment Operations | ||||||||||||
Net investment income (loss)D | 07 | .01 | (.02) | |||||||||
Net realized and unrealized gain (loss) | 2.66 | 2.26 | 1.86 | |||||||||
Total from investment operations | 2.73 | 2.27 | 1.84 | |||||||||
Distributions from net investment income | — | (.01) | (.04) | |||||||||
Distributions from net realized gain | — | — | (.01) | |||||||||
Total distributions | — | (.01) | (.05) | |||||||||
Net asset value, end of period | $ 16.78 | $ 14.05 | $ 11.79 | |||||||||
Total ReturnB,C | 19.43% | 19.27% | 18.31% | |||||||||
Ratios to Average Net AssetsF | ||||||||||||
Expenses before reductions | 84% | .86% | 1.07%A | |||||||||
Expenses net of fee waivers, if any | 84% | .86% | 1.07%A | |||||||||
Expenses net of all reductions | 79% | .82% | .96%A | |||||||||
Net investment income (loss) | 47% | .10% | (.49)%A | |||||||||
Supplemental Data | ||||||||||||
Net assets, end of period (in millions) | $ 498 | $ 120 | $ 23 | |||||||||
Portfolio turnover rate | 65% | 87% | 77%A |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E For the period July 31, 2003 (commencement of operations) to December 31, 2003. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start up periods may not be representative of longer term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
38 |
Notes to Financial Statements
For the period ended December 31, 2005 (Amounts in thousands except ratios) |
1. Significant Accounting Policies.
Fidelity Advisor New Insights Fund (the fund) is a fund of Fidelity Contrafund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open end management investment company organized as a Massachusetts business trust.
The fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The fund may invest in affiliated money market central funds (Money Market Central Funds) which are open end investment companies available to investment companies and other accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require manage ment 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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open end mutual funds, are valued at their closing net asset value each business day. Short term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of
39 Annual Report
Notes to Financial Statements continued |
(Amounts in thousands except ratios) |
1. Significant Accounting Policies continued |
Security Valuation continued |
the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securi ties markets, reviewing developments in foreign markets and evaluating the perfor mance of ADRs, futures contracts and exchange traded funds. Because the fund’s utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used can not be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts’ terms.
Foreign denominated assets, including investment securities, and liabilities are trans lated into U.S. dollars at the exchange rate at period end. Purchases and sales of invest ment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transac tion date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. Dividend income is recorded on the ex dividend date, except for certain dividends from foreign securities where the ex dividend date may have passed, which 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund esti mates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each fund in the trust.
Annual Report |
40 |
1. Significant Accounting Policies continued
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund’s understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distribu tions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book tax differences will reverse in a subsequent period.
Book tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), market discount, net operating losses, capital loss carryforwards, and losses deferred due to wash sales.
The tax basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ | 602,538 | ||||||
Unrealized depreciation | (58,431) | |||||||
Net unrealized appreciation (depreciation) | 544,107 | |||||||
Undistributed long term capital gain | 14,331 | |||||||
Cost for federal income tax purposes | $ | 3,753,808 | ||||||
The tax character of distributions paid was as follows: | ||||||||
December 31, 2005 | December 31, 2004 | |||||||
Ordinary Income | $ | — | $ | 206 | ||||
2. Operating Policies. |
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non government securities. Collateral is held in segregated accounts with
41 Annual Report
Notes to Financial Statements continued |
(Amounts in thousands except ratios) |
2. Operating Policies continued |
Repurchase Agreements continued |
custodian banks and may be obtained in the event of a default of the counterparty. The fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. The fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transac tions 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. Information regarding restricted securities is included at the end of the fund’s Schedule of Investments.
Loans and Other Direct Debt Instruments. The fund may invest in loans and loan participations, trade claims or other receivables. These investments may include standby financing commitments, including revolving credit facilities, that obligate the fund to supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary. The fund may be contrac tually obligated to receive approval from the agent bank and/or borrower prior to the sale of these investments.
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short term securities and U.S. government securities, aggregated $3,684,822 and $1,250,411, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment manage ment related services for which the fund pays a monthly management fee. The manage ment fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund’s average net assets and a group fee rate that averaged .27% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual man agement fee rate was ..57% of the fund’s average net assets.
Distribution and Service Plan. In accordance with Rule 12b 1 of the 1940 Act, the fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each
Annual Report 42
4. Fees and Other Transactions with Affiliates continued | ||
Distribution and Service Plan continued |
class’ average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |||||||||
Fee | Fee | FDC | by FDC | |||||||||
Class A | 0% | .25% | $ | 1,234 | $ | — | ||||||
Class T | 25% | .25% | 3,731 | 287 | ||||||||
Class B | 75% | .25% | 2,003 | 1,502 | ||||||||
Class C | 75% | .25% | 5,263 | 3,033 | ||||||||
$ | 12,231 | $ | 4,822 |
Sales Load. FDC receives a front end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermedi aries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and ..25% for certain purchases of Class A and Class T shares.
For the period, sales charge amounts retained by FDC were as follows: | ||||
Retained | ||||
by FDC | ||||
Class A | $ | 2,016 | ||
Class T | 505 | |||
Class B* | 248 | |||
Class C* | 95 | |||
$ | 2,864 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servic ing agent for each class of the fund. FIIOC receives account fees and asset based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of share holder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
43 Annual Report
Notes to Financial Statements continued | ||||||
(Amounts in thousands except ratios) | ||||||
4. Fees and Other Transactions with Affiliates continued | ||||||
Transfer Agent Fees continued | ||||||
% of | ||||||
Average | ||||||
Amount | Net Assets | |||||
Class A | $ | 1,324 | .27 | |||
Class T | 1,704 | .23 | ||||
Class B | 671 | .33 | ||||
Class C | 1,287 | .24 | ||||
Institutional Class | 435 | .19 | ||||
$ | 5,421 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund’s accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Affiliated Central Funds. The fund may invest in Money Market Central Funds which seek preservation of capital and current income and are managed by Fidelity Invest ments Money Management, Inc. (FIMM), an affiliate of FMR.
The Money Market Central Funds do not pay a management fee.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $58 for the period.
5. Committed Line of Credit. |
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the “line of credit”) to be utilized for temporary or emergency purposes to fund share holder redemptions or for other short term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Security Lending. |
The fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount 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
Annual Report |
44 |
6. Security Lending continued
delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the fund’s Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Net income from lending portfolio securities during the period amounted to $550.
7. Expense Reductions. |
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $958 for the period. In addition, through arrangements with the fund’s custodian and each class’ transfer agent, credits realized as a result of uninvested cash balances were used to reduce the fund’s expenses. During the period, these credits reduced the fund’s custody expenses by $7. During the period, credits reduced each class’ transfer agent expense as noted in the table below.
Transfer Agent | ||||
expense reduction | ||||
Institutional Class | $ | 5 | ||
8. Other. |
The fund’s organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the perfor mance of their duties to the fund. In the normal course of business, the fund may also enter into contracts that provide general indemnifications. The fund’s maximum expo sure under these arrangements is unknown as this would be dependent on future claims that may be made against the fund. The risk of material loss from such claims is considered remote.
45 Annual Report
Notes to Financial Statements continued | ||||||||||||
(Amounts in thousands except ratios) | ||||||||||||
9. Distributions to Shareholders. | ||||||||||||
Distributions to shareholders of each class were as follows: | ||||||||||||
Years ended December 31, | 2005 | 2004 | ||||||||||
From net investment income | ||||||||||||
Class A | $ | — | $ | 38 | ||||||||
Class T | — | 64 | ||||||||||
Class B | — | 28 | ||||||||||
Class C | — | 52 | ||||||||||
Institutional Class | — | 24 | ||||||||||
Total | $ | — | $ | 206 | ||||||||
10. Share Transactions. | ||||||||||||
Transactions for each class of shares were as follows: | ||||||||||||
Shares | Dollars | |||||||||||
Years ended December 31, | 2005 | 2004 | 2005 | 2004 | ||||||||
Class A | ||||||||||||
Shares sold | 48,615 | 14,442 | $ | 747,881 | $ | 186,266 | ||||||
Reinvestment of distributions | 3 | 32 | ||||||||||
Shares redeemed | (3,868) | (1,138) | (58,730) | (14,313) | ||||||||
Net increase (decrease) | 44,747 | 13,307 | $ | 689,151 | $ | 171,985 | ||||||
Class T | ||||||||||||
Shares sold | 65,661 | 19,345 | $ | 990,175 | $ | 246,887 | ||||||
Reinvestment of distributions | 5 | 59 | ||||||||||
Shares redeemed | (4,899) | (1,331) | (73,812) | (16,882) | ||||||||
Net increase (decrease) | 60,762 | 18,019 | $ | 916,363 | $ | 230,064 | ||||||
Class B | ||||||||||||
Shares sold | 14,492 | 5,963 | $ | 215,896 | $ | 75,522 | ||||||
Reinvestment of distributions | 2 | 19 | ||||||||||
Shares redeemed | (1,584) | (415) | (23,549) | (5,241) | ||||||||
Net increase (decrease) | 12,908 | 5,550 | $ | 192,347 | $ | 70,300 | ||||||
Class C | ||||||||||||
Shares sold | 46,847 | 14,235 | $ | 703,988 | $ | 180,974 | ||||||
Reinvestment of distributions | 3 | 35 | ||||||||||
Shares redeemed | (3,110) | (640) | (46,058) | (8,022) | ||||||||
Net increase (decrease) | 43,737 | 13,598 | $ | 657,930 | $ | 172,987 | ||||||
Institutional Class | ||||||||||||
Shares sold | 22,374 | 6,867 | $ | 349,673 | $ | 87,943 | ||||||
Reinvestment of distributions | 1 | 11 | ||||||||||
Shares redeemed | (1,206) | (322) | (18,435) | (4,111) | ||||||||
Net increase (decrease) | 21,168 | 6,546 | $ | 331,238 | $ | 83,843 |
Annual Report |
46 |
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Contrafund and the Shareholders of Fidelity Advisor New Insights Fund:
In our opinion, the accompanying statement of assets and liabilities, including the sched ule 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 Advisor New Insights Fund (a fund of Fidelity Contrafund) at December 31, 2005 and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereaf ter referred to as “financial statements”) are the responsibility of the Fidelity Advisor New Insights Fund’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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material mis statement. 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, 2005 by correspondence with the custodian and brokers, provide a reason able basis for our opinion.
/s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Boston, Massachusetts February 9, 2006 |
47 Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund’s activities, review contractual arrangements with companies that provide services to the fund, and review the fund’s performance. Except for William O. McCoy and Albert R. Gamper, Jr., each of the Trustees oversees 326 funds advised by FMR or an affiliate. Mr. McCoy oversees 328 funds advised by FMR or an affiliate. Mr. Gamper oversees 235 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instru ment signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation Edward C. Johnson 3d (75) |
Year of Election or Appointment: 1963
Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR Corp.; a Di rector and Chairman of the Board and of the Executive Committee of FMR; Chairman and a Director of Fidelity Management & Research (Far East) Inc.; Chairman and a Director of Fidelity Investments Money Man agement, Inc.; and Chairman (2001 present) and a Director (2000 present) of FMR Co., Inc.
Annual Report |
48 |
Name, Age; Principal Occupation Stephen P. Jonas (52) |
Year of Election or Appointment: 2005
Mr. Jonas is Senior Vice President of Advisor New Insights. He also serves as Senior Vice President of other Fidelity funds (2005 present). Mr. Jonas is Executive Director of FMR (2005 present). Previously, Mr. Jonas served as President of Fidelity Enterprise Operations and Risk Services (2004 2005), Chief Administrative Officer (2002 2004), and Chief Financial Officer of FMR Co. (1998 2000). Mr. Jonas has been with Fidelity Investments since 1987 and has held various financial and management positions including Chief Financial Officer of FMR. In addi tion, he serves on the Boards of Boston Ballet (2003 present) and Sim mons College (2003 present).
Robert L. Reynolds (53) |
Year of Election or Appointment: 2003
Mr. Reynolds is a Director (2003 present) and Chief Operating Officer (2002 present) of FMR Corp. He also serves on the Board at Fidelity Investments Canada, Ltd. (2000 present). Previously, Mr. Reynolds served as President of Fidelity Investments Institutional Retirement Group (1996 2000).
* Trustees have been determined to be “Interested Trustees” by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
Independent Trustees: |
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205 5235.
Name, Age; Principal Occupation Dennis J. Dirks (57) |
Year of Election or Appointment: 2005
Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999 2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Com pany (DTC) (1999 2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999 2003). In addi tion, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001 2003) and Chief Executive Officer and Board member of the Mortgage Backed Securities Clearing Corporation (2001 2003). Mr. Dirks also serves as a Trustee of Manhattan College (2005 present).
49 Annual Report
Trustees and Officers - continued
Name, Age; Principal Occupation Albert R. Gamper, Jr. (63) |
Year of Election or Appointment: 2006
Mr. Gamper also serves as a Trustee (2006 present) or Member of the Advisory Board (2005 present) of other investment companies advised by FMR. Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). Dur ing his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987 1989; 1999 2001; 2002 2004), Chief Executive Officer (1987 2004), and President (1989 2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001 present), Chairman of the Board of Governors, Rutgers University (2004 present), and Chairman of the Board of Saint Barnabas Health Care System.
Robert M. Gates (62) |
Year of Election or Appointment: 1997
Dr. Gates is Chairman of the Independent Trustees (2006 present). Dr. Gates is President of Texas A&M University (2002 present). He was Director of the Central Intelligence Agency (CIA) from 1991 to 1993. From 1989 to 1991, Dr. Gates served as Assistant to the President of the United States and Deputy National Security Advisor. Dr. Gates is a Director of NACCO Industries, Inc. (mining and manufacturing), Parker Drilling Co., Inc. (drilling and rental tools for the energy industry, 2001 present), and Brinker International (restaurant management, 2003 present). Previously, Dr. Gates served as a Director of LucasVarity PLC (automotive components and diesel engines), a Director of TRW Inc. (automotive, space, defense, and information technology), and Dean of the George Bush School of Government and Public Service at Texas A&M University (1999 2001). Dr. Gates also is a Trustee of the Forum for International Policy.
Annual Report |
50 |
Name, Age; Principal Occupation George H. Heilmeier (69) |
Year of Election or Appointment: 2004
Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (commu nication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineer ing and information technology support for the government), and HRL Laboratories (private research and development, 2004 present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE) (2000 present). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Acad emy of Arts and Sciences, and the Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Pre viously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992 2002), Compaq (1994 2002), Automatic Data Processing, Inc. (ADP) (technology based business outsourcing, 1995 2002), INET Technologies Inc. (telecommu nications network surveillance, 2001 2004), and Teletech Holdings (cus tomer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid display.
Marie L. Knowles (59) |
Year of Election or Appointment: 2001
Prior to Ms. Knowles’ retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996 2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare ser vice, 2002 present). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California.
51 Annual Report
Trustees and Officers - continued
Name, Age; Principal Occupation Ned C. Lautenbach (61) |
Year of Election or Appointment: 2000
Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Italtel Holding S.p.A. (telecommunications (Milan, Italy), 2004 present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005 present), as well as a member of the Council on Foreign Relations.
William O. McCoy (72) |
Year of Election or Appointment: 1997
Prior to his retirement in December 1994, Mr. McCoy was Vice Chair man of the Board of BellSouth Corporation (telecommunications) and President of BellSouth Enterprises. He is currently a Director of Liberty Corporation (holding company), Duke Realty Corporation (real estate), and Progress Energy, Inc. (electric utility). He is also a partner of Frank lin Street Partners (private investment management firm) and a member of the Research Triangle Foundation Board. In addition, Mr. McCoy served as the Interim Chancellor (1999 2000) and a member of the Board of Visitors for the University of North Carolina at Chapel Hill and currently serves on the Board of Directors of the University of North Carolina Health Care System and the Board of Visitors of the Kenan Flagler Business School (University of North Carolina at Chapel Hill). He also served as Vice President of Finance for the University of North Car olina (16 school system).
Cornelia M. Small (61) |
Year of Election or Appointment: 2005
Ms. Small is a member (2000 present) and Chairperson (2002 present) of the Investment Committee, and a member (2002 present) of the Board of Trustees of Smith College. Previously, she served as Chief In vestment Officer (1999 2000), Director of Global Equity Investments (1996 1999), and a member of the Board of Directors of Scudder, Ste vens & Clark (1990 1997) and Scudder Kemper Investments (1997 1998). In addition, Ms. Small served as Co Chair (2000 2003) of the Annual Fund for the Fletcher School of Law and Diplomacy.
Annual Report |
52 |
Name, Age; Principal Occupation William S. Stavropoulos (66) |
Year of Election or Appointment: 2001
Mr. Stavropoulos is Chairman of the Board (2000 present) and a Mem ber of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993 2000; 2002 2003), CEO (1995 2000; 2002 2004), and Chair man of the Executive Committee (2000 2004). Currently, he is a Direc tor of NCR Corporation (data warehousing and technology solutions), BellSouth Corporation (telecommunications), Chemical Financial Corpo ration, Maersk Inc. (industrial conglomerate, 2002 present), and Metal mark Capital (private equity investment firm, 2005 present). He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science.
Kenneth L. Wolfe (66) |
Year of Election or Appointment: 2005
Prior to his retirement in 2001, Mr. Wolfe was Chairman and Chief Executive Officer of Hershey Foods Corporation (1993 2001). He cur rently serves as a member of the boards of Adelphia Communications Corporation (2003 present), Bausch & Lomb, Inc., and Revlon Inc. (2004 present).
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation Peter S. Lynch (61) |
Year of Election or Appointment: 2003
Member of the Advisory Board of Fidelity Contrafund. Vice Chairman and a Director of FMR, and Vice Chairman (2001 present) and a Direc tor (2000 present) of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990 2003). In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield, John F. Kennedy Library, and the Museum of Fine Arts of Boston.
53 Annual Report
Trustees and Officers - continued
Name, Age; Principal Occupation William Danoff (45) |
Year of Election or Appointment: 2003
Vice President of Advisor New Insights. Mr. Danoff serves as Vice President of other funds advised by FMR. Prior to assuming his current responsibilities, Mr. Danoff worked as a research analyst and portfolio manager. Mr. Danoff also serves as Senior Vice President of FMR and FMR Co., Inc. (2001).
Eric D. Roiter (57) |
Year of Election or Appointment: 1998
Secretary of Advisor New Insights. He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001 present) and FMR; Assistant Secretary of Fidelity Man agement & Research (U.K.) Inc. (2001 present), Fidelity Management & Research (Far East) Inc. (2001 present), and Fidelity Investments Money Management, Inc. (2001 present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003 present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998 2005).
Stuart Fross (46) |
Year of Election or Appointment: 2003
Assistant Secretary of Advisor New Insights. Mr. Fross also serves as Assistant Secretary of other Fidelity funds (2003 present), Vice President and Secretary of FDC (2005 present), and is an employee of FMR.
Christine Reynolds (47) |
Year of Election or Appointment: 2004
President, Treasurer, and Anti Money Laundering (AML) officer of Advisor New Insights. Ms. Reynolds also serves as President, Treasurer, and AML officer of other Fidelity funds (2004) and is a Vice President (2003) and an employee (2002) of FMR. Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980 2002), where she was most recently an audit partner with PwC’s investment management practice.
Paul M. Murphy (58) |
Year of Election or Appointment: 2005
Chief Financial Officer of Advisor New Insights. Mr. Murphy also serves as Chief Financial Officer of other Fidelity funds (2005 present). He also serves as Senior Vice President of Fidelity Pricing and Cash Management Services Group (FPCMS).
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54 |
Name, Age; Principal Occupation Kenneth A. Rathgeber (58) |
Year of Election or Appointment: 2004
Chief Compliance Officer of Advisor New Insights. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004) and Executive Vice President of Risk Oversight for Fidelity Investments (2002). Previously, he served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998 2002).
John R. Hebble (47) |
Year of Election or Appointment: 2003
Deputy Treasurer of Advisor New Insights. Mr. Hebble also serves as Deputy Treasurer of other Fidelity funds (2003), and is an employee of FMR. Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002 2003) and Assistant Treasurer of the Scudder Funds (1998 2003).
Bryan A. Mehrmann (44) |
Year of Election or Appointment: 2005
Deputy Treasurer of Advisor New Insights. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005 present) and is an em ployee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998 2004).
Kimberley H. Monasterio (42) |
Year of Election or Appointment: 2004
Deputy Treasurer of Advisor New Insights. Ms. Monasterio also serves as Deputy Treasurer of other Fidelity funds (2004) and is an employee of FMR (2004). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000 2004) and Chief Financial Officer (2002 2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000 2004).
Kenneth B. Robins (36) |
Year of Election or Appointment:2005
Deputy Treasurer of Advisor New Insights. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005 present) and is an em ployee of FMR (2004 present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG’s de partment of professional practice (2002 2004) and a Senior Manager (1999 2000). In addition, Mr. Robins served as Assistant Chief Accoun tant, United States Securities and Exchange Commission (2000 2002).
55 Annual Report
Trustees and Officers - continued
Name, Age; Principal Occupation Robert G. Byrnes (39) |
Year of Election or Appointment: 2005
Assistant Treasurer of Advisor New Insights. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005 present) and is an em ployee of FMR (2005 present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003 2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000 2003).
John H. Costello (59) |
Year of Election or Appointment: 2003
Assistant Treasurer of Advisor New Insights. Mr. Costello also serves as Assistant Treasurer of other Fidelity funds and is an employee of FMR.
Peter L. Lydecker (51) |
Year of Election or Appointment: 2004
Assistant Treasurer of Advisor New Insights. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR.
Mark Osterheld (50) |
Year of Election or Appointment: 2002
Assistant Treasurer of Advisor New Insights. Mr. Osterheld also serves as Assistant Treasurer of other Fidelity funds (2002) and is an employee of FMR.
Gary W. Ryan (47) |
Year of Election or Appointment: 2005
Assistant Treasurer of Advisor New Insights. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2005 present). Previously, Mr. Ryan served as Vice Pres ident of Fund Reporting in FPCMS (1999 2005).
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56 |
Name, Age; Principal Occupation Salvatore Schiavone (40) |
Year of Election or Appointment: 2005
Assistant Treasurer of Advisor New Insights. Mr. Schiavone also serves as Assistant Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2005 present). Before joining Fidelity Investments, Mr. Schiavone worked at Deutsche Asset Management, where he most recently served as Assistant Treasurer (2003 2005) of the Scudder Funds and Vice President and Head of Fund Reporting (1996 2003).
57 Annual Report
Distributions |
The Board of Trustees of Fidelity Advisor New Insights Fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities.
Pay Date | Record Date | Dividends | Capital Gains | |||||
Class A | 02/06/06 | 02/03/06 | $— | $.05 | ||||
Class T | 02/06/06 | 02/03/06 | $— | $.05 | ||||
Class B | 02/06/06 | 02/03/06 | $— | $.05 | ||||
Class C | 02/06/06 | 02/03/06 | $— | $.05 |
The fund hereby designates as a capital gain dividend with respect to the taxable year ended December 31, 2005, $14,331,478, or, if subsequently determined to be different, the net capital gain of such year.
The fund will notify shareholders in January 2006 of amounts for use in preparing 2005 income tax returns.
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58 |
Proxy Voting Results
A special meeting of the fund’s shareholders was held on January 19, 2005. The results of votes taken among shareholders on proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||||
To amend the Declaration of Trust to | ||||
allow the Board of Trustees, if per- | ||||
mitted by applicable law, to authorize | ||||
fund mergers without shareholder | ||||
approval.* | ||||
# of | % of | |||
Votes | Votes | |||
Affirmative | 16,233,274,660.19 | 68.528 | ||
Against | 5,296,799,647.67 | 22.362 | ||
Abstain | 882,603,665.94 | 3.725 | ||
Broker | ||||
Non Votes . | 1,275,700,696.03 | 5.385 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
PROPOSAL 2 | ||||
To elect a Board of Trustees.* | ||||
# of | % of | |||
Votes | Votes | |||
Laura B. Cronin | ||||
Affirmative | 21,964,545,020.52 | 92.723 | ||
Withheld | 1,723,833,649.31 | 7.277 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Dennis J. Dirks | ||||
Affirmative | 22,473,495,368.70 | 94.871 | ||
Withheld | 1,214,883,301.13 | 5.129 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Robert M. Gates | ||||
Affirmative | 22,429,215,739.51 | 94.684 | ||
Withheld | 1,259,162,930.32 | 5.316 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
George H. Heilmeier | ||||
Affirmative | 22,427,222,693.12 | 94.676 | ||
Withheld | 1,261,155,976.71 | 5.324 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Abigail P. Johnson | ||||
Affirmative | 22,344,921,447.52 | 94.329 | ||
Withheld | 1,343,457,222.31 | 5.671 | ||
TOTAL | 23,688,378,669.83 | 100.000 |
# of | % of | |||
Votes | Votes | |||
Edward C. Johnson 3d | ||||
Affirmative | 22,331,899,258.73 | 94.274 | ||
Withheld | 1,356,479,411.10 | 5.726 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Marie L. Knowles | ||||
Affirmative | 22,457,370,997.41 | 94.803 | ||
Withheld | 1,231,007,672.42 | 5.197 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Ned C. Lautenbach | ||||
Affirmative | 22,461,566,287.67 | 94.821 | ||
Withheld | 1,226,812,382.16 | 5.179 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Marvin L. Mann | ||||
Affirmative | 22,418,349,134.25 | 94.639 | ||
Withheld | 1,270,029,535.58 | 5.361 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
William O. McCoy | ||||
Affirmative | 22,421,999,778.88 | 94.654 | ||
Withheld | 1,266,378,890.95 | 5.346 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Robert L. Reynolds | ||||
Affirmative | 22,450,709,253.08 | 94.775 | ||
Withheld | 1,237,669,416.75 | 5.225 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Cornelia M. Small | ||||
Affirmative | 22,437,020,012.08 | 94.717 | ||
Withheld | 1,251,358,657.75 | 5.283 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
William S. Stavropoulos | ||||
Affirmative | 22,435,472,051.80 | 94.711 | ||
Withheld | 1,252,906,618.03 | 5.289 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Kenneth L. Wolfe | ||||
Affirmative | 22,441,579,247.31 | 94.737 | ||
Withheld | 1,246,799,422.52 | 5.263 | ||
TOTAL | 23,688,378,669.83 | 100.000 |
* Denotes trust-wide proposals and voting results.
59 Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Advisor New Insights Fund
Each year, typically in July, the Board of Trustees, including the independent Trustees (together, the Board), votes on the renewal of the management contract and sub advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and independent Trustees’ counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly each month except August and takes into account throughout the year matters bearing on Advisory Contracts. The Board, acting directly and through its separate committees, considers at each of its meetings factors that are relevant to the annual renewal of the fund’s Advisory Contracts, including the services and support provided to the fund and its shareholders by Fidelity. At the time of the renewal, the Board had 11 standing committees, each composed of independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision making by the Board. Each committee has adopted a written charter outlining the structure and purposes of the committee. One such com mittee, the Equity Contract Committee, meets periodically during the first six months of each year and as necessary to consider matters specifically related to the annual renewal of Advisory Contracts. The committee requests and receives information on, and makes recommendations to the independent Trustees concerning, the approval and annual review of the Advisory Contracts.
At its July 2005 meeting, the Board of Trustees, including the independent Trustees, unanimously determined to renew the Advisory Contracts for the fund. In reaching its determination, the Board considered all factors it believed relevant, including (1) the nature, extent, and quality of the services to be provided to the fund and its shareholders by Fidelity (including the investment performance of the fund); (2) the competitiveness of the management fee and total expenses of the fund; (3) the total costs of the services to be provided by and the profits to be realized by the investment adviser and its affiliates from the relationship with the fund; (4) the extent to which economies of scale would be realized as the fund grows; and (5) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders.
In determining whether to renew the Advisory Contracts for the fund, the Board ulti mately reached a determination, with the assistance of fund counsel and independent Trustees’ counsel, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity’s fidu ciary duty under applicable law. In addition to evaluating the specific factors noted above, the Board, in reaching its determination, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund’s shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its
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prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Nature, Extent, and Quality of Services Provided by Fidelity. The Board consid ered staffing within the investment adviser, FMR, and the sub advisers (together, the Investment Advisers), including the background of the fund’s portfolio manager and the fund’s investment objective and discipline. The independent Trustees also had discus sions with senior management of Fidelity’s investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Fidelity Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers’ invest ment staff, their use of technology, and the Investment Advisers’ approach to recruiting, training, and retaining portfolio managers and other research, advisory, and manage ment personnel. The Board considered Fidelity’s extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board noted that Fidelity’s analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board also considered that Fidelity’s portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund’s portfolio, as well as an electronic communication system that provides immediate real time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered the nature, extent, quality, and cost of administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund. The Board also considered the nature and extent of the Investment Advisers’ supervision of third party service providers, principally custodians and subcustodians. The Board reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of “soft” commission dollars to pay for research services. The Board also considered that Fidelity voluntarily decided in 2004 to stop using “soft” commission dollars to pay for market data and, instead, to pay for that data out of its own resources. The Board also considered the resources devoted to, and the record of compliance with, the fund’s compliance policies and procedures.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24 hour access to
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Board Approval of Investment Advisory Contracts and Management Fees continued
account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund’s prospectus, without paying an additional sales charge. The Board noted that, since the last Advisory Contract renewals in July 2004, Fidelity has taken a number of actions that benefited particular funds, including (i) voluntarily deciding in 2004 to stop using “soft” commission dollars to pay for market data and, instead, to pay for that data out of its own resources, (ii) contractually agreeing to impose management fee reductions and expense limitations on its five Spartan stock index funds and its stock index fund available through variable insurance products, (iii) contractually agreeing to eliminate the management fees on the Fidelity Freedom Funds and the Fidelity Advisor Freedom Funds, (iv) contractually agreeing to reduce the management fees on most of its investment grade taxable bond funds, and (v) contractually agreeing to impose expense limitations on its retail and Spartan investment grade taxable bond funds.
Investment Performance and Compliance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund’s absolute investment performance for each class, as well as the fund’s relative investment performance for each class measured against (i) a broad based securities market index, and (ii) a peer group of mutual funds deemed appropriate by the Board. Because the fund had been in existence less than three calendar years, the following chart considered by the Board shows, for the one year period ended December 31, 2004, the returns of Class C and Institutional Class of the fund, the return of a broad based securities market index (“benchmark”), and a range of returns of a peer group of mutual funds identified by Lipper Inc. as having an investment objective similar to that of the fund. The returns of Class C and Institutional Class represent the performance of classes with the highest and lowest 12b 1 fees, respectively (not necessarily with the highest and lowest total expenses). The box within the chart shows the 25th percentile return (bottom of box) and the 75th percentile return (top of box) of the Lipper peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten numbers noted below the chart correspond to the percentile box and represent the percentage of funds in the Lipper peer group whose performance was equal to or lower than that of the class indicated.
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The Board reviewed the fund’s relative investment performance against its Lipper peer group and stated that the performance of Institutional Class of the fund was in the first quartile for the one year period. The Board also stated that the relative investment performance of Institutional Class of the fund compared favorably to its benchmark for the one year period. The Board considered that the variations in performance among the fund’s classes reflect the variations in class expenses, which result in lower performance for higher expense classes. The Board stated that it is difficult to evaluate in any compre hensive fashion the performance of the fund, in light of its relatively recent launch.
The Board has had thorough discussions with FMR throughout the year about the Board’s and FMR’s concerns about equity research, equity fund performance, and compliance with internal policies governing gifts and entertainment. FMR has taken steps that it believes will refocus and strengthen equity research and equity portfolio management and compliance. The Board noted with favor FMR’s recent reorganization of its senior management team and FMR’s plans to dedicate additional resources to investment research, and participated in the process that led to those changes.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided by Fidelity will benefit the fund’s shareholders, particularly in light of the Board’s view that the fund’s shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund’s management fee and total expenses compared to “mapped groups”
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Board Approval of Investment Advisory Contracts and Management Fees continued
of competitive funds and classes. Fidelity creates “mapped groups” by combining similar Lipper investment objective categories that have comparable management fee charac teristics. Combining Lipper investment objective categories aids the Board’s manage ment fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
The Board considered two proprietary management fee comparisons for the 12 month (or shorter) periods shown in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the “Total Mapped Group” and, for the reasons explained above, is broader than the Lipper peer group used by the Board for performance comparisons. The Total Mapped Group comparison focuses on a fund’s standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. “TMG %” represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund’s. For example, a TMG % of 15% means that 85% of the funds in the Total Mapped Group had higher management fees than the fund. The “Asset Size Peer Group” (ASPG) comparison focuses on a fund’s standing relative to non Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile (“quadrant”) in which the fund’s management fee ranked, is also included in the chart and considered by the Board.
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The Board noted that the fund’s management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2004.
Based on its review, the Board concluded that the fund’s management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of each class’s total expenses, the Board considered the fund’s management fee as well as other fund or class expenses, as applicable, such as transfer agent fees, pricing and bookkeeping fees, fund paid 12b 1 fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses of each class of the fund compared to competitive fund median expenses. Each class of the fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that the total expenses of each of Class A, Class B, Class C and Institu tional Class ranked below its competitive median for 2004, and the total expenses of Class T ranked above its competitive median for 2004. The Board noted that the fund offers multiple classes, each of which has a different sales load and 12b 1 fee structure, and that the multiple structures are intended to offer a range of pricing options for the intermediary market. The Board also noted that the total expenses of the classes vary primarily by the level of their 12b 1 fees, although differences in transfer agent fees may also cause expenses to vary from class to class.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the total expenses for each class of the fund were reasonable, although in one case above the median of the universe presented for comparison, in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, market ing, distributing, managing, administering and servicing the fund and its shareholders. The Board also considered the level of Fidelity’s profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity’s profitability for the fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost
65 Annual Report
Board Approval of Investment Advisory Contracts and Management Fees continued
allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year’s methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board’s assessment of the results of Fidelity’s profitability analysis. PwC’s engagement includes the review and assessment of Fidelity’s methodologies used in determining the revenues and expenses attributable to Fidelity’s mutual fund business, and completion of agreed upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC’s reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity’s profitabil ity methodologies are reasonable in all material respects.
The Board has also reviewed Fidelity’s non fund businesses and any fall out benefits related to the mutual fund business as well as cases where Fidelity’s affiliates may benefit from or be related to the fund’s business. In addition, a special committee of the Board reviewed services provided to Fidelity by its affiliates and determined that the fees that Fidelity paid for such services were reasonable.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions, including reductions that occur through operation of the transfer agent agreement. The transfer agent fee varies in part based on the number of accounts in the fund. If the number of accounts decreases or the average account size increases, the overall transfer agent fee rate decreases.
The Board recognized that the fund’s management contract incorporates a “group fee” structure, which provides for lower fee rates as total fund assets under FMR’s manage ment increase, and for higher fee rates as total fund assets under FMR’s management decrease. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity’s costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the
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group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR’s management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Advisory Contracts, the Board requested additional information regarding (i) equity fund transfer agency fees; (ii) Fidelity’s fund profitability methodology and the impact of various changes in the methodology over time; (iii) benefits to shareholders from economies of scale; (iv) composition and characteristics of various fund and industry data used in comparisons; and (v) com pensation of portfolio managers and research analysts.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the existing advisory fee structures are fair and reasonable, and that the fund’s existing Advisory Contracts should be renewed.
67 Annual Report
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Investment Adviser Fidelity Management & Research Company Boston, MA Investment Sub Adviser FMR Co., Inc. Fidelity Management & Research (U.K.) Inc. Fidelity Management & Research (Far East) Inc. Fidelity Investments Japan Limited Fidelity International Investment Advisors Fidelity International Investment Advisors (U.K.) Limited General Distributor Fidelity Distributors Corporation Boston, MA Transfer and Service Agents Fidelity Investments Institutional Operations Company, Inc. Boston, MA Fidelity Service Company, Inc. Boston, MA Custodian Brown Brothers Harriman & Co. Boston, MA |
ANIF UANN-0206 1.796408.102 |
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Fidelity® Advisor New Insights Fund - Institutional Class |
Annual Report December 31, 2005 |
Contents | ||||
Chairman’s Message | 4 | Ned Johnson’s message to shareholders. | ||
Performance | 5 | How the fund has done over time. | ||
Management’s Discussion | 6 | The manager’s review of fund | ||
performance, strategy and outlook. | ||||
Shareholder Expense | 7 | An example of shareholder expenses. | ||
Example | ||||
Investment Changes | 9 | A summary of major shifts in the fund’s | ||
investments over the past six months. | ||||
Investments | 10 | A complete list of the fund’s investments | ||
with their market values. | ||||
Financial Statements | 29 | Statements of assets and liabilities, | ||
operations, and changes in net assets, | ||||
as well as financial highlights. | ||||
Notes | 38 | Notes to the financial statements. | ||
Report of Independent | 46 | |||
Registered Public | ||||
Accounting Firm | ||||
Trustees and Officers | 47 | |||
Distributions | 57 | |||
Proxy Voting Results | 58 | |||
Board Approval of | 59 | |||
Investment Advisory | ||||
Contracts and | ||||
Management Fees |
To view a fund’s proxy voting guidelines and proxy voting record for the 12 month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission’s (SEC) web site at www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines. 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. |
Annual Report 2
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. A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N Q. Forms N Q are available on the SEC’s web site at http://www.sec.gov. A fund’s Forms N Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund’s portfolio hold ings, view the most recent quarterly holdings report, semiannual report, or annual report on Fidelity’s web site at http://www.advisor.fidelity.com. NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE Neither the fund nor Fidelity Distributors Corporation is a bank. |
3 Annual Report
Chairman’s Message
(photograph of Edward C. Johnson 3d)
Dear Shareholder:
During the past year or so, much has been reported about the mutual fund industry, and much of it has been more critical than I believe is warranted. Allegations that some companies have been less than forthright with their shareholders have cast a shadow on the entire industry. I continue to find these reports disturbing, and assert that they do not create an accurate picture of the industry overall. Therefore, I would like to remind every one where Fidelity stands on these issues. I will say two things specifically regarding allegations that some mutual fund companies were in violation of the Securities and Exchange Commission’s forward pricing rules or were involved in so called “market timing” activities.
First, Fidelity has no agreements that permit customers who buy fund shares after 4 p.m. to obtain the 4 p.m. price. This is not a new policy. This is not to say that some one could not deceive the company through fraudulent acts. However, we are extremely diligent in preventing fraud from occurring in this manner and in every other. But I underscore again that Fidelity has no so called “agreements” that sanction illegal practices.
Second, Fidelity continues to stand on record, as we have for years, in opposition to predatory short term trading that adversely affects shareholders in a mutual fund. Back in the 1980s, we initiated a fee which is returned to the fund and, therefore, to investors to discourage this activity. Further, we took the lead several years ago in developing a Fair Value Pricing Policy to prevent market timing on foreign securities in our funds. I am confident we will find other ways to make it more difficult for predatory traders to operate. However, this will only be achieved through close cooperation among regulators, legislators and the industry.
Yes, there have been unfortunate instances of unethical and illegal activity within the mutual fund industry from time to time. That is true of any industry. When this occurs, confessed or convicted offenders should be dealt with appropriately. But we are still concerned about the risk of over regulation and the quick application of simplistic solutions to intricate problems. Every system can be improved, and we support and applaud well thought out improvements by regulators, legislators and industry representatives that achieve the common goal of building and protecting the value of investors’ holdings.
For nearly 60 years, Fidelity has worked very hard to improve its products and service to justify your trust. When our family founded this company in 1946, we had only a few hundred customers. Today, we serve more than 18 million customers including individual investors and participants in retirement plans across America.
Let me close by saying that we do not take your trust in us for granted, and we realize that we must always work to improve all aspects of our service to you. In turn, we urge you to continue your active participation with your financial matters, so that your interests can be well served.
Best regards,
/s/ Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report 4
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class’ dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund’s returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns | ||||
Periods ended December 31, 2005 | Past 1 | Life of | ||
year | fundA | |||
Institutional Class | 19.43% | 24.10% | ||
A From July 31, 2003. | ||||
$10,000 Life of Fund |
Let’s say hypothetically that $10,000 was invested in Fidelity® Advisor New Insights Fund — Institutional Class on July 31, 2003, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor’s 500SM Index performed over the same period.
![](https://capedge.com/proxy/N-CSR/0000795422-06-000011/adnwinsghtannx77x1.jpg)
5 Annual Report
Management’s Discussion of Fund Performance
Comments from William Danoff, Portfolio Manager of Fidelity® Advisor New Insights Fund
U.S. equity benchmarks generally had positive results for the 12 months ending Decem ber 31, 2005, the third consecutive year that stocks finished in the black. Energy and utilities were the two best performing sectors, contributing greatly to the 4.91% gain of the Standard & Poor’s 500SM Index. Elsewhere, the NASDAQ Composite® Index returned 2.13%, while the Dow Jones Industrial AverageSM rose 1.72% . The U.S. economy did not decelerate as much as many had predicted, despite eight short term interest rate hikes, record high energy prices and the devastation caused by Hurricane Katrina. Meanwhile, corporate America notched its 14th consecutive quarter of double digit earnings gains through the third quarter of the year, an unprecedented streak in market history. From a style perspec tive, large cap stocks ended the six year reign of small caps by a narrow margin, but mid caps finished well ahead of both categories. The gap between growth and value stocks also was relatively narrow, with value gaining a slight edge.
For the year ending December 31, 2005, the fund’s Institutional Class shares gained 19.43%, well ahead of both the S&P 500® index and the LipperSM Growth Funds Average, which returned 6.53% . A continued emphasis on fast growing companies in expanding areas of the global economy, such as the Internet, wireless communications, health care and the emerging markets, helped drive overall performance, as did our commitment to the booming energy sector. The fund’s performance accelerated in the second half of 2005, aided by its bias toward growth oriented stocks, as well as by its overweighting versus the index in the materials sector, which rallied sharply during the past six months. Among the fund’s biggest contributors were Internet search firm Google; biotechnology leader Genen tech; semiconductor provider Marvell Technology; Latin American telecommunication services operator America Movil; and Apple Computer. Detracting from the fund’s returns were such stocks as Research In Motion, the Canadian maker of the BlackBerry handheld messaging device; eBay, the online auction company, which hurt performance because of untimely trading; and an underweighting in the red hot utilities sector.
The views expressed in this statement 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.
Annual Report |
6 6 |
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, and (2) ongoing costs, including management fees, distribution and/or service (12b 1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2005 to December 31, 2005).
Actual Expenses |
The first line of the table below for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
7 Annual Report
Shareholder Expense Example continued
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Expenses Paid | ||||||||||||
Beginning | Ending | During Period* | ||||||||||
Account Value | Account Value | July 1, 2005 to | ||||||||||
July 1, 2005 | December 31, 2005 | December 31, 2005 | ||||||||||
Class A | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,141.20 | $ | 6.31 | ||||||
HypotheticalA | $ | 1,000.00 | $ | 1,019.31 | $ | 5.96 | ||||||
Class T | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,139.60 | $ | 7.39 | ||||||
HypotheticalA | $ | 1,000.00 | $ | 1,018.30 | $ | 6.97 | ||||||
Class B | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,136.20 | $ | 10.66 | ||||||
HypotheticalA | $ | 1,000.00 | $ | 1,015.22 | $ | 10.06 | ||||||
Class C | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,136.80 | $ | 10.18 | ||||||
HypotheticalA | $ | 1,000.00 | $ | 1,015.68 | $ | 9.60 | ||||||
Institutional Class | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,143.10 | $ | 4.54 | ||||||
HypotheticalA | $ | 1,000.00 | $ | 1,020.97 | $ | 4.28 | ||||||
A 5% return per year before expenses |
* Expenses are equal to each Class’ annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one half year period).
Annualized | ||
Expense Ratio | ||
Class A | 1.17% | |
Class T | 1.37% | |
Class B | 1.98% | |
Class C | 1.89% | |
Institutional Class | 84% |
Annual Report |
8 |
Investment Changes | ||||
Top Ten Stocks as of December 31, 2005 | ||||
% of fund’s | % of fund’s net assets | |||
net assets | 6 months ago | |||
Google, Inc. Class A (sub. vtg.) | 4.3 | 3.0 | ||
Yahoo!, Inc. | 3.5 | 1.6 | ||
Marvell Technology Group Ltd. | 2.8 | 2.3 | ||
Apple Computer, Inc. | 2.7 | 1.0 | ||
Aetna, Inc. | 2.3 | 1.6 | ||
Genentech, Inc. | 2.3 | 3.3 | ||
UnitedHealth Group, Inc. | 2.2 | 1.1 | ||
Hewlett Packard Co. | 2.0 | 1.0 | ||
Samsung Electronics Co. Ltd. | 1.9 | 0.8 | ||
Berkshire Hathaway, Inc. Class A | 1.8 | 1.5 | ||
25.8 | ||||
Top Five Market Sectors as of December 31, 2005 | ||||
% of fund’s | % of fund’s net assets | |||
net assets | 6 months ago | |||
Information Technology | 25.4 | 16.6 | ||
Financials | 15.7 | 11.7 | ||
Health Care | 14.5 | 15.1 | ||
Energy | 9.0 | 13.6 | ||
Materials | 6.9 | 6.3 |
![](https://capedge.com/proxy/N-CSR/0000795422-06-000011/adnwinsghtannx81x1.jpg)
9 Annual Report
Investments December 31, 2005 | ||||||||
Showing Percentage of Net Assets | ||||||||
Common Stocks 89.9% | ||||||||
Shares | Value (Note 1) | |||||||
(000s) | ||||||||
CONSUMER DISCRETIONARY – 5.2% | ||||||||
Auto Components 0.1% | ||||||||
Johnson Controls, Inc. | 4,400 | $ | 321 | |||||
Midas, Inc. (a) | 100,000 | 1,836 | ||||||
2,157 | ||||||||
Automobiles – 0.5% | ||||||||
Honda Motor Co. Ltd. | 9,100 | 527 | ||||||
Toyota Motor Corp. | 419,400 | 21,939 | ||||||
22,466 | ||||||||
Distributors – 0.0% | ||||||||
Li & Fung Ltd. | 772,000 | 1,489 | ||||||
Diversified Consumer Services – 0.1% | ||||||||
Education Management Corp. (a) | 51,300 | 1,719 | ||||||
Laureate Education, Inc. (a) | 34,700 | 1,822 | ||||||
3,541 | ||||||||
Hotels, Restaurants & Leisure 1.5% | ||||||||
Ambassadors Group, Inc. | 26,038 | 596 | ||||||
Aristocrat Leisure Ltd. | 557,300 | 5,037 | ||||||
Cosi, Inc. (a) | 30,500 | 253 | ||||||
Domino’s Pizza, Inc. | 64,100 | 1,551 | ||||||
Four Seasons Hotels, Inc. (ltd. vtg.) (d) | 28,000 | 1,393 | ||||||
Hilton Group PLC | 43,870 | 275 | ||||||
Kerzner International Ltd. (a) | 14,000 | 963 | ||||||
Las Vegas Sands Corp. | 126,900 | 5,009 | ||||||
Life Time Fitness, Inc. (a) | 31,300 | 1,192 | ||||||
Panera Bread Co. Class A (a) | 183,464 | 12,050 | ||||||
Ruth’s Chris Steak House, Inc. | 15,400 | 279 | ||||||
Shuffle Master, Inc. (a)(d) | 25,600 | 644 | ||||||
Starbucks Corp. (a) | 320,500 | 9,618 | ||||||
Station Casinos, Inc. | 306,100 | 20,754 | ||||||
Texas Roadhouse, Inc. Class A (a) | 75,000 | 1,166 | ||||||
Wynn Resorts Ltd. (a)(d) | 75,800 | 4,158 | ||||||
64,938 | ||||||||
Household Durables – 0.3% | ||||||||
Fourlis Holdings SA | 500,000 | 6,783 | ||||||
Garmin Ltd. (d) | 25,300 | 1,679 | ||||||
Matsushita Electric Industrial Co. Ltd. | 137,000 | 2,655 | ||||||
Technical Olympic USA, Inc. | 9,800 | 207 | ||||||
11,324 | ||||||||
See accompanying notes which are an integral part of the financial statements. | ||||||||
Annual Report | 10 |
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
CONSUMER DISCRETIONARY – continued | ||||||
Internet & Catalog Retail 0.2% | ||||||
Blue Nile, Inc. (a)(d) | 53,700 | $ | 2,165 | |||
Coldwater Creek, Inc. (a) | 55,500 | 1,694 | ||||
Expedia, Inc. (a) | 186,850 | 4,477 | ||||
NutriSystem, Inc. (a) | 22,700 | 818 | ||||
VistaPrint Ltd. | 58,600 | 1,333 | ||||
10,487 | ||||||
Media – 0.7% | ||||||
Getty Images, Inc. (a) | 37,700 | 3,365 | ||||
Harte-Hanks, Inc. | 42,900 | 1,132 | ||||
Interactive Data Corp. | 19,500 | 443 | ||||
McGraw Hill Companies, Inc. | 63,300 | 3,268 | ||||
Pearson PLC | 95,900 | 1,135 | ||||
Pixar (a) | 106,900 | 5,636 | ||||
Reuters Group PLC | 258,800 | 1,918 | ||||
Sirius Satellite Radio, Inc. (a)(d) | 1,492,300 | 9,998 | ||||
The Weinstein Co. Holdings, LLC Class A 1 (h) | 2,267 | 2,267 | ||||
29,162 | ||||||
Multiline Retail – 0.2% | ||||||
Marks & Spencer Group PLC | 639,000 | 5,555 | ||||
Target Corp. | 87,000 | 4,782 | ||||
10,337 | ||||||
Specialty Retail – 1.3% | ||||||
Abercrombie & Fitch Co. Class A | 34,700 | 2,262 | ||||
Bakers Footwear Group, Inc. (a)(e) | 463,600 | 7,130 | ||||
Best Buy Co., Inc. | 32,150 | 1,398 | ||||
Chico’s FAS, Inc. (a) | 52,500 | 2,306 | ||||
Circuit City Stores, Inc. | 218,600 | 4,938 | ||||
Hennes & Mauritz AB (H&M) (B Shares) | 12,950 | 440 | ||||
Office Depot, Inc. (a) | 285,200 | 8,955 | ||||
Staples, Inc. | 305,300 | 6,933 | ||||
The Children’s Place Retail Stores, Inc. (a) | 7,800 | 385 | ||||
TJX Companies, Inc. | 236,500 | 5,494 | ||||
Too, Inc. (a) | 11,200 | 316 | ||||
Urban Outfitters, Inc. (a) | 416,000 | 10,529 | ||||
Volcom, Inc. | 28,200 | 959 | ||||
Wet Seal, Inc. Class A (a)(d) | 497,300 | 2,208 | ||||
Zumiez, Inc. | 12,700 | 549 | ||||
54,802 |
See accompanying notes which are an integral part of the financial statements.
11 Annual Report
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
CONSUMER DISCRETIONARY – continued | ||||||
Textiles, Apparel & Luxury Goods – 0.3% | ||||||
Asics Corp. | 297,000 | $ | 3,154 | |||
Burberry Group PLC | 91,700 | 678 | ||||
Coach, Inc. (a) | 101,300 | 3,377 | ||||
Deckers Outdoor Corp. (a) | 15,000 | 414 | ||||
Geox Spa | 35,400 | 389 | ||||
Polo Ralph Lauren Corp. Class A | 47,500 | 2,667 | ||||
Puma AG | 1,500 | 438 | ||||
11,117 | ||||||
TOTAL CONSUMER DISCRETIONARY | 221,820 | |||||
CONSUMER STAPLES 4.8% | ||||||
Beverages – 2.0% | ||||||
Diageo PLC sponsored ADR | 160,000 | 9,328 | ||||
Hansen Natural Corp. (a) | 363,900 | 28,679 | ||||
Jones Soda Co. (a) | 310,890 | 1,679 | ||||
PepsiCo, Inc. | 606,900 | 35,856 | ||||
The Coca-Cola Co. | 163,000 | 6,571 | ||||
82,113 | ||||||
Food & Staples Retailing – 0.7% | ||||||
Tesco PLC | 52,985 | 302 | ||||
Wal-Mart de Mexico SA de CV Series V | 393,739 | 2,185 | ||||
Walgreen Co. | 303,600 | �� | 13,437 | |||
Whole Foods Market, Inc. | 180,770 | 13,990 | ||||
29,914 | ||||||
Food Products 0.7% | ||||||
Goodman Fielder Ltd. | 750,000 | 1,150 | ||||
Groupe Danone | 22,700 | 2,372 | ||||
Hershey Co. | 75,300 | 4,160 | ||||
Kellogg Co. | 20,800 | 899 | ||||
Lindt & Spruengli AG | 93 | 1,554 | ||||
Nestle SA (Reg.) | 22,935 | 6,860 | ||||
Sara Lee Corp. | 112,100 | 2,119 | ||||
TreeHouse Foods, Inc. (a) | 151,500 | 2,836 | ||||
Wm. Wrigley Jr. Co. | 115,100 | 7,653 | ||||
29,603 | ||||||
Household Products – 1.4% | ||||||
Procter & Gamble Co. | 1,034,867 | 59,898 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
12 |
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
CONSUMER STAPLES – continued | ||||||
Personal Products 0.0% | ||||||
Herbalife Ltd. | 28,200 | $ | 917 | |||
TOTAL CONSUMER STAPLES | 202,445 | |||||
ENERGY 9.0% | ||||||
Energy Equipment & Services – 1.4% | ||||||
ENSCO International, Inc. | 79,900 | 3,544 | ||||
Halliburton Co. | 128,400 | 7,956 | ||||
Hydril Co. (a) | 5,100 | 319 | ||||
Noble Corp. | 20,000 | 1,411 | ||||
Schlumberger Ltd. (NY Shares) | 439,900 | 42,736 | ||||
Smith International, Inc. | 82,844 | 3,074 | ||||
59,040 | ||||||
Oil, Gas & Consumable Fuels – 7.6% | ||||||
BG Group PLC sponsored ADR | 157,200 | 7,808 | ||||
Bill Barrett Corp. | 66,100 | 2,552 | ||||
Blackrock Ventures, Inc. (a) | 433,600 | 4,289 | ||||
BP PLC sponsored ADR | 49,500 | 3,179 | ||||
Burlington Resources, Inc. | 96,500 | 8,318 | ||||
Canadian Natural Resources Ltd. | 84,700 | 4,199 | ||||
Canadian Oil Sands Trust unit | 31,600 | 3,425 | ||||
CNX Gas Corp. (a)(f) | 17,900 | 376 | ||||
CONSOL Energy, Inc. | 106,700 | 6,955 | ||||
Devon Energy Corp. | 164,400 | 10,282 | ||||
EnCana Corp. | 1,700,900 | 76,899 | ||||
Encore Acquisition Co. (a) | 30,138 | 966 | ||||
EOG Resources, Inc. | 346,400 | 25,415 | ||||
Exxon Mobil Corp. | 477,400 | 26,816 | ||||
Highpine Oil & Gas Ltd. | 36,300 | 646 | ||||
Murphy Oil Corp. | 374,500 | 20,219 | ||||
Peabody Energy Corp. | 3,000 | 247 | ||||
PetroChina Co. Ltd. sponsored ADR | 123,700 | 10,138 | ||||
Petroleo Brasileiro SA Petrobras sponsored ADR | 54,000 | 3,849 | ||||
Plains Exploration & Production Co. (a) | 48,500 | 1,927 | ||||
Quicksilver Resources, Inc. (a) | 102,350 | 4,300 | ||||
Range Resources Corp. | 117,150 | 3,086 | ||||
Sasol Ltd. sponsored ADR | 94,200 | 3,357 | ||||
Talisman Energy, Inc. | 88,300 | 4,679 | ||||
Total SA sponsored ADR | 24,400 | 3,084 | ||||
Ultra Petroleum Corp. (a) | 223,100 | 12,449 |
See accompanying notes which are an integral part of the financial statements.
13 Annual Report
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
ENERGY – continued | ||||||
Oil, Gas & Consumable Fuels – continued | ||||||
Valero Energy Corp. | 1,369,634 | $ | 70,673 | |||
XTO Energy, Inc. | 96,400 | 4,236 | ||||
324,369 | ||||||
TOTAL ENERGY | 383,409 | |||||
FINANCIALS – 15.7% | ||||||
Capital Markets 1.3% | ||||||
Charles Schwab Corp. | 591,800 | 8,682 | ||||
E*TRADE Financial Corp. (a) | 79,300 | 1,654 | ||||
Goldman Sachs Group, Inc. | 141,600 | 18,084 | ||||
Lazard Ltd. Class A | 26,400 | 842 | ||||
Legg Mason, Inc. | 28,000 | 3,351 | ||||
Lehman Brothers Holdings, Inc. | 168,700 | 21,622 | ||||
Nuveen Investments, Inc. Class A | 8,600 | 367 | ||||
54,602 | ||||||
Commercial Banks – 3.8% | ||||||
Allied Irish Banks PLC | 348,800 | 7,492 | ||||
Anglo Irish Bank Corp. PLC | 984,800 | 14,946 | ||||
Banco Itau Holding Financeira SA sponsored ADR (non-vtg.) | 111,000 | 2,666 | ||||
Bank of America Corp. | 783,900 | 36,177 | ||||
Bank of the Ozarks, Inc. | 39,100 | 1,443 | ||||
Center Financial Corp., California | 50,000 | 1,258 | ||||
HDFC Bank Ltd. | 85,593 | 1,348 | ||||
HDFC Bank Ltd. sponsored ADR | 35,900 | 1,827 | ||||
HSBC Holdings PLC sponsored ADR | 4,200 | 338 | ||||
M&T Bank Corp. | 131,900 | 14,384 | ||||
Mitsubishi UFJ Financial Group, Inc. | 45 | 616 | ||||
PrivateBancorp, Inc. | 101,000 | 3,593 | ||||
Royal Bank of Scotland Group PLC | 270,700 | 8,179 | ||||
Shinhan Financial Group Co. Ltd. | 48,530 | 1,977 | ||||
Uniao de Bancos Brasileiros SA (Unibanco) GDR | 188,700 | 11,996 | ||||
Wells Fargo & Co. | 857,000 | 53,845 | ||||
162,085 | ||||||
Consumer Finance – 1.6% | ||||||
American Express Co. | 842,900 | 43,376 | ||||
SLM Corp. | 476,600 | 26,256 | ||||
69,632 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
14 |
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
FINANCIALS – continued | ||||||
Diversified Financial Services – 1.2% | ||||||
Chicago Mercantile Exchange Holdings, Inc. Class A | 6,300 | $ | 2,315 | |||
JPMorgan Chase & Co. | 701,600 | 27,847 | ||||
Moody’s Corp. | 333,400 | 20,477 | ||||
50,639 | ||||||
Insurance – 6.5% | ||||||
ACE Ltd. | 102,000 | 5,451 | ||||
Admiral Group PLC | 535,600 | 4,195 | ||||
AFLAC, Inc. | 118,800 | 5,515 | ||||
Allstate Corp. | 385,400 | 20,839 | ||||
American Equity Investment Life Holding Co. | 50,000 | 653 | ||||
American International Group, Inc. | 226,100 | 15,427 | ||||
Assurant, Inc. | 101,100 | 4,397 | ||||
Assured Guaranty Ltd. | 56,500 | 1,435 | ||||
Axis Capital Holdings Ltd. | 187,500 | 5,865 | ||||
Berkshire Hathaway, Inc. Class A (a) | 874 | 77,454 | ||||
Everest Re Group Ltd. | 220,700 | 22,147 | ||||
Fidelity National Financial, Inc. | 12,900 | 475 | ||||
Genworth Financial, Inc. Class A (non-vtg.) | 58,600 | 2,026 | ||||
HCC Insurance Holdings, Inc. | 31,800 | 944 | ||||
Loews Corp. | 86,600 | 8,214 | ||||
Markel Corp. (a) | 1,300 | 412 | ||||
Mercury General Corp. | 17,600 | 1,025 | ||||
MetLife, Inc. | 497,900 | 24,397 | ||||
MetLife, Inc. unit | 80,000 | 2,204 | ||||
Millea Holdings, Inc. | 36 | 620 | ||||
PartnerRe Ltd. | 4,700 | 309 | ||||
ProAssurance Corp. (a) | 5,000 | 243 | ||||
Progressive Corp. | 115,300 | 13,465 | ||||
Prudential Financial, Inc. | 180,200 | 13,189 | ||||
RLI Corp. | 38,700 | 1,930 | ||||
StanCorp Financial Group, Inc. | 44,800 | 2,238 | ||||
The Chubb Corp. | 138,600 | 13,534 | ||||
The St. Paul Travelers Companies, Inc. | 236,800 | 10,578 | ||||
W.R. Berkley Corp. | 190,674 | 9,080 | ||||
White Mountains Insurance Group Ltd. | 11,083 | 6,190 | ||||
Willis Group Holdings Ltd. | 50,000 | 1,847 | ||||
276,298 | ||||||
Real Estate 0.5% | ||||||
CB Richard Ellis Group, Inc. Class A (a) | 101,400 | 5,967 |
See accompanying notes which are an integral part of the financial statements.
15 Annual Report
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
FINANCIALS – continued | ||||||
Real Estate continued | ||||||
CBL & Associates Properties, Inc. | 33,400 | $ | 1,320 | |||
Equity Residential (SBI) | 28,200 | 1,103 | ||||
General Growth Properties, Inc. | 24,200 | 1,137 | ||||
Global Signal, Inc. | 69,900 | 3,017 | ||||
Mitsui Fudosan Co. Ltd. | 112,000 | 2,275 | ||||
Vornado Realty Trust | 52,600 | 4,391 | ||||
19,210 | ||||||
Thrifts & Mortgage Finance – 0.8% | ||||||
Golden West Financial Corp., Delaware | 532,800 | 35,165 | ||||
Hudson City Bancorp, Inc. | 75,000 | 909 | ||||
36,074 | ||||||
TOTAL FINANCIALS | 668,540 | |||||
HEALTH CARE – 14.5% | ||||||
Biotechnology – 3.8% | ||||||
Actelion Ltd. (Reg.) (a) | 191,934 | 15,878 | ||||
Amgen, Inc. (a) | 61,900 | 4,881 | ||||
Amylin Pharmaceuticals, Inc. (a) | 10,600 | 423 | ||||
Anadys Pharmaceuticals, Inc. (a) | 83,900 | 738 | ||||
Arena Pharmaceuticals, Inc. (a) | 113,400 | 1,613 | ||||
Biogen Idec, Inc. (a) | 6,100 | 277 | ||||
BioMarin Pharmaceutical, Inc. (a) | 15,600 | 168 | ||||
Celgene Corp. (a) | 97,500 | 6,318 | ||||
Cephalon, Inc. (a) | 7,100 | 460 | ||||
Exelixis, Inc. (a) | 47,700 | 449 | ||||
Genentech, Inc. (a) | 1,054,400 | 97,532 | ||||
Genmab AS (a) | 18,600 | 398 | ||||
Genzyme Corp. (a) | 75,200 | 5,323 | ||||
Gilead Sciences, Inc. (a) | 238,300 | 12,542 | ||||
GTx, Inc. (a) | 25,000 | 189 | ||||
ICOS Corp. (a) | 35,100 | 970 | ||||
Idenix Pharmaceuticals, Inc. (a) | 43,900 | 751 | ||||
MannKind Corp. (a)(d) | 209,106 | 2,354 | ||||
MannKind Corp. warrants 8/3/10 (a)(h) | 29,881 | 154 | ||||
Medarex, Inc. (a) | 147,300 | 2,040 | ||||
MedImmune, Inc. (a) | 59,200 | 2,073 | ||||
Myogen, Inc. (a) | 20,900 | 630 | ||||
Neurocrine Biosciences, Inc. (a) | 6,700 | 420 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
16 |
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
HEALTH CARE – continued | ||||||
Biotechnology – continued | ||||||
Protein Design Labs, Inc. (a) | 6,500 | $ | 185 | |||
Seattle Genetics, Inc. (a) | 25,800 | 122 | ||||
Tanox, Inc. (a) | 49,700 | 814 | ||||
Techne Corp. (a) | 27,100 | 1,522 | ||||
Theravance, Inc. (a) | 37,500 | 845 | ||||
United Therapeutics Corp. (a) | 6,100 | 422 | ||||
ViaCell, Inc. | 87,800 | 493 | ||||
160,984 | ||||||
Health Care Equipment & Supplies – 3.4% | ||||||
Alcon, Inc. | 64,900 | 8,411 | ||||
Aspect Medical Systems, Inc. (a) | 4,800 | 165 | ||||
C.R. Bard, Inc. | 35,400 | 2,334 | ||||
China Medical Technologies, Inc. sponsored ADR (d) | 78,500 | 2,500 | ||||
Conceptus, Inc. (a) | 76,200 | 962 | ||||
DENTSPLY International, Inc. | 35,700 | 1,917 | ||||
DJ Orthopedics, Inc. (a) | 111,400 | 3,072 | ||||
Foxhollow Technologies, Inc. (a) | 101,400 | 3,021 | ||||
Gen-Probe, Inc. (a) | 61,600 | 3,005 | ||||
Hospira, Inc. (a) | 53,800 | 2,302 | ||||
Intuitive Surgical, Inc. (a) | 168,900 | 19,807 | ||||
IRIS International, Inc. (a) | 545,400 | 11,922 | ||||
Kyphon, Inc. (a) | 138,300 | 5,647 | ||||
LifeCell Corp. (a) | 36,800 | 702 | ||||
Medtronic, Inc. | 261,106 | 15,032 | ||||
Mentor Corp. | 16,100 | 742 | ||||
Millipore Corp. (a) | 3,500 | 231 | ||||
NeuroMetrix, Inc. (a) | 28,700 | 783 | ||||
NMT Medical, Inc. (a) | 36,200 | 579 | ||||
Nobel Biocare Holding AG (Switzerland) | 18,935 | 4,165 | ||||
NuVasive, Inc. (a) | 67,300 | 1,218 | ||||
ResMed, Inc. (a) | 82,000 | 3,141 | ||||
Respironics, Inc. (a) | 13,100 | 486 | ||||
Somanetics Corp. (a) | 58,146 | 1,861 | ||||
St. Jude Medical, Inc. (a) | 748,100 | 37,555 | ||||
Syneron Medical Ltd. (a) | 63,700 | 2,022 | ||||
Thermo Electron Corp. (a) | 233,300 | 7,029 | ||||
Varian Medical Systems, Inc. (a) | 34,600 | 1,742 | ||||
Viasys Healthcare, Inc. (a) | 38,900 | 1,000 | ||||
143,353 |
See accompanying notes which are an integral part of the financial statements.
17 Annual Report
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
HEALTH CARE – continued | ||||||
Health Care Providers & Services – 5.2% | ||||||
Aetna, Inc. | 1,039,000 | $ | 97,988 | |||
American Healthways, Inc. (a) | 2,600 | 118 | ||||
Caremark Rx, Inc. (a) | 104,500 | 5,412 | ||||
Cerner Corp. (a) | 14,600 | 1,327 | ||||
Chemed Corp. New | 7,600 | 378 | ||||
Health Net, Inc. (a) | 123,000 | 6,341 | ||||
Merge Technologies, Inc. (a) | 108,400 | 2,714 | ||||
Patterson Companies, Inc. (a) | 70,300 | 2,348 | ||||
UnitedHealth Group, Inc. | 1,478,200 | 91,855 | ||||
VCA Antech, Inc. (a) | 15,200 | 429 | ||||
WebMD Health Corp. Class A | 5,200 | 151 | ||||
WellPoint, Inc. (a) | 135,200 | 10,788 | ||||
219,849 | ||||||
Pharmaceuticals – 2.1% | ||||||
Allergan, Inc. | 26,300 | 2,839 | ||||
Atherogenics, Inc. (a) | 100,000 | 2,001 | ||||
Forest Laboratories, Inc. (a) | 9,800 | 399 | ||||
IVAX Corp. (a) | 97,900 | 3,067 | ||||
Kos Pharmaceuticals, Inc. (a) | 44,100 | 2,281 | ||||
New River Pharmaceuticals, Inc. (a) | 4,700 | 244 | ||||
Novartis AG sponsored ADR | 173,000 | 9,079 | ||||
Roche Holding AG (participation certificate) | 376,553 | 56,540 | ||||
Salix Pharmaceuticals Ltd. (a) | 40,100 | 705 | ||||
Sanofi-Aventis sponsored ADR | 70,600 | 3,099 | ||||
Schering-Plough Corp. | 210,800 | 4,395 | ||||
Teva Pharmaceutical Industries Ltd. sponsored ADR | 160,600 | 6,907 | ||||
91,556 | ||||||
TOTAL HEALTH CARE | 615,742 | |||||
INDUSTRIALS – 5.2% | ||||||
Aerospace & Defense – 0.1% | ||||||
Precision Castparts Corp. | 58,500 | 3,031 | ||||
United Technologies Corp. | 33,500 | 1,873 | ||||
4,904 | ||||||
Air Freight & Logistics – 0.5% | ||||||
C.H. Robinson Worldwide, Inc. | 464,072 | 17,185 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
18 |
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
INDUSTRIALS – continued | ||||||
Air Freight & Logistics – continued | ||||||
United Parcel Service, Inc. Class B | 47,500 | $ | 3,570 | |||
UTI Worldwide, Inc. | 13,600 | 1,263 | ||||
22,018 | ||||||
Airlines – 0.3% | ||||||
Gol Linhas Aereas Inteligentes SA sponsored ADR | 73,000 | 2,059 | ||||
JetBlue Airways Corp. (a) | 25,200 | 388 | ||||
Republic Airways Holdings, Inc. (a) | 152,400 | 2,316 | ||||
Ryanair Holdings PLC sponsored ADR (a) | 113,200 | 6,338 | ||||
Southwest Airlines Co. | 22,100 | 363 | ||||
US Airways Group, Inc. (a) | 80,400 | 2,986 | ||||
14,450 | ||||||
Commercial Services & Supplies – 0.4% | ||||||
Advisory Board Co. (a) | 8,500 | 405 | ||||
Corporate Executive Board Co. | 40,100 | 3,597 | ||||
Equifax, Inc. | 27,800 | 1,057 | ||||
Monster Worldwide, Inc. (a) | 44,700 | 1,825 | ||||
PHH Corp. (a) | 14,970 | 419 | ||||
Resources Connection, Inc. (a) | 111,900 | 2,916 | ||||
Robert Half International, Inc. | 123,500 | 4,679 | ||||
14,898 | ||||||
Construction & Engineering – 0.2% | ||||||
Jacobs Engineering Group, Inc. (a) | 95,900 | 6,509 | ||||
URS Corp. (a) | 42,000 | 1,580 | ||||
8,089 | ||||||
Electrical Equipment – 0.7% | ||||||
Cooper Industries Ltd. Class A | 154,500 | 11,279 | ||||
Energy Conversion Devices, Inc. (a)(d) | 103,600 | 4,222 | ||||
Evergreen Solar, Inc. (a) | 456,800 | 4,865 | ||||
Motech Industries, Inc. | 316,935 | 4,364 | ||||
NEOMAX Co. Ltd. | 35,000 | 1,152 | ||||
SolarWorld AG | 29,800 | 3,986 | ||||
Ultralife Batteries, Inc. (a) | 53,100 | 637 | ||||
30,505 | ||||||
Industrial Conglomerates – 0.1% | ||||||
Hutchison Whampoa Ltd. | 257,000 | 2,448 | ||||
Raven Industries, Inc. | 1,842 | 53 | ||||
2,501 |
See accompanying notes which are an integral part of the financial statements.
19 Annual Report
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
INDUSTRIALS – continued | ||||||
Machinery – 2.2% | ||||||
A.S.V., Inc. (a) | 53,000 | $ | 1,324 | |||
Bucyrus International, Inc. Class A | 24,918 | 1,313 | ||||
Caterpillar, Inc. | 425,600 | 24,587 | ||||
Cummins, Inc. | 62,300 | 5,590 | ||||
Danaher Corp. | 549,800 | 30,668 | ||||
FreightCar America, Inc. | 174,700 | 8,400 | ||||
IDEX Corp. | 58,100 | 2,388 | ||||
Joy Global, Inc. | 222,275 | 8,891 | ||||
PACCAR, Inc. | 159,350 | 11,032 | ||||
94,193 | ||||||
Marine – 0.0% | ||||||
American Commercial Lines, Inc. | 12,500 | 379 | ||||
Road & Rail 0.3% | ||||||
Canadian National Railway Co. | 102,800 | 8,236 | ||||
Knight Transportation, Inc. | 39,930 | 828 | ||||
Landstar System, Inc. | 88,100 | 3,677 | ||||
12,741 | ||||||
Trading Companies & Distributors – 0.4% | ||||||
Fastenal Co. | 170,000 | 6,662 | ||||
Mitsui & Co. Ltd. | 801,000 | 10,292 | ||||
16,954 | ||||||
TOTAL INDUSTRIALS | 221,632 | |||||
INFORMATION TECHNOLOGY – 25.4% | ||||||
Communications Equipment – 1.6% | ||||||
Comverse Technology, Inc. (a) | 172,500 | 4,587 | ||||
Corning, Inc. (a) | 335,400 | 6,594 | ||||
CSR PLC (a) | 202,600 | 3,265 | ||||
ECI Telecom Ltd. (a) | 215,800 | 1,616 | ||||
F5 Networks, Inc. (a) | 34,700 | 1,984 | ||||
Foxconn International Holdings Ltd. | 478,000 | 780 | ||||
Ixia (a) | 513,500 | 7,590 | ||||
JDS Uniphase Corp. (a) | 147,000 | 347 | ||||
Motorola, Inc. | 880,600 | 19,893 | ||||
Nice Systems Ltd. sponsored ADR (a) | 12,000 | 578 | ||||
Nokia Corp. sponsored ADR | 138,200 | 2,529 | ||||
Nortel Networks Corp. (a) | 1,031,300 | 3,156 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
20 |
Common Stocks continued | �� | |||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
INFORMATION TECHNOLOGY – continued | ||||||
Communications Equipment – continued | ||||||
QUALCOMM, Inc. | 334,200 | $ | 14,397 | |||
Sycamore Networks, Inc. (a) | 87,200 | 377 | ||||
67,693 | ||||||
Computers & Peripherals – 5.2% | ||||||
Apple Computer, Inc. (a) | 1,588,400 | 114,190 | ||||
EMC Corp. (a) | 218,600 | 2,977 | ||||
Hewlett-Packard Co. | 3,016,100 | 86,351 | ||||
Logitech International SA sponsored ADR (a) | 77,800 | 3,639 | ||||
Network Appliance, Inc. (a) | 416,400 | 11,243 | ||||
Seagate Technology | 61,800 | 1,235 | ||||
219,635 | ||||||
Electronic Equipment & Instruments – 0.6% | ||||||
Agilent Technologies, Inc. (a) | 89,800 | 2,989 | ||||
Amphenol Corp. Class A | 40,400 | 1,788 | ||||
Cogent, Inc. (a) | 7,100 | 161 | ||||
FLIR Systems, Inc. (a) | 1,982 | 44 | ||||
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 1,442,104 | 7,908 | ||||
Hoya Corp. | 10,800 | 388 | ||||
LoJack Corp. (a) | 300,000 | 7,239 | ||||
Mettler-Toledo International, Inc. (a) | 54,900 | 3,030 | ||||
National Instruments Corp. | 110,800 | 3,551 | ||||
Nidec Corp. | 3,900 | 332 | ||||
27,430 | ||||||
Internet Software & Services – 8.4% | ||||||
Akamai Technologies, Inc. (a) | 553,100 | 11,023 | ||||
Equinix, Inc. (a) | 10,377 | 423 | ||||
Google, Inc. Class A (sub. vtg.) (a) | 445,700 | 184,892 | ||||
iVillage, Inc. (a) | 328,200 | 2,632 | ||||
Websense, Inc. (a) | 21,343 | 1,401 | ||||
WebSideStory, Inc. (a) | 417,300 | 7,566 | ||||
Yahoo!, Inc. (a) | 3,814,000 | 149,433 | ||||
357,370 | ||||||
IT Services – 2.1% | ||||||
Accenture Ltd. Class A | 161,600 | 4,665 | ||||
CheckFree Corp. (a) | 82,500 | 3,787 | ||||
Cognizant Technology Solutions Corp. Class A (a) | 157,700 | 7,940 | ||||
First Data Corp. | 71,000 | 3,054 | ||||
Fiserv, Inc. (a) | 68,700 | 2,973 | ||||
Global Payments, Inc. | 244,300 | 11,387 |
See accompanying notes which are an integral part of the financial statements.
21 Annual Report
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
INFORMATION TECHNOLOGY – continued | ||||||
IT Services – continued | ||||||
Heartland Payment Systems, Inc. | 3,200 | $ | 69 | |||
Infosys Technologies Ltd. sponsored ADR | 220,900 | 17,862 | ||||
MoneyGram International, Inc. | 29,200 | 762 | ||||
MPS Group, Inc. (a) | 28,600 | 391 | ||||
Paychex, Inc. | 106,300 | 4,052 | ||||
SRA International, Inc. Class A (a) | 201,561 | 6,156 | ||||
TALX Corp. | 275,000 | 12,570 | ||||
VeriFone Holdings, Inc. | 459,100 | 11,615 | ||||
Wright Express Corp. | 17,000 | 374 | ||||
87,657 | ||||||
Semiconductors & Semiconductor Equipment – 5.9% | ||||||
Advanced Analogic Technologies, Inc. | 37,200 | 515 | ||||
ATI Technologies, Inc. (a) | 47,300 | 806 | ||||
Broadcom Corp. Class A (a) | 168,600 | 7,949 | ||||
FormFactor, Inc. (a) | 137,000 | 3,347 | ||||
Freescale Semiconductor, Inc. Class A (a) | 12,100 | 305 | ||||
Hittite Microwave Corp. | 3,600 | 83 | ||||
Lam Research Corp. (a) | 62,500 | 2,230 | ||||
Marvell Technology Group Ltd. (a) | 2,147,600 | 120,459 | ||||
MathStar, Inc. | 10,000 | 57 | ||||
MediaTek, Inc. | 66,000 | 778 | ||||
Monolithic Power Systems, Inc. (a) | 106,400 | 1,595 | ||||
National Semiconductor Corp. | 535,100 | 13,902 | ||||
NVIDIA Corp. (a) | 217,400 | 7,948 | ||||
O2Micro International Ltd. sponsored ADR (a) | 3,000 | 31 | ||||
Powertech Technology, Inc. | 373,000 | 1,227 | ||||
Q Cells AG | 4,900 | 286 | ||||
Samsung Electronics Co. Ltd. | 124,325 | 81,320 | ||||
Siliconware Precision Industries Co. Ltd. sponsored ADR (d) | 67,700 | 470 | ||||
SiRF Technology Holdings, Inc. (a) | 252,900 | 7,536 | ||||
250,844 | ||||||
Software 1.6% | ||||||
Activision, Inc. (a) | 69,321 | 952 | ||||
Adobe Systems, Inc. | 232,706 | 8,601 | ||||
Altiris, Inc. (a) | 61,900 | 1,045 | ||||
Autodesk, Inc. (a) | 183,200 | 7,868 | ||||
Blackboard, Inc. (a) | 32,600 | 945 | ||||
Citrix Systems, Inc. (a) | 43,200 | 1,243 | ||||
FileNET Corp. (a) | 112,895 | 2,918 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
22 |
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
INFORMATION TECHNOLOGY – continued | ||||||
Software – continued | ||||||
Intuit, Inc. (a) | 142,977 | $ | 7,621 | |||
JAMDAT Mobile, Inc. (a) | 16,400 | 436 | ||||
JDA Software Group, Inc. (a) | 400,000 | 6,804 | ||||
McAfee, Inc. (a) | 227,300 | 6,167 | ||||
NAVTEQ Corp. (a) | 136,530 | 5,990 | ||||
NDS Group PLC sponsored ADR (a) | 21,200 | 872 | ||||
Quality Systems, Inc. | 23,758 | 1,824 | ||||
Red Hat, Inc. (a) | 123,174 | 3,355 | ||||
Salesforce.com, Inc. (a) | 214,900 | 6,888 | ||||
SAP AG sponsored ADR | 100,900 | 4,548 | ||||
THQ, Inc. (a) | 6,150 | 147 | ||||
68,224 | ||||||
TOTAL INFORMATION TECHNOLOGY | 1,078,853 | |||||
MATERIALS 6.9% | ||||||
Chemicals – 0.7% | ||||||
Agrium, Inc. | 101,200 | 2,230 | ||||
Bayer AG | 192,000 | 8,018 | ||||
Celanese Corp. Class A | 81,100 | 1,551 | ||||
Chemtura Corp. | 11,128 | 141 | ||||
Monsanto Co. | 10,200 | 791 | ||||
Nalco Holding Co. (a) | 72,500 | 1,284 | ||||
Praxair, Inc. | 323,300 | 17,122 | ||||
31,137 | ||||||
Construction Materials 0.2% | ||||||
Eagle Materials, Inc. | 17,500 | 2,141 | ||||
Rinker Group Ltd. | 362,181 | 4,370 | ||||
6,511 | ||||||
Containers & Packaging – 0.1% | ||||||
Crown Holdings, Inc. (a) | 173,100 | 3,381 | ||||
Owens Illinois, Inc. (a) | 139,300 | 2,931 | ||||
6,312 | ||||||
Metals & Mining – 5.9% | ||||||
Aber Diamond Corp. | 1,800 | 67 | ||||
Agnico-Eagle Mines Ltd. | 137,300 | 2,719 | ||||
Alamos Gold, Inc. (a) | 1,010,000 | 5,708 | ||||
Anglo American PLC ADR (d) | 438,700 | 15,258 | ||||
Aquarius Platinum Ltd. (Australia) | 598,000 | 4,825 |
See accompanying notes which are an integral part of the financial statements.
23 Annual Report
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
MATERIALS – continued | ||||||
Metals & Mining – continued | ||||||
Bema Gold Corp. (a) | 1,356,200 | $ | 3,931 | |||
BHP Billiton Ltd. sponsored ADR | 938,500 | 31,365 | ||||
Companhia Vale do Rio Doce sponsored ADR | 126,500 | 5,204 | ||||
Compania de Minas Buenaventura SA sponsored ADR | 65,000 | 1,840 | ||||
Compass Minerals International, Inc. | 49,900 | 1,225 | ||||
Eldorado Gold Corp. (a) | 608,400 | 2,978 | ||||
Falconbridge Ltd. | 116,600 | 3,460 | ||||
First Quantum Minerals Ltd. | 183,500 | 5,880 | ||||
Freeport-McMoRan Copper & Gold, Inc. Class B | 66,300 | 3,567 | ||||
Gabriel Resources Ltd. (a) | 498,900 | 1,219 | ||||
Gerdau SA sponsored ADR | 212,200 | 3,539 | ||||
Glamis Gold Ltd. (a) | 768,800 | 21,142 | ||||
Goldcorp, Inc. | 797,175 | 17,760 | ||||
IPSCO, Inc. | 134,800 | 11,214 | ||||
Ivanhoe Mines Ltd. (a) | 565,600 | 4,062 | ||||
Lihir Gold Ltd. (a) | 377,800 | 604 | ||||
Meridian Gold, Inc. (a) | 40,000 | 877 | ||||
Minefinders Corp. Ltd. (a) | 162,300 | 824 | ||||
New Gold, Inc. (a) | 324,100 | 2,175 | ||||
Newmont Mining Corp. | 879,100 | 46,944 | ||||
Nucor Corp. | 119,300 | 7,960 | ||||
Phelps Dodge Corp. | 29,700 | 4,273 | ||||
POSCO sponsored ADR | 111,500 | 5,520 | ||||
Rio Tinto PLC (Reg.) | 592,800 | 27,089 | ||||
Shore Gold, Inc. (a) | 15,100 | 100 | ||||
Southern Copper Corp. | 23,600 | 1,581 | ||||
Teck Cominco Ltd. Class B (sub. vtg.) | 84,500 | 4,510 | ||||
United States Steel Corp. | 8,400 | 404 | ||||
249,824 | ||||||
TOTAL MATERIALS | 293,784 | |||||
TELECOMMUNICATION SERVICES – 3.0% | ||||||
Diversified Telecommunication Services – 0.1% | ||||||
PT Telkomunikasi Indonesia Tbk sponsored ADR | 16,500 | 394 | ||||
Telewest Global, Inc. (a) | 151,415 | 3,607 | ||||
Telkom SA Ltd. | 17,500 | 373 | ||||
4,374 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
24 |
Common Stocks continued | ||||||||
Shares | Value (Note 1) | |||||||
(000s) | ||||||||
TELECOMMUNICATION SERVICES – continued | ||||||||
Wireless Telecommunication Services – 2.9% | ||||||||
America Movil SA de CV Series L sponsored ADR | 2,186,600 | $ | 63,980 | |||||
American Tower Corp. Class A (a) | 331,427 | 8,982 | ||||||
China Mobile (Hong Kong) Ltd. sponsored ADR | 136,700 | 3,286 | ||||||
Investcom LLC GDR | 38,400 | 540 | ||||||
Leap Wireless International, Inc. (a) | 10,800 | 409 | ||||||
Nextel Partners, Inc. Class A (a) | 551,978 | 15,422 | ||||||
NII Holdings, Inc. (a) | 608,947 | 26,599 | ||||||
Rogers Communications, Inc. Class B (non-vtg.) | 43,700 | 1,849 | ||||||
Turkcell Iletisim Hizmet AS sponsored ADR | 11,000 | 169 | ||||||
Vimpel Communications sponsored ADR (a) | 58,400 | 2,583 | ||||||
123,819 | ||||||||
TOTAL TELECOMMUNICATION SERVICES | 128,193 | |||||||
UTILITIES – 0.2% | ||||||||
Gas Utilities 0.2% | ||||||||
Questar Corp. | 29,100 | 2,203 | ||||||
Southern Union Co. | 204,075 | 4,822 | ||||||
7,025 | ||||||||
Independent Power Producers & Energy Traders – 0.0% | ||||||||
AES Corp. (a) | 150,400 | 2,381 | ||||||
Water Utilities 0.0% | ||||||||
Companhia de Saneamento Basico do Estado de Sao Paulo | ||||||||
(SABESP) sponsored ADR | 28,100 | 474 | ||||||
TOTAL UTILITIES | 9,880 | |||||||
TOTAL COMMON STOCKS | ||||||||
(Cost $3,273,427) | 3,824,298 | |||||||
Nonconvertible Preferred Stocks 0.0% | ||||||||
CONSUMER DISCRETIONARY – 0.0% | ||||||||
Automobiles – 0.0% | ||||||||
Porsche AG (non-vtg.) | 1,178 | 846 | ||||||
TOTAL NONCONVERTIBLE PREFERRED STOCKS | ||||||||
(Cost $871) | 846 |
See accompanying notes which are an integral part of the financial statements.
25 Annual Report
Investments continued | ||||||||||
U.S. Treasury Obligations 0.1% | ||||||||||
Principal | Value (Note 1) | |||||||||
Amount (000s) | (000s) | |||||||||
U.S. Treasury Notes: | ||||||||||
4.25% 8/15/14 | $ | 2,600 | $ | 2,572 | ||||||
4.75% 5/15/14 | 2,700 | 2,766 | ||||||||
TOTAL U.S. TREASURY OBLIGATIONS | ||||||||||
(Cost $5,376) | 5,338 | |||||||||
Floating Rate Loans 0.0% | ||||||||||
CONSUMER DISCRETIONARY – 0.0% | ||||||||||
Media – 0.0% | ||||||||||
Charter Communications Operating LLC Tranche B, term | ||||||||||
loan 7.5% 4/7/11 (g) | 818 | 820 | ||||||||
TOTAL FLOATING RATE LOANS | ||||||||||
(Cost $805) | 820 | |||||||||
Money Market Funds 11.0% | ||||||||||
Shares | ||||||||||
Fidelity Cash Central Fund, 4.28% (b) | 431,339,011 | 431,339 | ||||||||
Fidelity Securities Lending Cash Central Fund, | ||||||||||
4.35% (b)(c) | 35,274,425 | 35,274 | ||||||||
TOTAL MONEY MARKET FUNDS | ||||||||||
(Cost $466,613) | 466,613 | |||||||||
TOTAL INVESTMENT PORTFOLIO 101.0% | ||||||||||
(Cost $3,747,092) | 4,297,915 | |||||||||
NET OTHER ASSETS – (1.0)% | (42,857) | |||||||||
NET ASSETS 100% | $ | 4,255,058 |
Legend (a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund’s holdings as of its most recent quarter end is available upon request. |
See accompanying notes which are an integral part of the financial statements.
Annual Report 26
(c) Investment made with cash collateral received from securities on loan. (d) Security or a portion of the security is on loan at period end. (e) Affiliated company (f) 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 $376,000 or 0.0% of net assets. (g) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. (h) Restricted securities – Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $2,421,000 or 0.1% of net assets. |
Additional information on each holding is as follows:
Acquisition | Acquisition | |||||
Security | Date | Cost (000s) | ||||
MannKind Corp. | ||||||
warrants 8/3/10 | 8/3/05 | $ | 1 | |||
The Weinstein Co. | ||||||
Holdings, LLC | ||||||
Class A 1 | 10/19/05 | 2,267 |
Affiliated Central Funds
Information regarding income received by the fund from the affiliated Central funds during the period is as follows:
Fund | Income received | |||
(amounts in thousands) | ||||
Fidelity Cash Central Fund | $ | 10,040 | ||
Fidelity Securities Lending Cash Central Fund | 550 | |||
Total | $ | 10,590 |
Other Affiliated Issuers
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:
Value, | ||||||||||||||||||||
Affiliate | beginning of | Sales | Dividend | Value, end of | ||||||||||||||||
(amounts in thousands) | period | Purchases | Proceeds | Income | period | |||||||||||||||
Bakers Footwear | ||||||||||||||||||||
Group, Inc. | $ | 1,061 | $ | 5,460 | $ | — | $ | — | $ | 7,130 |
See accompanying notes which are an integral part of the financial statements.
27 Annual Report
Investments continued
Other Information
Distribution of investments by country of issue, as a percentage of total net assets, is as follows:
United States of America | 75.4% | |
Canada | 5.2% | |
Bermuda | 4.2% | |
Switzerland | 2.5% | |
United Kingdom | 2.1% | |
Korea (South) | 2.0% | |
Mexico | 1.6% | |
Japan | 1.0% | |
Netherlands Antilles | 1.0% | |
Others (individually less than 1%) . | 5.0% | |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report 28
Financial Statements | ||||||||
Statement of Assets and Liabilities | ||||||||
Amounts in thousands (except per share amounts) | December 31, 2005 | |||||||
Assets | ||||||||
Investment in securities, at value (including securities | ||||||||
loaned of $34,259) See accompanying schedule: | ||||||||
Unaffiliated issuers (cost $3,274,017) | $ | 3,824,172 | ||||||
Affiliated Central Funds (cost $466,613) | 466,613 | |||||||
Other affiliated issuers (cost $6,462) | 7,130 | |||||||
Total Investments (cost $3,747,092) | $ | 4,297,915 | ||||||
Receivable for investments sold | 5,131 | |||||||
Receivable for fund shares sold | 39,274 | |||||||
Dividends receivable | 3,623 | |||||||
Interest receivable | 1,835 | |||||||
Prepaid expenses | 10 | |||||||
Other affiliated receivables | 2 | |||||||
Other receivables | 440 | |||||||
Total assets | 4,348,230 | |||||||
Liabilities | ||||||||
Payable for investments purchased | $ | 48,929 | ||||||
Payable for fund shares redeemed | 3,928 | |||||||
Accrued management fee | 1,933 | |||||||
Distribution fees payable | 1,837 | |||||||
Other affiliated payables | 811 | |||||||
Other payables and accrued expenses | 460 | |||||||
Collateral on securities loaned, at value | 35,274 | |||||||
Total liabilities | 93,172 | |||||||
Net Assets | $ | 4,255,058 | ||||||
Net Assets consist of: | ||||||||
Paid in capital | $ | 3,696,619 | ||||||
Accumulated net investment loss | (34) | |||||||
Accumulated undistributed net realized gain (loss) on | ||||||||
investments and foreign currency transactions | 7,661 | |||||||
Net unrealized appreciation (depreciation) on | ||||||||
investments and assets and liabilities in foreign | ||||||||
currencies | 550,812 | |||||||
Net Assets | $ | 4,255,058 | ||||||
See accompanying notes which are an integral part of the financial statements. | ||||||||
29 | Annual Report |
Financial Statements continued | ||||
Statement of Assets and Liabilities continued | ||||
Amounts in thousands (except per share amounts) | December 31, 2005 | |||
Calculation of Maximum Offering Price | ||||
Class A: | ||||
Net Asset Value and redemption price per share | ||||
($1,019,057 ÷ 61,217 shares) | $ | 16.65 | ||
Maximum offering price per share (100/94.25 of $16.65) | $ | 17.67 | ||
Class T: | ||||
Net Asset Value and redemption price per share | ||||
($1,392,718 ÷ 84,042 shares) | $ | 16.57 | ||
Maximum offering price per share (100/96.50 of $16.57) | $ | 17.17 | ||
Class B: | ||||
Net Asset Value and offering price per share ($339,225 | ||||
÷ 20,748 shares)A | $ | 16.35 | ||
Class C: | ||||
Net Asset Value and offering price per share | ||||
($1,006,236 ÷ 61,474 shares)A | $ | 16.37 | ||
Institutional Class: | ||||
Net Asset Value, offering price and redemption price per | ||||
share ($497,822 ÷ 29,674 shares) | $ | 16.78 | ||
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. |
See accompanying notes which are an integral part of the financial statements.
Annual Report 30
Statement of Operations | ||||||
Amounts in thousands | Year ended December 31, 2005 | |||||
Investment Income | ||||||
Dividends | $ | 16,413 | ||||
Interest | 867 | |||||
Income from affiliated Central Funds | 10,590 | |||||
Total income | 27,870 | |||||
Expenses | ||||||
Management fee | $ | 12,559 | ||||
Transfer agent fees | 5,421 | |||||
Distribution fees | 12,231 | |||||
Accounting and security lending fees | 699 | |||||
Independent trustees’ compensation | 9 | |||||
Custodian fees and expenses | 288 | |||||
Registration fees | 848 | |||||
Audit | 56 | |||||
Legal | 14 | |||||
Miscellaneous | 13 | |||||
Total expenses before reductions | 32,138 | |||||
Expense reductions | (970) | 31,168 | ||||
Net investment income (loss) | (3,298) | |||||
Realized and Unrealized Gain (Loss) | ||||||
Net realized gain (loss) on: | ||||||
Investment securities: | ||||||
Unaffiliated issuers (net of foreign taxes of $1) | 15,492 | |||||
Foreign currency transactions | (54) | |||||
Total net realized gain (loss) | 15,438 | |||||
Change in net unrealized appreciation (depreciation) on: | ||||||
Investment securities (net of increase in deferred for- | ||||||
eign taxes of $11) | 426,571 | |||||
Assets and liabilities in foreign currencies | (4) | |||||
Total change in net unrealized appreciation | ||||||
(depreciation) | 426,567 | |||||
Net gain (loss) | 442,005 | |||||
Net increase (decrease) in net assets resulting from | ||||||
operations | $ | 438,707 |
See accompanying notes which are an integral part of the financial statements.
31 Annual Report
Financial Statements continued | ||||||||
Statement of Changes in Net Assets | ||||||||
Year ended | Year ended | |||||||
December 31, | December 31, | |||||||
Amounts in thousands | 2005 | 2004 | ||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | (3,298) | $ | (2,694) | ||||
Net realized gain (loss) | 15,438 | (4,061) | ||||||
Change in net unrealized appreciation (depreciation) . | 426,567 | 109,094 | ||||||
Net increase (decrease) in net assets resulting | ||||||||
from operations | 438,707 | 102,339 | ||||||
Distributions to shareholders from net investment income | . | — | (206) | |||||
Share transactions - net increase (decrease) | 2,787,029 | 729,179 | ||||||
Total increase (decrease) in net assets | 3,225,736 | 831,312 | ||||||
Net Assets | ||||||||
Beginning of period | 1,029,322 | 198,010 | ||||||
End of period (including accumulated net investment | ||||||||
loss of $34 and accumulated net investment loss of | ||||||||
$560, respectively) | $ | 4,255,058 | $ | 1,029,322 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
32 |
Financial Highlights Class A | ||||||||||||
Years ended December 31, | 2005 | 2004 | 2003F | |||||||||
Selected Per Share Data | ||||||||||||
Net asset value, beginning of period | $ 13.99 | $ 11.79 | $ 10.00 | |||||||||
Income from Investment Operations | ||||||||||||
Net investment income (loss)E | 02 | (.03) | (.04) | |||||||||
Net realized and unrealized gain (loss) | 2.64 | 2.24 | 1.87 | |||||||||
Total from investment operations | 2.66 | 2.21 | 1.83 | |||||||||
Distributions from net investment income | — | (.01) | (.03) | |||||||||
Distributions from net realized gain | — | — | (.01) | |||||||||
Total distributions | — | (.01) | (.04) | |||||||||
Net asset value, end of period | $ 16.65 | $ 13.99 | $ 11.79 | |||||||||
Total ReturnB,C,D | 19.01% | 18.76% | 18.23% | |||||||||
Ratios to Average Net AssetsG | ||||||||||||
Expenses before reductions | 1.17% | 1.22% | 1.39%A | |||||||||
Expenses net of fee waivers, if any | 1.17% | 1.22% | 1.39%A | |||||||||
Expenses net of all reductions | 1.13% | 1.17% | 1.28%A | |||||||||
Net investment income (loss) | 13% | (.26)% | (.81)%A | |||||||||
Supplemental Data | ||||||||||||
Net assets, end of period (in millions) | $ 1,019 | $ 230 | $ 37 | |||||||||
Portfolio turnover rate | 65% | 87% | 77%A |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F For the period July 31, 2003 (commencement of operations) to December 31, 2003. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start up periods may not be representative of longer term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. |
See accompanying notes which are an integral part of the financial statements.
33 Annual Report
Financial Highlights Class T | ||||||||||||
Years ended December 31, | 2005 | 2004 | 2003F | |||||||||
Selected Per Share Data | ||||||||||||
Net asset value, beginning of period | $ 13.96 | $ 11.78 | $ 10.00 | |||||||||
Income from Investment Operations | ||||||||||||
Net investment income (loss)E | (.01) | (.06) | (.05) | |||||||||
Net realized and unrealized gain (loss) | 2.62 | 2.25 | 1.86 | |||||||||
Total from investment operations | 2.61 | 2.19 | 1.81 | |||||||||
Distributions from net investment income | — | (.01) | (.02) | |||||||||
Distributions from net realized gain | — | — | (.01) | |||||||||
Total distributions | — | (.01) | (.03) | |||||||||
Net asset value, end of period | $ 16.57 | $ 13.96 | $ 11.78 | |||||||||
Total ReturnB,C,D | 18.70% | 18.60% | 18.08% | |||||||||
Ratios to Average Net AssetsG | ||||||||||||
Expenses before reductions | 1.38% | 1.43% | 1.62%A | |||||||||
Expenses net of fee waivers, if any | 1.38% | 1.43% | 1.62%A | |||||||||
Expenses net of all reductions | 1.34% | 1.39% | 1.51%A | |||||||||
Net investment income (loss) | (.08)% | (.48)% | (1.04)%A | |||||||||
Supplemental Data | ||||||||||||
Net assets, end of period (in millions) | $ 1,393 | $ 325 | $ 62 | |||||||||
Portfolio turnover rate | 65% | 87% | 77%A |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F For the period July 31, 2003 (commencement of operations) to December 31, 2003. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start up periods may not be representative of longer term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
34 |
Financial Highlights Class B | ||||||||||||
Years ended December 31, | 2005 | 2004 | 2003F | |||||||||
Selected Per Share Data | ||||||||||||
Net asset value, beginning of period | $ 13.85 | $ 11.76 | $ 10.00 | |||||||||
Income from Investment Operations | ||||||||||||
Net investment income (loss)E | (.10) | (.13) | (.07) | |||||||||
Net realized and unrealized gain (loss) | 2.60 | 2.23 | 1.85 | |||||||||
Total from investment operations | 2.50 | 2.10 | 1.78 | |||||||||
Distributions from net investment income | — | (.01) | (.01) | |||||||||
Distributions from net realized gain | — | — | (.01) | |||||||||
Total distributions | — | (.01) | (.02) | |||||||||
Net asset value, end of period | $ 16.35 | $ 13.85 | $ 11.76 | |||||||||
Total ReturnB,C,D | 18.05% | 17.87% | 17.75% | |||||||||
Ratios to Average Net AssetsG | ||||||||||||
Expenses before reductions | 1.98% | 2.02% | 2.19%A | |||||||||
Expenses net of fee waivers, if any | 1.98% | 2.02% | 2.19%A | |||||||||
Expenses net of all reductions | 1.94% | 1.97% | 2.08%A | |||||||||
Net investment income (loss) | (.68)% | (1.06)% | (1.61)%A | |||||||||
Supplemental Data | ||||||||||||
Net assets, end of period (in millions) | $ 339 | $ 109 | $ 27 | |||||||||
Portfolio turnover rate | 65% | 87% | 77%A |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F For the period July 31, 2003 (commencement of operations) to December 31, 2003. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start up periods may not be representative of longer term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. |
See accompanying notes which are an integral part of the financial statements.
35 Annual Report
Financial Highlights Class C | ||||||||||||
Years ended December 31, | 2005 | 2004 | 2003F | |||||||||
Selected Per Share Data | ||||||||||||
Net asset value, beginning of period | $ 13.86 | $ 11.76 | $ 10.00 | |||||||||
Income from Investment Operations | ||||||||||||
Net investment income (loss)E | (.09) | (.12) | (.07) | |||||||||
Net realized and unrealized gain (loss) | 2.60 | 2.23 | 1.85 | |||||||||
Total from investment operations | 2.51 | 2.11 | 1.78 | |||||||||
Distributions from net investment income | — | (.01) | (.01) | |||||||||
Distributions from net realized gain | — | — | (.01) | |||||||||
Total distributions | — | (.01) | (.02) | |||||||||
Net asset value, end of period | $ 16.37 | $ 13.86 | $ 11.76 | |||||||||
Total ReturnB,C,D | 18.11% | 17.95% | 17.77% | |||||||||
Ratios to Average Net AssetsG | ||||||||||||
Expenses before reductions | 1.89% | 1.94% | 2.14%A | |||||||||
Expenses net of fee waivers, if any | 1.89% | 1.94% | 2.14%A | |||||||||
Expenses net of all reductions | 1.85% | 1.89% | 2.03%A | |||||||||
Net investment income (loss) | (.59)% | (.98)% | (1.55)%A | |||||||||
Supplemental Data | ||||||||||||
Net assets, end of period (in millions) | $ 1,006 | $ 246 | $ 49 | |||||||||
Portfolio turnover rate | 65% | 87% | 77%A |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F For the period July 31, 2003 (commencement of operations) to December 31, 2003. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start up periods may not be representative of longer term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
36 |
Financial Highlights Institutional Class | ||||||||||||
Years ended December 31, | 2005 | 2004 | 2003E | |||||||||
Selected Per Share Data | ||||||||||||
Net asset value, beginning of period | $ 14.05 | $ 11.79 | $ 10.00 | |||||||||
Income from Investment Operations | ||||||||||||
Net investment income (loss)D | 07 | .01 | (.02) | |||||||||
Net realized and unrealized gain (loss) | 2.66 | 2.26 | 1.86 | |||||||||
Total from investment operations | 2.73 | 2.27 | 1.84 | |||||||||
Distributions from net investment income | — | (.01) | (.04) | |||||||||
Distributions from net realized gain | — | — | (.01) | |||||||||
Total distributions | — | (.01) | (.05) | |||||||||
Net asset value, end of period | $ 16.78 | $ 14.05 | $ 11.79 | |||||||||
Total ReturnB,C | 19.43% | 19.27% | 18.31% | |||||||||
Ratios to Average Net AssetsF | ||||||||||||
Expenses before reductions | 84% | .86% | 1.07%A | |||||||||
Expenses net of fee waivers, if any | 84% | .86% | 1.07%A | |||||||||
Expenses net of all reductions | 79% | .82% | .96%A | |||||||||
Net investment income (loss) | 47% | .10% | (.49)%A | |||||||||
Supplemental Data | ||||||||||||
Net assets, end of period (in millions) | $ 498 | $ 120 | $ 23 | |||||||||
Portfolio turnover rate | 65% | 87% | 77%A |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E For the period July 31, 2003 (commencement of operations) to December 31, 2003. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start up periods may not be representative of longer term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. |
See accompanying notes which are an integral part of the financial statements.
37 Annual Report
Notes to Financial Statements
For the period ended December 31, 2005 (Amounts in thousands except ratios) |
1. Significant Accounting Policies.
Fidelity Advisor New Insights Fund (the fund) is a fund of Fidelity Contrafund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open end management investment company organized as a Massachusetts business trust.
The fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the fund, and certain fund level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
The fund may invest in affiliated money market central funds (Money Market Central Funds) which are open end investment companies available to investment companies and other accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require manage ment 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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open end mutual funds, are valued at their closing net asset value each business day. Short term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of
Annual Report |
38 |
1. Significant Accounting Policies continued | ||
Security Valuation continued |
the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securi ties markets, reviewing developments in foreign markets and evaluating the perfor mance of ADRs, futures contracts and exchange traded funds. Because the fund’s utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used can not be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts’ terms.
Foreign denominated assets, including investment securities, and liabilities are trans lated into U.S. dollars at the exchange rate at period end. Purchases and sales of invest ment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transac tion date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. Dividend income is recorded on the ex dividend date, except for certain dividends from foreign securities where the ex dividend date may have passed, which 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund esti mates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each fund in the trust.
39 Annual Report
Notes to Financial Statements continued |
(Amounts in thousands except ratios) |
1. Significant Accounting Policies continued |
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund’s understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distribu tions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book tax differences will reverse in a subsequent period.
Book tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), market discount, net operating losses, capital loss carryforwards, and losses deferred due to wash sales.
The tax basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ | 602,538 | ||||||
Unrealized depreciation | (58,431) | |||||||
Net unrealized appreciation (depreciation) | 544,107 | |||||||
Undistributed long term capital gain | 14,331 | |||||||
Cost for federal income tax purposes | $ | 3,753,808 | ||||||
The tax character of distributions paid was as follows: | ||||||||
December 31, 2005 | December 31, 2004 | |||||||
Ordinary Income | $ | — | $ | 206 | ||||
2. Operating Policies. |
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non government securities. Collateral is held in segregated accounts with
Annual Report |
40 |
2. Operating Policies continued
Repurchase Agreements continued
custodian banks and may be obtained in the event of a default of the counterparty. The fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. The fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transac tions 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. Information regarding restricted securities is included at the end of the fund’s Schedule of Investments.
Loans and Other Direct Debt Instruments. The fund may invest in loans and loan participations, trade claims or other receivables. These investments may include standby financing commitments, including revolving credit facilities, that obligate the fund to supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary. The fund may be contrac tually obligated to receive approval from the agent bank and/or borrower prior to the sale of these investments.
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short term securities and U.S. government securities, aggregated $3,684,822 and $1,250,411, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment manage ment related services for which the fund pays a monthly management fee. The manage ment fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund’s average net assets and a group fee rate that averaged .27% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual man agement fee rate was .57% of the fund’s average net assets.
Distribution and Service Plan. In accordance with Rule 12b 1 of the 1940 Act, the fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each
41 Annual Report
Notes to Financial Statements continued | ||
(Amounts in thousands except ratios) | ||
4. Fees and Other Transactions with Affiliates continued | ||
Distribution and Service Plan continued |
class’ average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
Distribution | Service | Paid to | Retained | |||||||||
Fee | Fee | FDC | by FDC | |||||||||
Class A | 0% | .25% | $ | 1,234 | $ | — | ||||||
Class T | 25% | .25% | 3,731 | 287 | ||||||||
Class B | 75% | .25% | 2,003 | 1,502 | ||||||||
Class C | 75% | .25% | 5,263 | 3,033 | ||||||||
$ | 12,231 | $ | 4,822 |
Sales Load. FDC receives a front end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermedi aries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and ..25% for certain purchases of Class A and Class T shares.
For the period, sales charge amounts retained by FDC were as follows: | ||||
Retained | ||||
by FDC | ||||
Class A | $ | 2,016 | ||
Class T | 505 | |||
Class B* | 248 | |||
Class C* | 95 | |||
$ | 2,864 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servic ing agent for each class of the fund. FIIOC receives account fees and asset based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of share holder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:
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42 |
4. Fees and Other Transactions with Affiliates continued | ||||||
Transfer Agent Fees continued | ||||||
% of | ||||||
Average | ||||||
Amount | Net Assets | |||||
Class A | $ | 1,324 | .27 | |||
Class T | 1,704 | .23 | ||||
Class B | 671 | .33 | ||||
Class C | 1,287 | .24 | ||||
Institutional Class | 435 | .19 | ||||
$ | 5,421 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund’s accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Affiliated Central Funds. The fund may invest in Money Market Central Funds which seek preservation of capital and current income and are managed by Fidelity Invest ments Money Management, Inc. (FIMM), an affiliate of FMR.
The Money Market Central Funds do not pay a management fee.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $58 for the period.
5. Committed Line of Credit. |
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the “line of credit”) to be utilized for temporary or emergency purposes to fund share holder redemptions or for other short term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Security Lending. |
The fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount 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
43 Annual Report
Notes to Financial Statements continued |
(Amounts in thousands except ratios) |
6. Security Lending continued |
delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the fund’s Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Net income from lending portfolio securities during the period amounted to $550.
7. Expense Reductions. |
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $958 for the period. In addition, through arrangements with the fund’s custodian and each class’ transfer agent, credits realized as a result of uninvested cash balances were used to reduce the fund’s expenses. During the period, these credits reduced the fund’s custody expenses by $7. During the period, credits reduced each class’ transfer agent expense as noted in the table below.
Transfer Agent | ||||
expense reduction | ||||
Institutional Class | $ | 5 | ||
8. Other. |
The fund’s organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the perfor mance of their duties to the fund. In the normal course of business, the fund may also enter into contracts that provide general indemnifications. The fund’s maximum expo sure under these arrangements is unknown as this would be dependent on future claims that may be made against the fund. The risk of material loss from such claims is considered remote.
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44 |
9. Distributions to Shareholders. | ||||||||||||
Distributions to shareholders of each class were as follows: | ||||||||||||
Years ended December 31, | 2005 | 2004 | ||||||||||
From net investment income | ||||||||||||
Class A | $ | — | $ | 38 | ||||||||
Class T | — | 64 | ||||||||||
Class B | — | 28 | ||||||||||
Class C | — | 52 | ||||||||||
Institutional Class | — | 24 | ||||||||||
Total | $ | — | $ | 206 | ||||||||
10. Share Transactions. | ||||||||||||
Transactions for each class of shares were as follows: | ||||||||||||
Shares | Dollars | |||||||||||
Years ended December 31, | 2005 | 2004 | 2005 | 2004 | ||||||||
Class A | ||||||||||||
Shares sold | 48,615 | 14,442 | $ | 747,881 | $ | 186,266 | ||||||
Reinvestment of distributions | 3 | 32 | ||||||||||
Shares redeemed | (3,868) | (1,138) | (58,730) | (14,313) | ||||||||
Net increase (decrease) | 44,747 | 13,307 | $ | 689,151 | $ | 171,985 | ||||||
Class T | ||||||||||||
Shares sold | 65,661 | 19,345 | $ | 990,175 | $ | 246,887 | ||||||
Reinvestment of distributions | 5 | 59 | ||||||||||
Shares redeemed | (4,899) | (1,331) | (73,812) | (16,882) | ||||||||
Net increase (decrease) | 60,762 | 18,019 | $ | 916,363 | $ | 230,064 | ||||||
Class B | ||||||||||||
Shares sold | 14,492 | 5,963 | $ | 215,896 | $ | 75,522 | ||||||
Reinvestment of distributions | 2 | 19 | ||||||||||
Shares redeemed | (1,584) | (415) | (23,549) | (5,241) | ||||||||
Net increase (decrease) | 12,908 | 5,550 | $ | 192,347 | $ | 70,300 | ||||||
Class C | ||||||||||||
Shares sold | 46,847 | 14,235 | $ | 703,988 | $ | 180,974 | ||||||
Reinvestment of distributions | 3 | 35 | ||||||||||
Shares redeemed | (3,110) | (640) | (46,058) | (8,022) | ||||||||
Net increase (decrease) | 43,737 | 13,598 | $ | 657,930 | $ | 172,987 | ||||||
Institutional Class | ||||||||||||
Shares sold | 22,374 | 6,867 | $ | 349,673 | $ | 87,943 | ||||||
Reinvestment of distributions | 1 | 11 | ||||||||||
Shares redeemed | (1,206) | (322) | (18,435) | (4,111) | ||||||||
Net increase (decrease) | 21,168 | 6,546 | $ | 331,238 | $ | 83,843 |
45 Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Contrafund and the Shareholders of Fidelity Advisor New Insights Fund:
In our opinion, the accompanying statement of assets and liabilities, including the sched ule 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 Advisor New Insights Fund (a fund of Fidelity Contrafund) at December 31, 2005 and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereaf ter referred to as “financial statements”) are the responsibility of the Fidelity Advisor New Insights Fund’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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material mis statement. 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, 2005 by correspondence with the custodian and brokers, provide a reason able basis for our opinion.
/s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Boston, Massachusetts February 9, 2006 |
Annual Report |
46 |
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund’s activities, review contractual arrangements with companies that provide services to the fund, and review the fund’s performance. Except for William O. McCoy and Albert R. Gamper, Jr., each of the Trustees oversees 326 funds advised by FMR or an affiliate. Mr. McCoy oversees 328 funds advised by FMR or an affiliate. Mr. Gamper oversees 235 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instru ment signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation Edward C. Johnson 3d (75) |
Year of Election or Appointment: 1963
Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR Corp.; a Di rector and Chairman of the Board and of the Executive Committee of FMR; Chairman and a Director of Fidelity Management & Research (Far East) Inc.; Chairman and a Director of Fidelity Investments Money Man agement, Inc.; and Chairman (2001 present) and a Director (2000 present) of FMR Co., Inc.
47 Annual Report
Trustees and Officers - continued
Name, Age; Principal Occupation Stephen P. Jonas (52) |
Year of Election or Appointment: 2005
Mr. Jonas is Senior Vice President of Advisor New Insights. He also serves as Senior Vice President of other Fidelity funds (2005 present). Mr. Jonas is Executive Director of FMR (2005 present). Previously, Mr. Jonas served as President of Fidelity Enterprise Operations and Risk Services (2004 2005), Chief Administrative Officer (2002 2004), and Chief Financial Officer of FMR Co. (1998 2000). Mr. Jonas has been with Fidelity Investments since 1987 and has held various financial and management positions including Chief Financial Officer of FMR. In addi tion, he serves on the Boards of Boston Ballet (2003 present) and Sim mons College (2003 present).
Robert L. Reynolds (53) |
Year of Election or Appointment: 2003
Mr. Reynolds is a Director (2003 present) and Chief Operating Officer (2002 present) of FMR Corp. He also serves on the Board at Fidelity Investments Canada, Ltd. (2000 present). Previously, Mr. Reynolds served as President of Fidelity Investments Institutional Retirement Group (1996 2000).
* Trustees have been determined to be “Interested Trustees” by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
Independent Trustees: |
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205 5235.
Name, Age; Principal Occupation Dennis J. Dirks (57) |
Year of Election or Appointment: 2005
Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999 2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Com pany (DTC) (1999 2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999 2003). In addi tion, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001 2003) and Chief Executive Officer and Board member of the Mortgage Backed Securities Clearing Corporation (2001 2003). Mr. Dirks also serves as a Trustee of Manhattan College (2005 present).
Annual Report |
48 |
Name, Age; Principal Occupation Albert R. Gamper, Jr. (63) |
Year of Election or Appointment: 2006
Mr. Gamper also serves as a Trustee (2006 present) or Member of the Advisory Board (2005 present) of other investment companies advised by FMR. Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). Dur ing his tenure with CIT Group Inc. Mr. Gamper served in numerous sen ior management positions, including Chairman (1987 1989; 1999 2001; 2002 2004), Chief Executive Officer (1987 2004), and President (1989 2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001 present), Chairman of the Board of Governors, Rutgers University (2004 present), and Chairman of the Board of Saint Barnabas Health Care System.
Robert M. Gates (62) |
Year of Election or Appointment: 1997
Dr. Gates is Chairman of the Independent Trustees (2006 present). Dr. Gates is President of Texas A&M University (2002 present). He was Director of the Central Intelligence Agency (CIA) from 1991 to 1993. From 1989 to 1991, Dr. Gates served as Assistant to the President of the United States and Deputy National Security Advisor. Dr. Gates is a Director of NACCO Industries, Inc. (mining and manufacturing), Parker Drilling Co., Inc. (drilling and rental tools for the energy industry, 2001 present), and Brinker International (restaurant management, 2003 present). Previously, Dr. Gates served as a Director of LucasVarity PLC (automotive components and diesel engines), a Director of TRW Inc. (automotive, space, defense, and information technology), and Dean of the George Bush School of Government and Public Service at Texas A&M University (1999 2001). Dr. Gates also is a Trustee of the Forum for International Policy.
49 Annual Report
Trustees and Officers - continued
Name, Age; Principal Occupation George H. Heilmeier (69) |
Year of Election or Appointment: 2004
Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (commu nication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineer ing and information technology support for the government), and HRL Laboratories (private research and development, 2004 present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE) (2000 present). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Acad emy of Arts and Sciences, and the Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Pre viously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992 2002), Compaq (1994 2002), Automatic Data Processing, Inc. (ADP) (technology based business outsourcing, 1995 2002), INET Technologies Inc. (telecommu nications network surveillance, 2001 2004), and Teletech Holdings (cus tomer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid display.
Marie L. Knowles (59) |
Year of Election or Appointment: 2001
Prior to Ms. Knowles’ retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996 2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare ser vice, 2002 present). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California.
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50 |
Name, Age; Principal Occupation Ned C. Lautenbach (61) |
Year of Election or Appointment: 2000
Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Italtel Holding S.p.A. (telecommunications (Milan, Italy), 2004 present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005 present), as well as a member of the Council on Foreign Relations.
William O. McCoy (72) |
Year of Election or Appointment: 1997
Prior to his retirement in December 1994, Mr. McCoy was Vice Chair man of the Board of BellSouth Corporation (telecommunications) and President of BellSouth Enterprises. He is currently a Director of Liberty Corporation (holding company), Duke Realty Corporation (real estate), and Progress Energy, Inc. (electric utility). He is also a partner of Frank lin Street Partners (private investment management firm) and a member of the Research Triangle Foundation Board. In addition, Mr. McCoy served as the Interim Chancellor (1999 2000) and a member of the Board of Visitors for the University of North Carolina at Chapel Hill and currently serves on the Board of Directors of the University of North Carolina Health Care System and the Board of Visitors of the Kenan Flagler Business School (University of North Carolina at Chapel Hill). He also served as Vice President of Finance for the University of North Car olina (16 school system).
Cornelia M. Small (61) |
Year of Election or Appointment: 2005
Ms. Small is a member (2000 present) and Chairperson (2002 present) of the Investment Committee, and a member (2002 present) of the Board of Trustees of Smith College. Previously, she served as Chief In vestment Officer (1999 2000), Director of Global Equity Investments (1996 1999), and a member of the Board of Directors of Scudder, Ste vens & Clark (1990 1997) and Scudder Kemper Investments (1997 1998). In addition, Ms. Small served as Co Chair (2000 2003) of the Annual Fund for the Fletcher School of Law and Diplomacy.
51 Annual Report
Trustees and Officers - continued
Name, Age; Principal Occupation William S. Stavropoulos (66) |
Year of Election or Appointment: 2001
Mr. Stavropoulos is Chairman of the Board (2000 present) and a Mem ber of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993 2000; 2002 2003), CEO (1995 2000; 2002 2004), and Chair man of the Executive Committee (2000 2004). Currently, he is a Direc tor of NCR Corporation (data warehousing and technology solutions), BellSouth Corporation (telecommunications), Chemical Financial Corpo ration, Maersk Inc. (industrial conglomerate, 2002 present), and Metal mark Capital (private equity investment firm, 2005 present). He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science.
Kenneth L. Wolfe (66) |
Year of Election or Appointment: 2005
Prior to his retirement in 2001, Mr. Wolfe was Chairman and Chief Executive Officer of Hershey Foods Corporation (1993 2001). He cur rently serves as a member of the boards of Adelphia Communications Corporation (2003 present), Bausch & Lomb, Inc., and Revlon Inc. (2004 present).
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation Peter S. Lynch (61) |
Year of Election or Appointment: 2003
Member of the Advisory Board of Fidelity Contrafund. Vice Chairman and a Director of FMR, and Vice Chairman (2001 present) and a Direc tor (2000 present) of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990 2003). In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield, John F. Kennedy Library, and the Museum of Fine Arts of Boston.
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52 |
Name, Age; Principal Occupation William Danoff (45) |
Year of Election or Appointment: 2003
Vice President of Advisor New Insights. Mr. Danoff serves as Vice President of other funds advised by FMR. Prior to assuming his current re sponsibilities, Mr. Danoff worked as a research analyst and portfolio manager. Mr. Danoff also serves as Senior Vice President of FMR and FMR Co., Inc. (2001).
Eric D. Roiter (57) |
Year of Election or Appointment: 1998
Secretary of Advisor New Insights. He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001 present) and FMR; Assistant Secretary of Fidelity Man agement & Research (U.K.) Inc. (2001 present), Fidelity Management & Research (Far East) Inc. (2001 present), and Fidelity Investments Money Management, Inc. (2001 present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003 present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998 2005).
Stuart Fross (46) |
Year of Election or Appointment: 2003
Assistant Secretary of Advisor New Insights. Mr. Fross also serves as Assistant Secretary of other Fidelity funds (2003 present), Vice President and Secretary of FDC (2005 present), and is an employee of FMR.
Christine Reynolds (47) |
Year of Election or Appointment: 2004
President, Treasurer, and Anti Money Laundering (AML) officer of Advisor New Insights. Ms. Reynolds also serves as President, Treasurer, and AML officer of other Fidelity funds (2004) and is a Vice President (2003) and an employee (2002) of FMR. Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980 2002), where she was most recently an audit partner with PwC’s investment management practice.
Paul M. Murphy (58) |
Year of Election or Appointment: 2005
Chief Financial Officer of Advisor New Insights. Mr. Murphy also serves as Chief Financial Officer of other Fidelity funds (2005 present). He also serves as Senior Vice President of Fidelity Pricing and Cash Management Services Group (FPCMS).
53 Annual Report
Trustees and Officers - continued
Name, Age; Principal Occupation Kenneth A. Rathgeber (58) |
Year of Election or Appointment: 2004
Chief Compliance Officer of Advisor New Insights. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004) and Executive Vice President of Risk Oversight for Fidelity Investments (2002). Previously, he served as Executive Vice President and Chief Op erating Officer for Fidelity Investments Institutional Services Company, Inc. (1998 2002).
John R. Hebble (47) |
Year of Election or Appointment: 2003
Deputy Treasurer of Advisor New Insights. Mr. Hebble also serves as Deputy Treasurer of other Fidelity funds (2003), and is an employee of FMR. Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002 2003) and Assistant Treasurer of the Scudder Funds (1998 2003).
Bryan A. Mehrmann (44) |
Year of Election or Appointment: 2005
Deputy Treasurer of Advisor New Insights. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005 present) and is an em ployee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998 2004).
Kimberley H. Monasterio (42) |
Year of Election or Appointment: 2004
Deputy Treasurer of Advisor New Insights. Ms. Monasterio also serves as Deputy Treasurer of other Fidelity funds (2004) and is an employee of FMR (2004). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000 2004) and Chief Financial Officer (2002 2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000 2004).
Kenneth B. Robins (36) |
Year of Election or Appointment:2005
Deputy Treasurer of Advisor New Insights. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005 present) and is an em ployee of FMR (2004 present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG’s de partment of professional practice (2002 2004) and a Senior Manager (1999 2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000 2002).
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54 |
Name, Age; Principal Occupation Robert G. Byrnes (39) |
Year of Election or Appointment: 2005
Assistant Treasurer of Advisor New Insights. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005 present) and is an em ployee of FMR (2005 present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003 2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000 2003).
John H. Costello (59) |
Year of Election or Appointment: 2003
Assistant Treasurer of Advisor New Insights. Mr. Costello also serves as Assistant Treasurer of other Fidelity funds and is an employee of FMR.
Peter L. Lydecker (51) |
Year of Election or Appointment: 2004
Assistant Treasurer of Advisor New Insights. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR.
Mark Osterheld (50) |
Year of Election or Appointment: 2002
Assistant Treasurer of Advisor New Insights. Mr. Osterheld also serves as Assistant Treasurer of other Fidelity funds (2002) and is an employee of FMR.
Gary W. Ryan (47) |
Year of Election or Appointment: 2005
Assistant Treasurer of Advisor New Insights. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2005 present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999 2005).
55 Annual Report
Trustees and Officers - continued
Name, Age; Principal Occupation Salvatore Schiavone (40) |
Year of Election or Appointment: 2005
Assistant Treasurer of Advisor New Insights. Mr. Schiavone also serves as Assistant Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2005 present). Before joining Fidelity Investments, Mr. Schiavone worked at Deutsche Asset Management, where he most recently served as Assistant Treasurer (2003 2005) of the Scudder Funds and Vice President and Head of Fund Reporting (1996 2003).
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56 |
Distributions |
The Board of Trustees of Fidelity Advisor New Insights Fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities.
Pay Date | Record Date | Dividends | Capital Gains | |||||
Institutional Class | 02/06/2006 | 02/03/2006 | $— | $.05 |
The fund hereby designates as a capital gain dividend with respect to the taxable year ended December 31, 2005, $14,331,478, or, if subsequently determined to be different, the net capital gain of such year.
The fund will notify shareholders in January 2006 of amounts for use in preparing 2005 income tax returns.
57 Annual Report
Proxy Voting Results
A special meeting of the fund’s shareholders was held on January 19, 2005. The results of votes taken among shareholders on proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||||
To amend the Declaration of Trust to | ||||
allow the Board of Trustees, if per- | ||||
mitted by applicable law, to authorize | ||||
fund mergers without shareholder | ||||
approval.* | ||||
# of | % of | |||
Votes | Votes | |||
Affirmative | 16,233,274,660.19 | 68.528 | ||
Against | 5,296,799,647.67 | 22.362 | ||
Abstain | 882,603,665.94 | 3.725 | ||
Broker | ||||
Non Votes . | 1,275,700,696.03 | 5.385 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
PROPOSAL 2 | ||||
To elect a Board of Trustees.* | ||||
# of | % of | |||
Votes | Votes | |||
Laura B. Cronin | ||||
Affirmative | 21,964,545,020.52 | 92.723 | ||
Withheld | 1,723,833,649.31 | 7.277 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Dennis J. Dirks | ||||
Affirmative | 22,473,495,368.70 | 94.871 | ||
Withheld | 1,214,883,301.13 | 5.129 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Robert M. Gates | ||||
Affirmative | 22,429,215,739.51 | 94.684 | ||
Withheld | 1,259,162,930.32 | 5.316 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
George H. Heilmeier | ||||
Affirmative | 22,427,222,693.12 | 94.676 | ||
Withheld | 1,261,155,976.71 | 5.324 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Abigail P. Johnson | ||||
Affirmative | 22,344,921,447.52 | 94.329 | ||
Withheld | 1,343,457,222.31 | 5.671 | ||
TOTAL | 23,688,378,669.83 | 100.000 |
# of | % of | |||
Votes | Votes | |||
Edward C. Johnson 3d | ||||
Affirmative | 22,331,899,258.73 | 94.274 | ||
Withheld | 1,356,479,411.10 | 5.726 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Marie L. Knowles | ||||
Affirmative | 22,457,370,997.41 | 94.803 | ||
Withheld | 1,231,007,672.42 | 5.197 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Ned C. Lautenbach | ||||
Affirmative | 22,461,566,287.67 | 94.821 | ||
Withheld | 1,226,812,382.16 | 5.179 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Marvin L. Mann | ||||
Affirmative | 22,418,349,134.25 | 94.639 | ||
Withheld | 1,270,029,535.58 | 5.361 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
William O. McCoy | ||||
Affirmative | 22,421,999,778.88 | 94.654 | ||
Withheld | 1,266,378,890.95 | 5.346 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Robert L. Reynolds | ||||
Affirmative | 22,450,709,253.08 | 94.775 | ||
Withheld | 1,237,669,416.75 | 5.225 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Cornelia M. Small | ||||
Affirmative | 22,437,020,012.08 | 94.717 | ||
Withheld | 1,251,358,657.75 | 5.283 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
William S. Stavropoulos | ||||
Affirmative | 22,435,472,051.80 | 94.711 | ||
Withheld | 1,252,906,618.03 | 5.289 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Kenneth L. Wolfe | ||||
Affirmative | 22,441,579,247.31 | 94.737 | ||
Withheld | 1,246,799,422.52 | 5.263 | ||
TOTAL | 23,688,378,669.83 | 100.000 |
* Denotes trust-wide proposals and voting results.
Semiannual Report 58
Board Approval of Investment Advisory Contracts and Management Fees
Advisor New Insights Fund
Each year, typically in July, the Board of Trustees, including the independent Trustees (together, the Board), votes on the renewal of the management contract and sub advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and independent Trustees’ counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly each month except August and takes into account throughout the year matters bearing on Advisory Contracts. The Board, acting directly and through its separate committees, considers at each of its meetings factors that are relevant to the annual renewal of the fund’s Advisory Contracts, including the services and support provided to the fund and its shareholders by Fidelity. At the time of the renewal, the Board had 11 standing committees, each composed of independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision making by the Board. Each committee has adopted a written charter outlining the structure and purposes of the committee. One such com mittee, the Equity Contract Committee, meets periodically during the first six months of each year and as necessary to consider matters specifically related to the annual renewal of Advisory Contracts. The committee requests and receives information on, and makes recommendations to the independent Trustees concerning, the approval and annual review of the Advisory Contracts.
At its July 2005 meeting, the Board of Trustees, including the independent Trustees, unanimously determined to renew the Advisory Contracts for the fund. In reaching its determination, the Board considered all factors it believed relevant, including (1) the nature, extent, and quality of the services to be provided to the fund and its shareholders by Fidelity (including the investment performance of the fund); (2) the competitiveness of the management fee and total expenses of the fund; (3) the total costs of the services to be provided by and the profits to be realized by the investment adviser and its affiliates from the relationship with the fund; (4) the extent to which economies of scale would be realized as the fund grows; and (5) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders.
In determining whether to renew the Advisory Contracts for the fund, the Board ulti mately reached a determination, with the assistance of fund counsel and independent Trustees’ counsel, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity’s fidu ciary duty under applicable law. In addition to evaluating the specific factors noted above, the Board, in reaching its determination, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund’s shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its
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Board Approval of Investment Advisory Contracts and Management Fees continued
prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Nature, Extent, and Quality of Services Provided by Fidelity. The Board consid ered staffing within the investment adviser, FMR, and the sub advisers (together, the Investment Advisers), including the background of the fund’s portfolio manager and the fund’s investment objective and discipline. The independent Trustees also had discus sions with senior management of Fidelity’s investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Fidelity Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers’ invest ment staff, their use of technology, and the Investment Advisers’ approach to recruiting, training, and retaining portfolio managers and other research, advisory, and manage ment personnel. The Board considered Fidelity’s extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board noted that Fidelity’s analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board also considered that Fidelity’s portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund’s portfolio, as well as an electronic communication system that provides immediate real time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered the nature, extent, quality, and cost of administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund. The Board also considered the nature and extent of the Investment Advisers’ supervision of third party service providers, principally custodians and subcustodians. The Board reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of “soft” commission dollars to pay for research services. The Board also considered that Fidelity voluntarily decided in 2004 to stop using “soft” commission dollars to pay for market data and, instead, to pay for that data out of its own resources. The Board also considered the resources devoted to, and the record of compliance with, the fund’s compliance policies and procedures.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24 hour access to
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account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund’s prospectus, without paying an additional sales charge. The Board noted that, since the last Advisory Contract renewals in July 2004, Fidelity has taken a number of actions that benefited particular funds, including (i) voluntarily deciding in 2004 to stop using “soft” commission dollars to pay for market data and, instead, to pay for that data out of its own resources, (ii) contractually agreeing to impose management fee reductions and expense limitations on its five Spartan stock index funds and its stock index fund available through variable insurance products, (iii) contractually agreeing to eliminate the management fees on the Fidelity Freedom Funds and the Fidelity Advisor Freedom Funds, (iv) contractually agreeing to reduce the management fees on most of its investment grade taxable bond funds, and (v) contractually agreeing to impose expense limitations on its retail and Spartan investment grade taxable bond funds.
Investment Performance and Compliance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund’s absolute investment performance for each class, as well as the fund’s relative investment performance for each class measured against (i) a broad based securities market index, and (ii) a peer group of mutual funds deemed appropriate by the Board. Because the fund had been in existence less than three calendar years, the following chart considered by the Board shows, for the one year period ended December 31, 2004, the returns of Class C and Institutional Class of the fund, the return of a broad based securities market index (“benchmark”), and a range of returns of a peer group of mutual funds identified by Lipper Inc. as having an investment objective similar to that of the fund. The returns of Class C and Institutional Class represent the performance of classes with the highest and lowest 12b 1 fees, respectively (not necessarily with the highest and lowest total expenses). The box within the chart shows the 25th percentile return (bottom of box) and the 75th percentile return (top of box) of the Lipper peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten numbers noted below the chart correspond to the percentile box and represent the percentage of funds in the Lipper peer group whose performance was equal to or lower than that of the class indicated.
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Board Approval of Investment Advisory Contracts and Management Fees continued
The Board reviewed the fund’s relative investment performance against its Lipper peer group and stated that the performance of Institutional Class of the fund was in the first quartile for the one year period. The Board also stated that the relative investment performance of Institutional Class of the fund compared favorably to its benchmark for the one year period. The Board considered that the variations in performance among the fund’s classes reflect the variations in class expenses, which result in lower performance for higher expense classes. The Board stated that it is difficult to evaluate in any compre hensive fashion the performance of the fund, in light of its relatively recent launch.
The Board has had thorough discussions with FMR throughout the year about the Board’s and FMR’s concerns about equity research, equity fund performance, and compliance with internal policies governing gifts and entertainment. FMR has taken steps that it believes will refocus and strengthen equity research and equity portfolio management and compliance. The Board noted with favor FMR’s recent reorganization of its senior management team and FMR’s plans to dedicate additional resources to investment research, and participated in the process that led to those changes.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided by Fidelity will benefit the fund’s shareholders, particularly in light of the Board’s view that the fund’s shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund’s management fee and total expenses compared to “mapped groups”
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of competitive funds and classes. Fidelity creates “mapped groups” by combining similar Lipper investment objective categories that have comparable management fee charac teristics. Combining Lipper investment objective categories aids the Board’s manage ment fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
The Board considered two proprietary management fee comparisons for the 12 month (or shorter) periods shown in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the “Total Mapped Group” and, for the reasons explained above, is broader than the Lipper peer group used by the Board for performance comparisons. The Total Mapped Group comparison focuses on a fund’s standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. “TMG %” represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund’s. For example, a TMG % of 15% means that 85% of the funds in the Total Mapped Group had higher management fees than the fund. The “Asset Size Peer Group” (ASPG) comparison focuses on a fund’s standing relative to non Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile (“quadrant”) in which the fund’s management fee ranked, is also included in the chart and considered by the Board.
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Board Approval of Investment Advisory Contracts and Management Fees continued
The Board noted that the fund’s management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2004.
Based on its review, the Board concluded that the fund’s management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of each class’s total expenses, the Board considered the fund’s management fee as well as other fund or class expenses, as applicable, such as transfer agent fees, pricing and bookkeeping fees, fund paid 12b 1 fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses of each class of the fund compared to competitive fund median expenses. Each class of the fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that the total expenses of each of Class A, Class B, Class C and Institu tional Class ranked below its competitive median for 2004, and the total expenses of Class T ranked above its competitive median for 2004. The Board noted that the fund offers multiple classes, each of which has a different sales load and 12b 1 fee structure, and that the multiple structures are intended to offer a range of pricing options for the intermediary market. The Board also noted that the total expenses of the classes vary primarily by the level of their 12b 1 fees, although differences in transfer agent fees may also cause expenses to vary from class to class.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the total expenses for each class of the fund were reasonable, although in one case above the median of the universe presented for comparison, in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, market ing, distributing, managing, administering and servicing the fund and its shareholders. The Board also considered the level of Fidelity’s profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity’s profitability for the fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost
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allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year’s methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board’s assessment of the results of Fidelity’s profitability analysis. PwC’s engagement includes the review and assessment of Fidelity’s methodologies used in determining the revenues and expenses attributable to Fidelity’s mutual fund business, and completion of agreed upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC’s reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity’s profitabil ity methodologies are reasonable in all material respects.
The Board has also reviewed Fidelity’s non fund businesses and any fall out benefits related to the mutual fund business as well as cases where Fidelity’s affiliates may benefit from or be related to the fund’s business. In addition, a special committee of the Board reviewed services provided to Fidelity by its affiliates and determined that the fees that Fidelity paid for such services were reasonable.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions, including reductions that occur through operation of the transfer agent agreement. The transfer agent fee varies in part based on the number of accounts in the fund. If the number of accounts decreases or the average account size increases, the overall transfer agent fee rate decreases.
The Board recognized that the fund’s management contract incorporates a “group fee” structure, which provides for lower fee rates as total fund assets under FMR’s manage ment increase, and for higher fee rates as total fund assets under FMR’s management decrease. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity’s costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the
65 Annual Report
Board Approval of Investment Advisory Contracts and Management Fees continued
group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR’s management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Advisory Contracts, the Board requested additional information regarding (i) equity fund transfer agency fees; (ii) Fidelity’s fund profitability methodology and the impact of various changes in the methodology over time; (iii) benefits to shareholders from economies of scale; (iv) composition and characteristics of various fund and industry data used in comparisons; and (v) com pensation of portfolio managers and research analysts.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the existing advisory fee structures are fair and reasonable, and that the fund’s existing Advisory Contracts should be renewed.
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67 Annual Report
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71 Annual Report
Investment Adviser Fidelity Management & Research Company Boston, MA Investment Sub Adviser FMR Co., Inc. Fidelity Management & Research (U.K.) Inc. Fidelity Management & Research (Far East) Inc. Fidelity Investments Japan Limited Fidelity International Investment Advisors Fidelity International Investment Advisors (U.K.) Limited General Distributor Fidelity Distributors Corporation Boston, MA Transfer and Service Agents Fidelity Investments Institutional Operations Company, Inc. Boston, MA Fidelity Service Company, Inc. Boston, MA Custodian Brown Brothers Harriman & Co. Boston, MA |
ANIFI-UANN-0206 1.796411.102 |
Fidelity® Contrafund® |
Annual Report December 31, 2005 |
![](https://capedge.com/proxy/N-CSR/0000795422-06-000011/contraannx1x2.jpg)
Contents | ||||
Chairman’s Message | 4 | Ned Johnson’s message to shareholders. | ||
Performance | 5 | How the fund has done over time. | ||
Management’s Discussion | 6 | The manager’s review of fund | ||
performance, strategy and outlook. | ||||
Shareholder Expense | 7 | An example of shareholder expenses. | ||
Example | ||||
Investment Changes | 8 | A summary of major shifts in the fund’s | ||
investments over the past six months. | ||||
Investments | 9 | 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 | Notes to the financial statements. | ||
Report of Independent | 40 | |||
Registered Public | ||||
Accounting Firm | ||||
Trustees and Officers | 41 | |||
Distributions | 51 | |||
Proxy Voting Results | 52 | |||
Board Approval of | 54 | |||
Investment Advisory | ||||
Contracts and | ||||
Management Fees |
To view a fund’s proxy voting guidelines and proxy voting record for the 12 month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission’s (SEC) web site at www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines. 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. |
Annual Report 2
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. A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N Q. Forms N Q are available on the SEC’s web site at http://www.sec.gov. A fund’s Forms N Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund’s portfolio holdings, view the most recent quarterly holdings report, semiannual report, or annual report on Fidelity’s web site at http://www.fidelity.com/holdings. NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE Neither the fund nor Fidelity Distributors Corporation is a bank. |
3 Annual Report
Chairman’s Message
(photograph of Edward C. Johnson 3d)
Dear Shareholder:
During the past year or so, much has been reported about the mutual fund industry, and much of it has been more critical than I believe is warranted. Allegations that some companies have been less than forthright with their shareholders have cast a shadow on the entire industry. I continue to find these reports disturbing, and assert that they do not create an accurate picture of the industry overall. Therefore, I would like to remind every one where Fidelity stands on these issues. I will say two things specifically regarding allegations that some mutual fund companies were in violation of the Securities and Exchange Commission’s forward pricing rules or were involved in so called “market timing” activities.
First, Fidelity has no agreements that permit customers who buy fund shares after 4 p.m. to obtain the 4 p.m. price. This is not a new policy. This is not to say that some one could not deceive the company through fraudulent acts. However, we are extremely diligent in preventing fraud from occurring in this manner and in every other. But I underscore again that Fidelity has no so called “agreements” that sanction illegal practices.
Second, Fidelity continues to stand on record, as we have for years, in opposition to predatory short term trading that adversely affects shareholders in a mutual fund. Back in the 1980s, we initiated a fee which is returned to the fund and, therefore, to investors to discourage this activity. Further, we took the lead several years ago in developing a Fair Value Pricing Policy to prevent market timing on foreign securities in our funds. I am confident we will find other ways to make it more difficult for predatory traders to operate. However, this will only be achieved through close cooperation among regula tors, legislators and the industry.
Yes, there have been unfortunate instances of unethical and illegal activity within the mutual fund industry from time to time. That is true of any industry. When this occurs, confessed or convicted offenders should be dealt with appropriately. But we are still concerned about the risk of over regulation and the quick application of simplistic solutions to intricate problems. Every system can be improved, and we support and applaud well thought out improvements by regulators, legislators and industry representatives that achieve the common goal of building and protecting the value of investors’ holdings.
For nearly 60 years, Fidelity has worked very hard to improve its products and service to justify your trust. When our family founded this company in 1946, we had only a few hundred customers. Today, we serve more than 18 million customers including individual investors and participants in retirement plans across America.
Let me close by saying that we do not take your trust in us for granted, and we realize that we must always work to improve all aspects of our service to you. In turn, we urge you to continue your active participation with your financial matters, so that your interests can be well served.
Best regards,
/s/ Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report 4
Performance: The Bottom Line
Average annual 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) and assuming a constant rate of perfor mance each year. The $10,000 table and the fund’s returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns | ||||||
Periods ended December 31, 2005 | Past 1 | Past 5 | Past 10 | |||
year | years | years | ||||
Fidelity® Contrafund® | 16.23% | 6.21% | 12.01% | |||
$10,000 Over 10 Years |
Let’s say hypothetically that $10,000 was invested in Fidelity® Contrafund® on Decem ber 31, 1995. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor’s 500SM Index performed over the same period.
![](https://capedge.com/proxy/N-CSR/0000795422-06-000011/contraannx5x1.jpg)
5 Annual Report 5 |
Management’s Discussion of Fund Performance
Comments from William Danoff, Portfolio Manager of Fidelity® Contrafund®
U.S. equity benchmarks generally had positive results for the 12 months ending Decem ber 31, 2005, the third consecutive year that stocks finished in the black. Energy and utilities were the two best performing sectors, contributing greatly to the 4.91% gain of the Standard & Poor’s 500SM Index. Elsewhere, the NASDAQ Composite® Index returned 2.13%, while the Dow Jones Industrial AverageSM rose 1.72% . The U.S. economy did not decelerate as much as many had predicted, despite eight short term interest rate hikes, record high energy prices and the devastation caused by Hurricane Katrina. Meanwhile, corporate America notched its 14th consecutive quarter of double digit earnings gains through the third quarter of the year, an unprecedented streak in market history. From a style perspec tive, large cap stocks ended the six year reign of small caps by a narrow margin, but mid caps finished well ahead of both categories. The gap between growth and value stocks also was relatively narrow, with value gaining a slight edge.
For the year ending December 31, 2005, Contrafund gained 16.23%, comfortably ahead of both the S&P 500® index and the LipperSM Growth Funds Average, which returned 6.53% . A continued emphasis on fast growing companies in expanding areas of the global econ omy, such as the Internet, wireless communications, health care and the emerging mar kets, helped drive overall performance, as did our commitment to the booming energy sector. The fund’s performance accelerated in the second half of 2005, aided by its bias toward growth oriented stocks, as well as by its overweighting versus the index in the materials sector, which rallied sharply during the past six months. Among the fund’s biggest contributors were Internet search firm Google, Canadian natural gas explorer EnCana, biotechnology leader Genentech, semiconductor provider Marvell Technology and Latin American telecommunication services operator America Movil. Detractors included such stocks as Avon Products, the direct seller of personal products for women, and dental equipment distributor Patterson Companies, both of which saw their share prices fall due to slower earnings growth. Weak results in some insurance industry holdings also ham pered results.
The views expressed in this statement 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.
Annual Report |
6 6 |
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2005 to December 31, 2005).
Actual Expenses |
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the share holder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Expenses Paid | ||||||||||||
Beginning | Ending | During Period* | ||||||||||
Account Value | Account Value | July 1, 2005 to | ||||||||||
July 1, 2005 | December 31, 2005 | December 31, 2005 | ||||||||||
Actual | $ | 1,000.00 | $ | 1,125.20 | $ | 4.82 | ||||||
Hypothetical (5% return per | ||||||||||||
year before expenses) | $ | 1,000.00 | $ | 1,020.67 | $ | 4.58 |
* Expenses are equal to the Fund’s annualized expense ratio of .90%; multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one half year period).
7 Annual Report
Investment Changes | ||||
Top Ten Stocks as of December 31, 2005 | ||||
% of fund’s | % of fund’s net assets | |||
net assets | 6 months ago | |||
Google, Inc. Class A (sub. vtg.) | 3.5 | 2.0 | ||
Genentech, Inc. | 2.9 | 2.7 | ||
EnCana Corp. | 2.6 | 2.8 | ||
Berkshire Hathaway, Inc. Class A | 2.1 | 2.2 | ||
Marvell Technology Group Ltd. | 1.8 | 1.4 | ||
Yahoo!, Inc. | 1.6 | 1.8 | ||
Apple Computer, Inc. | 1.5 | 0.6 | ||
Procter & Gamble Co. | 1.5 | 0.2 | ||
Samsung Electronics Co. Ltd. | 1.4 | 1.2 | ||
America Movil SA de CV Series L sponsored | ||||
ADR | 1.3 | 1.0 | ||
20.2 | ||||
Top Five Market Sectors as of December 31, 2005 | ||||
% of fund’s | % of fund’s net assets | |||
net assets | 6 months ago | |||
Information Technology | 17.6 | 13.6 | ||
Financials | 16.6 | 13.8 | ||
Health Care | 14.1 | 13.9 | ||
Energy | 11.7 | 13.4 | ||
Industrials | 7.8 | 8.4 |
![](https://capedge.com/proxy/N-CSR/0000795422-06-000011/contraannx8x1.jpg)
Annual Report 8
Investments December 31, 2005 | ||||||
Showing Percentage of Net Assets | ||||||
Common Stocks 90.1% | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
CONSUMER DISCRETIONARY – 5.9% | ||||||
Auto Components 0.0% | ||||||
Bridgestone Corp. (d) | 924,000 | $ | 19,239 | |||
Johnson Controls, Inc. | 71,800 | 5,235 | ||||
24,474 | ||||||
Automobiles – 0.6% | ||||||
Honda Motor Co. Ltd. | 465,000 | 26,942 | ||||
Toyota Motor Corp. | 6,453,900 | 337,604 | ||||
364,546 | ||||||
Distributors – 0.1% | ||||||
Li & Fung Ltd. | 14,372,000 | 27,711 | ||||
Diversified Consumer Services – 0.1% | ||||||
Education Management Corp. (a) | 783,600 | 26,258 | ||||
Laureate Education, Inc. (a) | 781,180 | 41,020 | ||||
67,278 | ||||||
Hotels, Restaurants & Leisure 1.9% | ||||||
Aristocrat Leisure Ltd. | 11,234,996 | 101,534 | ||||
Boyd Gaming Corp. | 483,900 | 23,063 | ||||
Cosi, Inc. (a) | 621,210 | 5,156 | ||||
Domino’s Pizza, Inc. | 1,172,200 | 28,367 | ||||
Four Seasons Hotels, Inc. (ltd. vtg.) (d) | 603,500 | 30,026 | ||||
Hilton Group PLC | 3,723,202 | 23,299 | ||||
Kerzner International Ltd. (a) | 599,900 | 41,243 | ||||
Las Vegas Sands Corp. (d) | 1,942,400 | 76,667 | ||||
Life Time Fitness, Inc. (a) | 780,300 | 29,722 | ||||
Panera Bread Co. Class A (a)(e) | 2,909,851 | 191,119 | ||||
Ruth’s Chris Steak House, Inc. | 472,682 | 8,556 | ||||
Shuffle Master, Inc. (a)(d) | 889,665 | 22,366 | ||||
Starbucks Corp. (a) | 5,278,800 | 158,417 | ||||
Station Casinos, Inc. | 3,306,900 | 224,208 | ||||
Texas Roadhouse, Inc. Class A (a) | 1,301,188 | 20,233 | ||||
The Cheesecake Factory, Inc. (a) | 897,664 | 33,564 | ||||
William Hill PLC | 6,585,807 | 60,714 | ||||
Wynn Resorts Ltd. (a)(d) | 1,056,396 | 57,943 | ||||
1,136,197 | ||||||
Household Durables – 0.1% | ||||||
Garmin Ltd. (d) | 364,300 | 24,171 | ||||
Matsushita Electric Industrial Co. Ltd. | 1,874,000 | 36,318 | ||||
Technical Olympic USA, Inc. | 307,400 | 6,483 | ||||
66,972 | ||||||
See accompanying notes which are an integral part of the financial statements. | ||||||
9 | Annual Report |
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
CONSUMER DISCRETIONARY – continued | ||||||
Internet & Catalog Retail 0.2% | ||||||
Blue Nile, Inc. (a) | 755,283 | $ | 30,445 | |||
Coldwater Creek, Inc. (a) | 820,200 | 25,041 | ||||
Expedia, Inc. (a) | 1,995,400 | 47,810 | ||||
NutriSystem, Inc. (a) | 279,000 | 10,050 | ||||
VistaPrint Ltd. | 1,071,600 | 24,383 | ||||
137,729 | ||||||
Media – 0.8% | ||||||
Getty Images, Inc. (a) | 917,200 | 81,878 | ||||
Harte-Hanks, Inc. | 668,800 | 17,650 | ||||
Interactive Data Corp. | 900,000 | 20,439 | ||||
McGraw Hill Companies, Inc. | 1,197,700 | 61,837 | ||||
Pearson PLC | 1,572,200 | 18,608 | ||||
Pixar (a) | 1,849,302 | 97,495 | ||||
Reuters Group PLC | 4,518,300 | 33,486 | ||||
Sirius Satellite Radio, Inc. (a)(d) | 15,187,891 | 101,759 | ||||
The Weinstein Co. Holdings, LLC Class A 1 (h) | 41,234 | 41,234 | ||||
XM Satellite Radio Holdings, Inc. Class A (a) | 461,895 | 12,600 | ||||
486,986 | ||||||
Multiline Retail – 0.4% | ||||||
Marks & Spencer Group PLC | 10,408,647 | 90,491 | ||||
Target Corp. | 2,887,800 | 158,742 | ||||
249,233 | ||||||
Specialty Retail – 1.2% | ||||||
Abercrombie & Fitch Co. Class A | 292,600 | 19,072 | ||||
Bed Bath & Beyond, Inc. (a) | 276,823 | 10,007 | ||||
Best Buy Co., Inc. | 584,550 | 25,416 | ||||
Chico’s FAS, Inc. (a) | 2,261,800 | 99,361 | ||||
Circuit City Stores, Inc. | 1,598,600 | 36,112 | ||||
Esprit Holdings Ltd. | 1,170,500 | 8,318 | ||||
Hennes & Mauritz AB (H&M) (B Shares) | 602,925 | 20,491 | ||||
Inditex SA | 175,008 | 5,708 | ||||
Office Depot, Inc. (a) | 4,496,900 | 141,203 | ||||
Staples, Inc. | 4,948,000 | 112,369 | ||||
The Children’s Place Retail Stores, Inc. (a) | 131,200 | 6,484 | ||||
TJX Companies, Inc. | 3,129,000 | 72,687 | ||||
Too, Inc. (a) | 234,000 | 6,601 | ||||
Urban Outfitters, Inc. (a) | 4,994,500 | 126,411 | ||||
Volcom, Inc. | 403,600 | 13,726 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
10 |
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
CONSUMER DISCRETIONARY – continued | ||||||
Specialty Retail – continued | ||||||
Wet Seal, Inc. Class A (a)(e) | 4,074,000 | $ | 18,089 | |||
Zumiez, Inc. | 256,000 | 11,064 | ||||
733,119 | ||||||
Textiles, Apparel & Luxury Goods – 0.5% | ||||||
Asics Corp. | 1,799,000 | 19,103 | ||||
Burberry Group PLC | 3,320,994 | 24,570 | ||||
Coach, Inc. (a) | 4,808,452 | 160,314 | ||||
Deckers Outdoor Corp. (a) | 155,900 | 4,306 | ||||
Geox Spa | 780,118 | 8,571 | ||||
Polo Ralph Lauren Corp. Class A | 821,800 | 46,136 | ||||
Puma AG | 19,200 | 5,603 | ||||
268,603 | ||||||
TOTAL CONSUMER DISCRETIONARY | 3,562,848 | |||||
CONSUMER STAPLES 5.2% | ||||||
Beverages – 1.0% | ||||||
Diageo PLC sponsored ADR | 2,552,100 | 148,787 | ||||
Hansen Natural Corp. (a) | 80,104 | 6,313 | ||||
PepsiCo, Inc. | 6,212,890 | 367,058 | ||||
The Coca-Cola Co. | 2,271,800 | 91,576 | ||||
613,734 | ||||||
Food & Staples Retailing – 0.9% | ||||||
Sysco Corp. | 1,366,300 | 42,424 | ||||
Tesco PLC | 9,194,013 | 52,470 | ||||
Wal-Mart de Mexico SA de CV Series V | 6,706,972 | 37,223 | ||||
Walgreen Co. | 3,569,710 | 157,995 | ||||
Whole Foods Market, Inc. | 3,453,650 | 267,278 | ||||
557,390 | ||||||
Food Products 0.8% | ||||||
Goodman Fielder Ltd. | 7,797,500 | 11,954 | ||||
Groupe Danone | 367,760 | 38,422 | ||||
Hershey Co. | 1,879,000 | 103,815 | ||||
Kellogg Co. | 1,220,500 | 52,750 | ||||
Nestle SA (Reg.) | 329,924 | 98,676 | ||||
Sara Lee Corp. | 1,251,100 | �� | 23,646 |
See accompanying notes which are an integral part of the financial statements.
11 Annual Report
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
CONSUMER STAPLES – continued | ||||||
Food Products – continued | ||||||
TreeHouse Foods, Inc. (a) | 992,300 | $ | 18,576 | |||
Wm. Wrigley Jr. Co. | 2,135,700 | 142,003 | ||||
489,842 | ||||||
Household Products – 1.7% | ||||||
Colgate-Palmolive Co. | 2,513,200 | 137,849 | ||||
Procter & Gamble Co. | 15,027,972 | 869,819 | ||||
1,007,668 | ||||||
Personal Products 0.8% | ||||||
Avon Products, Inc. | 13,685,944 | 390,734 | ||||
Herbalife Ltd. | 1,546,000 | 50,276 | ||||
441,010 | ||||||
TOTAL CONSUMER STAPLES | 3,109,644 | |||||
ENERGY 11.7% | ||||||
Energy Equipment & Services – 1.7% | ||||||
ENSCO International, Inc. | 940,500 | 41,711 | ||||
Halliburton Co. | 3,032,000 | 187,863 | ||||
Hydril Co. (a) | 78,100 | 4,889 | ||||
Noble Corp. | 93,600 | 6,603 | ||||
Schlumberger Ltd. (NY Shares) | 6,454,600 | 627,064 | ||||
Smith International, Inc. | 4,282,680 | 158,930 | ||||
1,027,060 | ||||||
Oil, Gas & Consumable Fuels – 10.0% | ||||||
Apache Corp. | 940,340 | 64,432 | ||||
BG Group PLC sponsored ADR | 839,900 | 41,718 | ||||
Bill Barrett Corp. | 1,369,966 | 52,894 | ||||
Blackrock Ventures, Inc. (a)(e) | 9,083,400 | 89,853 | ||||
BP PLC sponsored ADR | 5,575,066 | 358,031 | ||||
Burlington Resources, Inc. | 2,385,920 | 205,666 | ||||
Canadian Natural Resources Ltd. | 330,800 | 16,398 | ||||
Canadian Oil Sands Trust unit | 374,700 | 40,611 | ||||
China Petroleum & Chemical Corp. sponsored ADR (d) | 738,200 | 36,615 | ||||
CNX Gas Corp. (a)(f) | 410,600 | 8,623 | ||||
CONSOL Energy, Inc. | 930,500 | 60,650 | ||||
Devon Energy Corp. | 2,531,400 | 158,314 | ||||
EnCana Corp. | 34,375,048 | 1,554,129 | ||||
Encore Acquisition Co. (a) | 651,708 | 20,881 | ||||
EOG Resources, Inc. | 5,072,300 | 372,155 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
12 |
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
ENERGY – continued | ||||||
Oil, Gas & Consumable Fuels – continued | ||||||
Exxon Mobil Corp. | 10,629,200 | $ | 597,042 | |||
Highpine Oil & Gas Ltd. | 628,400 | 11,189 | ||||
Imperial Oil Ltd. | 337,000 | 33,455 | ||||
Mariner Energy, Inc. (a)(e)(f) | 1,847,200 | 32,788 | ||||
Murphy Oil Corp. | 8,662,400 | 467,683 | ||||
Noble Energy, Inc. | 889,734 | 35,856 | ||||
Peabody Energy Corp. | 975,000 | 80,360 | ||||
PetroChina Co. Ltd. sponsored ADR (d) | 2,613,200 | 214,178 | ||||
Petroleo Brasileiro SA Petrobras sponsored ADR | 928,900 | 66,203 | ||||
Plains Exploration & Production Co. (a) | 761,600 | 30,258 | ||||
Quicksilver Resources, Inc. (a) | 1,880,150 | 78,985 | ||||
Range Resources Corp. | 1,658,800 | 43,693 | ||||
Sasol Ltd. sponsored ADR | 1,990,200 | 70,931 | ||||
Talisman Energy, Inc. | 1,575,010 | 83,455 | ||||
Total SA sponsored ADR | 1,960,331 | 247,786 | ||||
Ultra Petroleum Corp. (a) | 950,500 | 53,038 | ||||
Valero Energy Corp. | 13,203,574 | 681,304 | ||||
XTO Energy, Inc. | 2,125,533 | 93,396 | ||||
6,002,570 | ||||||
TOTAL ENERGY | 7,029,630 | |||||
FINANCIALS – 16.6% | ||||||
Capital Markets 1.5% | ||||||
Charles Schwab Corp. | 8,940,500 | 131,157 | ||||
E*TRADE Financial Corp. (a) | 1,190,900 | 24,842 | ||||
Goldman Sachs Group, Inc. | 2,333,400 | 297,999 | ||||
Lazard Ltd. Class A | 699,600 | 22,317 | ||||
Legg Mason, Inc. | 597,900 | 71,563 | ||||
Lehman Brothers Holdings, Inc. | 2,567,300 | 329,051 | ||||
Nuveen Investments, Inc. Class A | 128,900 | 5,494 | ||||
882,423 | ||||||
Commercial Banks – 2.6% | ||||||
Allied Irish Banks PLC | 4,096,800 | 87,999 | ||||
Anglo Irish Bank Corp. PLC | 6,306,518 | 95,714 | ||||
Banco Itau Holding Financeira SA sponsored ADR (non-vtg.) | 2,023,300 | 48,600 | ||||
Bank of America Corp. | 4,026,200 | 185,809 | ||||
HDFC Bank Ltd. | 1,132,564 | 17,840 | ||||
HDFC Bank Ltd. sponsored ADR | 420,300 | 21,393 | ||||
HSBC Holdings PLC sponsored ADR | 430,407 | 34,635 |
See accompanying notes which are an integral part of the financial statements.
13 Annual Report
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
FINANCIALS – continued | ||||||
Commercial Banks – continued | ||||||
M&T Bank Corp. | 2,834,900 | $ | 309,146 | |||
Mitsubishi UFJ Financial Group, Inc. | 724 | 9,912 | ||||
Royal Bank of Scotland Group PLC | 3,533,400 | 106,755 | ||||
Shinhan Financial Group Co. Ltd. | 603,290 | 24,581 | ||||
Uniao de Bancos Brasileiros SA (Unibanco) GDR | 2,227,500 | 141,602 | ||||
Wells Fargo & Co. | 7,481,200 | 470,044 | ||||
1,554,030 | ||||||
Consumer Finance – 1.4% | ||||||
American Express Co. | 7,502,850 | 386,097 | ||||
SLM Corp. | 8,582,500 | 472,810 | ||||
858,907 | ||||||
Diversified Financial Services – 0.7% | ||||||
Brookfield Asset Management, Inc. Class A | 647,400 | 32,639 | ||||
Chicago Mercantile Exchange Holdings, Inc. Class A | 88,300 | 32,449 | ||||
JPMorgan Chase & Co. | 2,653,300 | 105,309 | ||||
Moody’s Corp. | 4,658,400 | 286,119 | ||||
456,516 | ||||||
Insurance – 8.8% | ||||||
ACE Ltd. | 1,834,600 | 98,041 | ||||
Admiral Group PLC | 6,180,300 | 48,411 | ||||
AFLAC, Inc. | 3,257,500 | 151,213 | ||||
Allstate Corp. | 8,491,900 | 459,157 | ||||
American Equity Investment Life Holding Co. | 389,900 | 5,088 | ||||
American International Group, Inc. | 8,640,826 | 589,564 | ||||
Assurant, Inc. | 3,054,150 | 132,825 | ||||
Assured Guaranty Ltd. | 233,900 | 5,939 | ||||
Axis Capital Holdings Ltd. | 4,448,800 | 139,158 | ||||
Berkshire Hathaway, Inc. Class A (a) | 14,420 | 1,277,900 | ||||
Endurance Specialty Holdings Ltd. | 381,000 | 13,659 | ||||
Everest Re Group Ltd. (e) | 3,708,120 | 372,110 | ||||
Fidelity National Financial, Inc. | 466,200 | 17,151 | ||||
Genworth Financial, Inc. Class A (non-vtg.) | 1,039,100 | 35,932 | ||||
HCC Insurance Holdings, Inc. | 533,200 | 15,825 | ||||
Loews Corp. | 1,276,400 | 121,067 | ||||
Markel Corp. (a) | 63,550 | 20,149 | ||||
Mercury General Corp. | 862,500 | 50,215 | ||||
MetLife, Inc. | 6,124,400 | 300,096 | ||||
MetLife, Inc. unit | 3,244,100 | 89,375 | ||||
Millea Holdings, Inc. | 468 | 8,058 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
14 |
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
FINANCIALS – continued | ||||||
Insurance – continued | ||||||
Montpelier Re Holdings Ltd. | 1,567,600 | $ | 29,628 | |||
PartnerRe Ltd. | 665,500 | 43,703 | ||||
Progressive Corp. | 1,845,200 | 215,482 | ||||
Prudential Financial, Inc. | 3,165,200 | 231,661 | ||||
RenaissanceRe Holdings Ltd. | 716,110 | 31,588 | ||||
RLI Corp. | 619,500 | 30,894 | ||||
StanCorp Financial Group, Inc. | 948,800 | 47,393 | ||||
The Chubb Corp. | 2,325,700 | 227,105 | ||||
The St. Paul Travelers Companies, Inc. | 3,637,600 | 162,492 | ||||
W.R. Berkley Corp. | 3,432,200 | 163,441 | ||||
White Mountains Insurance Group Ltd. | 190,250 | 106,264 | ||||
Willis Group Holdings Ltd. | 780,100 | 28,817 | ||||
5,269,401 | ||||||
Real Estate 0.7% | ||||||
CB Richard Ellis Group, Inc. Class A (a) | 2,690,100 | 158,312 | ||||
CBL & Associates Properties, Inc. | 1,514,894 | 59,853 | ||||
Equity Office Properties Trust | 36,400 | 1,104 | ||||
Equity Residential (SBI) | 960,400 | 37,571 | ||||
General Growth Properties, Inc. | 502,400 | 23,608 | ||||
Global Signal, Inc. | 547,100 | 23,613 | ||||
Mitsui Fudosan Co. Ltd. | 1,768,000 | 35,913 | ||||
Vornado Realty Trust | 1,020,900 | 85,215 | ||||
425,189 | ||||||
Thrifts & Mortgage Finance – 0.9% | ||||||
Golden West Financial Corp., Delaware | 7,877,080 | 519,887 | ||||
Hudson City Bancorp, Inc. | 1,000,000 | 12,120 | ||||
532,007 | ||||||
TOTAL FINANCIALS | 9,978,473 | |||||
HEALTH CARE – 14.1% | ||||||
Biotechnology – 4.3% | ||||||
Actelion Ltd. (Reg.) (a) | 254,145 | 21,024 | ||||
Amgen, Inc. (a) | 1,322,100 | 104,261 | ||||
Amylin Pharmaceuticals, Inc. (a) | 140,600 | 5,613 | ||||
Anadys Pharmaceuticals, Inc. (a)(e) | 1,697,600 | 14,939 | ||||
Arena Pharmaceuticals, Inc. (a)(e) | 2,415,922 | 34,354 | ||||
Biogen Idec, Inc. (a) | 86,700 | 3,930 | ||||
BioMarin Pharmaceutical, Inc. (a) | 237,116 | 2,556 |
See accompanying notes which are an integral part of the financial statements.
15 Annual Report
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
HEALTH CARE – continued | ||||||
Biotechnology – continued | ||||||
Celgene Corp. (a) | 1,655,300 | $ | 107,263 | |||
Cephalon, Inc. (a) | 98,300 | 6,364 | ||||
Exelixis, Inc. (a) | 1,052,000 | 9,910 | ||||
Genentech, Inc. (a) | 18,466,800 | 1,708,179 | ||||
Genmab AS (a) | 234,000 | 5,013 | ||||
Genzyme Corp. (a) | 1,109,900 | 78,559 | ||||
Gilead Sciences, Inc. (a) | 4,097,000 | 215,625 | ||||
ICOS Corp. (a) | 533,200 | 14,732 | ||||
Idenix Pharmaceuticals, Inc. (a) | 1,482,000 | 25,357 | ||||
MannKind Corp. (a)(d) | 2,118,528 | 23,854 | ||||
MannKind Corp. warrants 8/3/10 (a)(h) | 304,338 | 1,566 | ||||
Medarex, Inc. (a) | 2,415,000 | 33,448 | ||||
MedImmune, Inc. (a) | 941,500 | 32,971 | ||||
Myogen, Inc. (a) | 389,876 | 11,759 | ||||
Neurocrine Biosciences, Inc. (a) | 88,600 | 5,558 | ||||
Protein Design Labs, Inc. (a) | 310,900 | 8,836 | ||||
Seattle Genetics, Inc. (a)(e) | 2,477,300 | 11,693 | ||||
Tanox, Inc. (a) | 764,817 | 12,520 | ||||
Techne Corp. (a) | 535,221 | 30,053 | ||||
Theravance, Inc. (a) | 412,300 | 9,285 | ||||
United Therapeutics Corp. (a) | 109,300 | 7,555 | ||||
ViaCell, Inc. | 689,400 | 3,874 | ||||
2,550,651 | ||||||
Health Care Equipment & Supplies – 3.7% | ||||||
Alcon, Inc. | 2,332,500 | 302,292 | ||||
Aspect Medical Systems, Inc. (a) | 247,460 | 8,500 | ||||
C.R. Bard, Inc. | 1,591,200 | 104,892 | ||||
China Medical Technologies, Inc. sponsored ADR (d) | 1,022,900 | 32,579 | ||||
Conceptus, Inc. (a) | 1,251,186 | 15,790 | ||||
DENTSPLY International, Inc. (e) | 4,163,837 | 223,556 | ||||
Foxhollow Technologies, Inc. (a)(d)(e) | 1,758,500 | 52,386 | ||||
Gen-Probe, Inc. (a) | 1,993,600 | 97,268 | ||||
Hospira, Inc. (a) | 797,800 | 34,130 | ||||
IDEXX Laboratories, Inc. (a) | 97,980 | 7,053 | ||||
Intuitive Surgical, Inc. (a)(e) | 2,369,822 | 277,909 | ||||
Kyphon, Inc. (a)(e) | 2,478,100 | 101,181 | ||||
LifeCell Corp. (a) | 409,200 | 7,803 | ||||
Medtronic, Inc. | 2,645,500 | 152,301 | ||||
Mentor Corp. | 386,400 | 17,805 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
16 |
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
HEALTH CARE – continued | ||||||
Health Care Equipment & Supplies – continued | ||||||
NeuroMetrix, Inc. (a) | 312,000 | $ | 8,511 | |||
NMT Medical, Inc. (a) | 591,152 | 9,458 | ||||
Nobel Biocare Holding AG (Switzerland) | 174,607 | 38,403 | ||||
NuVasive, Inc. (a) | 737,063 | 13,341 | ||||
ResMed, Inc. (a) | 871,400 | 33,383 | ||||
Respironics, Inc. (a) | 234,300 | 8,686 | ||||
Somanetics Corp. (a) | 203,750 | 6,520 | ||||
St. Jude Medical, Inc. (a) | 9,992,700 | 501,634 | ||||
Syneron Medical Ltd. (a) | 604,400 | 19,190 | ||||
Thermo Electron Corp. (a) | 3,061,000 | 92,228 | ||||
Varian Medical Systems, Inc. (a) | 669,900 | 33,723 | ||||
Viasys Healthcare, Inc. (a) | 507,100 | 13,032 | ||||
2,213,554 | ||||||
Health Care Providers & Services – 3.8% | ||||||
Aetna, Inc. | 8,504,360 | 802,046 | ||||
American Healthways, Inc. (a) | 245,089 | 11,090 | ||||
Caremark Rx, Inc. (a) | 1,678,000 | 86,904 | ||||
Cerner Corp. (a) | 208,400 | 18,946 | ||||
Chemed Corp. New | 156,000 | 7,750 | ||||
Health Net, Inc. (a) | 1,254,500 | 64,669 | ||||
Merge Technologies, Inc. (a)(e) | 1,436,247 | 35,964 | ||||
Patterson Companies, Inc. (a)(e) | 10,593,020 | 353,807 | ||||
UnitedHealth Group, Inc. | 10,988,540 | 682,828 | ||||
VCA Antech, Inc. (a) | 783,969 | 22,108 | ||||
WebMD Health Corp. Class A | 101,200 | 2,940 | ||||
WellPoint, Inc. (a) | 2,592,600 | 206,864 | ||||
2,295,916 | ||||||
Pharmaceuticals – 2.3% | ||||||
Allergan, Inc. | 207,400 | 22,391 | ||||
Forest Laboratories, Inc. (a) | 130,600 | 5,313 | ||||
IVAX Corp. (a) | 1,754,600 | 54,972 | ||||
Johnson & Johnson | 336,950 | 20,251 | ||||
Kos Pharmaceuticals, Inc. (a) | 628,100 | 32,492 | ||||
New River Pharmaceuticals, Inc. (a) | 95,400 | 4,949 | ||||
Novartis AG sponsored ADR | 3,676,800 | 192,958 | ||||
Novo Nordisk AS Series B | 26,266 | 1,478 | ||||
Roche Holding AG (participation certificate) | 5,101,730 | 766,036 | ||||
Salix Pharmaceuticals Ltd. (a) | 572,400 | 10,063 | ||||
Sanofi-Aventis sponsored ADR | 1,231,200 | 54,050 |
See accompanying notes which are an integral part of the financial statements.
17 Annual Report
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
HEALTH CARE – continued | ||||||
Pharmaceuticals – continued | ||||||
Schering-Plough Corp. | 6,356,600 | $ | 132,535 | |||
Teva Pharmaceutical Industries Ltd. sponsored ADR | 2,445,000 | 105,159 | ||||
1,402,647 | ||||||
TOTAL HEALTH CARE | 8,462,768 | |||||
INDUSTRIALS – 7.8% | ||||||
Aerospace & Defense – 0.7% | ||||||
L 3 Communications Holdings, Inc. | 475,900 | 35,383 | ||||
Lockheed Martin Corp. | 4,396,595 | 279,755 | ||||
Precision Castparts Corp. | 1,383,528 | 71,681 | ||||
United Technologies Corp. | 809,900 | 45,282 | ||||
432,101 | ||||||
Air Freight & Logistics – 0.7% | ||||||
C.H. Robinson Worldwide, Inc. (e) | 9,246,000 | 342,379 | ||||
United Parcel Service, Inc. Class B | 608,700 | 45,744 | ||||
UTI Worldwide, Inc. | 285,000 | 26,459 | ||||
414,582 | ||||||
Airlines – 0.6% | ||||||
Gol Linhas Aereas Inteligentes SA sponsored ADR (d) | 1,501,800 | 42,366 | ||||
JetBlue Airways Corp. (a) | 427,950 | 6,582 | ||||
Republic Airways Holdings, Inc. (a)(e) | 2,259,912 | 34,351 | ||||
Ryanair Holdings PLC sponsored ADR (a) | 4,688,106 | 262,487 | ||||
Southwest Airlines Co. | 522,900 | 8,591 | ||||
US Airways Group, Inc. (a) | 823,700 | 30,592 | ||||
384,969 | ||||||
Commercial Services & Supplies – 0.5% | ||||||
Advisory Board Co. (a) | 194,398 | 9,267 | ||||
Aramark Corp. Class B | 2,687,600 | 74,662 | ||||
Corporate Executive Board Co. | 314,800 | 28,238 | ||||
Equifax, Inc. | 649,200 | 24,683 | ||||
Monster Worldwide, Inc. (a) | 643,800 | 26,280 | ||||
PHH Corp. (a) | 466,930 | 13,083 | ||||
Resources Connection, Inc. (a)(e) | 2,667,764 | 69,522 | ||||
Robert Half International, Inc. | 2,208,849 | 83,693 | ||||
329,428 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
18 |
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
INDUSTRIALS – continued | ||||||
Construction & Engineering – 0.3% | ||||||
Jacobs Engineering Group, Inc. (a) | 1,981,666 | $ | 134,496 | |||
URS Corp. (a) | 900,500 | 33,868 | ||||
168,364 | ||||||
Electrical Equipment – 0.6% | ||||||
Cooper Industries Ltd. Class A | 3,314,600 | 241,966 | ||||
Energy Conversion Devices, Inc. (a)(d) | 941,700 | 38,374 | ||||
Motech Industries, Inc. | 3,256,972 | 44,846 | ||||
NEOMAX Co. Ltd. | 716,000 | 23,562 | ||||
Roper Industries, Inc. | 445,500 | 17,602 | ||||
SolarWorld AG | 69,500 | 9,297 | ||||
Ultralife Batteries, Inc. (a)(e) | 1,068,280 | 12,819 | ||||
388,466 | ||||||
Industrial Conglomerates – 1.1% | ||||||
3M Co. | 7,195,080 | 557,619 | ||||
Hutchison Whampoa Ltd. | 8,028,000 | 76,463 | ||||
Raven Industries, Inc. | 26,100 | 753 | ||||
634,835 | ||||||
Machinery – 2.5% | ||||||
A.S.V., Inc. (a) | 1,132,800 | 28,297 | ||||
Bucyrus International, Inc. Class A | 848,400 | 44,711 | ||||
Caterpillar, Inc. | 3,500,500 | 202,224 | ||||
Cummins, Inc. | 1,205,000 | 108,125 | ||||
Danaher Corp. | 10,209,840 | 569,505 | ||||
IDEX Corp. | 1,472,400 | 60,530 | ||||
Joy Global, Inc. | 4,451,950 | 178,078 | ||||
PACCAR, Inc. | 3,926,057 | 271,801 | ||||
Volvo AB sponsored ADR | 462,400 | 21,770 | ||||
1,485,041 | ||||||
Marine – 0.0% | ||||||
American Commercial Lines, Inc. | 226,200 | 6,852 | ||||
Road & Rail 0.6% | ||||||
Canadian National Railway Co. | 1,897,000 | 151,982 | ||||
Heartland Express, Inc. | 1,584,563 | 32,151 | ||||
Knight Transportation, Inc. | 1,939,426 | 40,204 | ||||
Landstar System, Inc. | 2,607,452 | 108,835 | ||||
333,172 |
See accompanying notes which are an integral part of the financial statements.
19 Annual Report
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
INDUSTRIALS – continued | ||||||
Trading Companies & Distributors – 0.2% | ||||||
Fastenal Co. | 2,052,576 | $ | 80,440 | |||
Mitsui & Co. Ltd. | 4,741,000 | 60,919 | ||||
141,359 | ||||||
TOTAL INDUSTRIALS | 4,719,169 | |||||
INFORMATION TECHNOLOGY – 17.6% | ||||||
Communications Equipment – 1.6% | ||||||
Comverse Technology, Inc. (a) | 3,659,273 | 97,300 | ||||
Corning, Inc. (a) | 2,656,100 | 52,219 | ||||
CSR PLC (a) | 2,612,473 | 42,097 | ||||
ECI Telecom Ltd. (a) | 2,421,500 | 18,137 | ||||
F5 Networks, Inc. (a) | 555,160 | 31,750 | ||||
Foxconn International Holdings Ltd. | 12,467,000 | 20,340 | ||||
Harris Corp. | 1,817,100 | 78,153 | ||||
Ixia (a) | 1,268,700 | 18,751 | ||||
JDS Uniphase Corp. (a) | 2,123,500 | 5,011 | ||||
Motorola, Inc. | 11,825,462 | 267,137 | ||||
Nokia Corp. sponsored ADR | 1,067,700 | 19,539 | ||||
Nortel Networks Corp. (a) | 8,227,000 | 25,175 | ||||
QUALCOMM, Inc. | 6,711,300 | 289,123 | ||||
Sycamore Networks, Inc. (a) | 1,205,000 | 5,206 | ||||
969,938 | ||||||
Computers & Peripherals – 2.6% | ||||||
Apple Computer, Inc. (a) | 12,169,037 | 874,832 | ||||
EMC Corp. (a) | 3,074,200 | 41,871 | ||||
Hewlett-Packard Co. | 15,684,600 | 449,050 | ||||
Logitech International SA sponsored ADR (a) | 1,126,200 | 52,672 | ||||
Network Appliance, Inc. (a) | 2,178,300 | 58,814 | ||||
SanDisk Corp. (a) | 1,043,049 | 65,524 | ||||
Seagate Technology | 539,600 | 10,787 | ||||
1,553,550 | ||||||
Electronic Equipment & Instruments – 0.7% | ||||||
Agilent Technologies, Inc. (a) | 1,227,300 | 40,857 | ||||
Amphenol Corp. Class A | 1,738,330 | 76,938 | ||||
Cogent, Inc. (a) | 478,760 | 10,858 | ||||
FLIR Systems, Inc. (a)(d) | 2,854,551 | 63,742 | ||||
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 28,951,238 | 158,750 | ||||
Hoya Corp. | 468,600 | 16,851 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
20 |
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
INFORMATION TECHNOLOGY – continued | ||||||
Electronic Equipment & Instruments – continued | ||||||
Mettler-Toledo International, Inc. (a) | 823,700 | $ | 45,468 | |||
National Instruments Corp. | 786,577 | 25,210 | ||||
Nidec Corp. | 66,400 | 5,649 | ||||
444,323 | ||||||
Internet Software & Services – 5.4% | ||||||
Akamai Technologies, Inc. (a) | 5,839,979 | 116,391 | ||||
Google, Inc. Class A (sub. vtg.) (a) | 4,993,280 | 2,071,507 | ||||
iVillage, Inc. (a)(e) | 3,964,398 | 31,794 | ||||
Websense, Inc. (a) | 398,008 | 26,125 | ||||
WebSideStory, Inc. (a) | 850,421 | 15,418 | ||||
Yahoo!, Inc. (a) | 24,561,434 | 962,317 | ||||
3,223,552 | ||||||
IT Services – 1.6% | ||||||
Accenture Ltd. Class A | 2,161,400 | 62,400 | ||||
Anteon International Corp. (a) | 1,387,600 | 75,416 | ||||
Ceridian Corp. (a) | 522,400 | 12,982 | ||||
CheckFree Corp. (a) | 1,214,298 | 55,736 | ||||
Cognizant Technology Solutions Corp. Class A (a) | 3,099,241 | 156,047 | ||||
First Data Corp. | 1,044,800 | 44,937 | ||||
Fiserv, Inc. (a) | 757,800 | 32,790 | ||||
Global Payments, Inc. | 1,867,900 | 87,063 | ||||
Heartland Payment Systems, Inc. | 57,800 | 1,252 | ||||
Infosys Technologies Ltd. sponsored ADR | 2,422,200 | 195,859 | ||||
MoneyGram International, Inc. | 513,100 | 13,382 | ||||
MPS Group, Inc. (a) | 545,900 | 7,462 | ||||
Paychex, Inc. | 1,704,600 | 64,979 | ||||
SRA International, Inc. Class A (a)(e) | 3,726,200 | 113,798 | ||||
VeriFone Holdings, Inc. | 2,368,000 | 59,910 | ||||
Wright Express Corp. | 627,800 | 13,812 | ||||
997,825 | ||||||
Semiconductors & Semiconductor Equipment – 3.9% | ||||||
Advanced Analogic Technologies, Inc. | 595,800 | 8,252 | ||||
ATI Technologies, Inc. (a) | 666,200 | 11,346 | ||||
Broadcom Corp. Class A (a) | 3,075,700 | 145,019 | ||||
Freescale Semiconductor, Inc. Class A (a) | 203,600 | 5,129 | ||||
Hittite Microwave Corp. | 180,621 | 4,180 | ||||
Lam Research Corp. (a) | 786,800 | 28,073 | ||||
Marvell Technology Group Ltd. (a)(e) | 19,573,300 | 1,097,866 | ||||
MathStar, Inc. | 304,900 | 1,744 |
See accompanying notes which are an integral part of the financial statements.
21 Annual Report
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
INFORMATION TECHNOLOGY – continued | ||||||
Semiconductors & Semiconductor Equipment – continued | ||||||
MediaTek, Inc. | 836,000 | $ | 9,856 | |||
Monolithic Power Systems, Inc. (a) | 1,053,330 | 15,789 | ||||
National Semiconductor Corp. | 1,702,200 | 44,223 | ||||
NVIDIA Corp. (a) | 2,454,000 | 89,718 | ||||
Powertech Technology, Inc. | 5,166,000 | 16,996 | ||||
Samsung Electronics Co. Ltd. | 1,278,224 | 836,079 | ||||
Siliconware Precision Industries Co. Ltd. sponsored ADR (d) | 779,800 | 5,412 | ||||
SiRF Technology Holdings, Inc. (a) | 1,158,218 | 34,515 | ||||
2,354,197 | ||||||
Software 1.8% | ||||||
Activision, Inc. (a) | 4,304,817 | 59,148 | ||||
Adobe Systems, Inc. | 5,399,020 | 199,548 | ||||
Altiris, Inc. (a)(e) | 2,623,874 | 44,317 | ||||
Autodesk, Inc. (a) | 2,961,314 | 127,188 | ||||
Blackboard, Inc. (a) | 563,000 | 16,316 | ||||
Citrix Systems, Inc. (a) | 731,211 | 21,044 | ||||
FileNET Corp. (a) | 1,872,641 | 48,408 | ||||
Intuit, Inc. (a) | 2,116,190 | 112,793 | ||||
JAMDAT Mobile, Inc. (a) | 242,994 | 6,459 | ||||
McAfee, Inc. (a) | 2,848,500 | 77,280 | ||||
NAVTEQ Corp. (a) | 2,687,200 | 117,887 | ||||
NDS Group PLC sponsored ADR (a) | 274,400 | 11,292 | ||||
Quality Systems, Inc. | 354,557 | 27,216 | ||||
Red Hat, Inc. (a) | 958,026 | 26,097 | ||||
Salesforce.com, Inc. (a) | 2,718,900 | 87,141 | ||||
SAP AG sponsored ADR | 1,291,600 | 58,212 | ||||
Symantec Corp. (a) | 1,079,648 | 18,894 | ||||
THQ, Inc. (a) | 404,700 | 9,652 | ||||
1,068,892 | ||||||
TOTAL INFORMATION TECHNOLOGY | 10,612,277 | |||||
MATERIALS 7.6% | ||||||
Chemicals – 1.2% | ||||||
Agrium, Inc. | 1,499,700 | 33,050 | ||||
Bayer AG | 2,067,900 | 86,356 | ||||
Celanese Corp. Class A | 2,807,200 | 53,674 | ||||
Chemtura Corp. | 1,714,387 | 21,773 | ||||
Ecolab, Inc. | 5,786,600 | 209,880 | ||||
Monsanto Co. | 117,000 | 9,071 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
22 |
Common Stocks continued | ||||||||
Shares | Value (Note 1) | |||||||
(000s) | ||||||||
MATERIALS – continued | ||||||||
Chemicals – continued | ||||||||
Nalco Holding Co. (a) | 2,067,200 | $ | 36,610 | |||||
Praxair, Inc. | 4,676,100 | 247,646 | ||||||
698,060 | ||||||||
Construction Materials 0.2% | ||||||||
Eagle Materials, Inc. (e) | 536,000 | 65,585 | ||||||
Florida Rock Industries, Inc. | 138,900 | 6,814 | ||||||
Lafarge SA (Bearer) | 63,200 | 5,686 | ||||||
Rinker Group Ltd. | 5,302,988 | 63,991 | ||||||
142,076 | ||||||||
Containers & Packaging – 0.2% | ||||||||
Crown Holdings, Inc. (a) | 2,089,905 | 40,816 | ||||||
Owens Illinois, Inc. (a) | 3,719,440 | 78,257 | ||||||
119,073 | ||||||||
Metals & Mining – 6.0% | ||||||||
Aber Diamond Corp. | 850,800 | 31,447 | ||||||
Agnico-Eagle Mines Ltd. | 1,051,500 | 20,821 | ||||||
Anglo American PLC ADR (d) | 6,990,625 | 243,134 | ||||||
Bema Gold Corp. (a) | 15,722,600 | 45,577 | ||||||
BHP Billiton Ltd. sponsored ADR | 12,502,930 | 417,848 | ||||||
Companhia Vale do Rio Doce sponsored ADR | 3,798,800 | 156,283 | ||||||
Compania de Minas Buenaventura SA sponsored ADR | 1,050,100 | 29,718 | ||||||
Compass Minerals International, Inc. | 1,490,600 | 36,579 | ||||||
Eldorado Gold Corp. (a) | 9,022,400 | 44,159 | ||||||
Falconbridge Ltd. | 1,023,100 | 30,362 | ||||||
First Quantum Minerals Ltd. | 2,075,200 | 66,493 | ||||||
Freeport-McMoRan Copper & Gold, Inc. Class B | 1,811,808 | 97,475 | ||||||
Gabriel Resources Ltd. (a) | 5,435,500 | 13,278 | ||||||
Gerdau SA sponsored ADR | 3,357,250 | 55,999 | ||||||
Glamis Gold Ltd. (a)(e) | 9,573,400 | 263,267 | ||||||
Goldcorp, Inc. | 15,032,778 | 334,909 | ||||||
IPSCO, Inc. | 2,162,400 | 179,885 | ||||||
Ivanhoe Mines Ltd. (a) | 5,873,300 | 42,185 | ||||||
Lihir Gold Ltd. (a) | 13,295,252 | 21,261 | ||||||
Meridian Gold, Inc. (a) | 742,700 | 16,278 | ||||||
New Gold, Inc. (a) | 746,500 | 5,009 | ||||||
Newcrest Mining Ltd. | 2,197,600 | 39,173 | ||||||
Newmont Mining Corp. | 11,407,849 | 609,179 | ||||||
Nucor Corp. | 904,600 | 60,355 |
See accompanying notes which are an integral part of the financial statements.
23 Annual Report
Investments continued | ||||||
Common Stocks continued | ||||||
Shares | Value (Note 1) | |||||
(000s) | ||||||
MATERIALS – continued | ||||||
Metals & Mining – continued | ||||||
Phelps Dodge Corp. | 511,100 | $ | 73,532 | |||
POSCO sponsored ADR (d) | 2,408,500 | 119,245 | ||||
Rio Tinto PLC (Reg.) | 8,843,637 | 404,132 | ||||
Shore Gold, Inc. (a) | 1,154,700 | 7,628 | ||||
Southern Copper Corp. | 376,200 | 25,198 | ||||
Teck Cominco Ltd. Class B (sub. vtg.) | 2,022,000 | 107,922 | ||||
United States Steel Corp. | 81,600 | 3,923 | ||||
Xstrata PLC | 1,149,300 | 26,909 | ||||
3,629,163 | ||||||
TOTAL MATERIALS | 4,588,372 | |||||
TELECOMMUNICATION SERVICES – 3.3% | ||||||
Diversified Telecommunication Services – 0.1% | ||||||
NeuStar, Inc. Class A | 337,000 | 10,275 | ||||
PT Telkomunikasi Indonesia Tbk sponsored ADR | 194,900 | 4,650 | ||||
Telkom SA Ltd. | 374,300 | 7,971 | ||||
22,896 | ||||||
Wireless Telecommunication Services – 3.2% | ||||||
ALLTEL Corp. | 145,340 | 9,171 | ||||
America Movil SA de CV Series L sponsored ADR | 27,710,500 | 810,809 | ||||
American Tower Corp. Class A (a) | 4,472,245 | 121,198 | ||||
China Mobile (Hong Kong) Ltd. sponsored ADR | 2,015,400 | 48,450 | ||||
Investcom LLC GDR | 625,500 | 8,788 | ||||
Leap Wireless International, Inc. (a) | 303,200 | 11,485 | ||||
MTN Group Ltd. | 780,000 | 7,661 | ||||
Nextel Partners, Inc. Class A (a) | 9,147,300 | 255,576 | ||||
NII Holdings, Inc. (a)(e) | 8,951,494 | 391,001 | ||||
Rogers Communications, Inc. Class B (non-vtg.) | 1,203,700 | 50,941 | ||||
Sprint Nextel Corp. | 7,728,110 | 180,529 | ||||
Turkcell Iletisim Hizmet AS sponsored ADR | 293,100 | 4,502 | ||||
Vimpel Communications sponsored ADR (a) | 901,000 | 39,851 | ||||
1,939,962 | ||||||
TOTAL TELECOMMUNICATION SERVICES | 1,962,858 | |||||
UTILITIES – 0.3% | ||||||
Electric Utilities – 0.0% | ||||||
Exelon Corp. | 333,300 | 17,712 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
24 |
Common Stocks continued | ||||||||||
Shares | Value (Note 1) | |||||||||
(000s) | ||||||||||
UTILITIES – continued | ||||||||||
Gas Utilities 0.2% | ||||||||||
Questar Corp. | 476,800 | $ | 36,094 | |||||||
Southern Union Co. | 2,642,030 | 62,431 | ||||||||
98,525 | ||||||||||
Independent Power Producers & Energy Traders – 0.1% | ||||||||||
AES Corp. (a) | 2,437,200 | 38,581 | ||||||||
NRG Energy, Inc. (a) | 142,200 | 6,700 | ||||||||
TXU Corp. | 189,016 | 9,487 | ||||||||
54,768 | ||||||||||
Water Utilities 0.0% | ||||||||||
Companhia de Saneamento Basico do Estado de Sao Paulo | ||||||||||
(SABESP) sponsored ADR | 467,500 | 7,887 | ||||||||
TOTAL UTILITIES | 178,892 | |||||||||
TOTAL COMMON STOCKS | ||||||||||
(Cost $37,637,201) | 54,204,931 | |||||||||
Nonconvertible Preferred Stocks 0.0% | ||||||||||
CONSUMER DISCRETIONARY – 0.0% | ||||||||||
Automobiles – 0.0% | ||||||||||
Porsche AG (non-vtg.) | 19,170 | 13,775 | ||||||||
TOTAL NONCONVERTIBLE PREFERRED STOCKS | ||||||||||
(Cost $14,174) | 13,775 | |||||||||
Nonconvertible Bonds 0.0% | ||||||||||
Principal | ||||||||||
Amount (000s) | ||||||||||
INDUSTRIALS – 0.0% | ||||||||||
Machinery – 0.0% | ||||||||||
Rexnord Corp. 10.125% 12/15/12 | $ | 6,000 | 6,465 | |||||||
TOTAL NONCONVERTIBLE BONDS | ||||||||||
(Cost $6,450) | 6,465 | |||||||||
U.S. Treasury Obligations 0.2% | ||||||||||
U.S. Treasury Notes 4.25% 8/15/14 | ||||||||||
(Cost $105,536) | 104,300 | 103,159 |
See accompanying notes which are an integral part of the financial statements.
25 Annual Report
Investments continued | ||||||||||
Floating Rate Loans 0.0% | ||||||||||
Principal | Value (Note 1) | |||||||||
Amount (000s) | (000s) | |||||||||
CONSUMER DISCRETIONARY – 0.0% | ||||||||||
Media – 0.0% | ||||||||||
Charter Communications Operating LLC Tranche B, term | ||||||||||
loan 7.5% 4/7/11 (g) | $ | 7,751 | $ | 7,771 | ||||||
TOTAL FLOATING RATE LOANS | ||||||||||
(Cost $7,629) | 7,771 | |||||||||
Money Market Funds 10.6% | ||||||||||
Shares | ||||||||||
Fidelity Cash Central Fund, 4.28% (b) | 5,950,093,191 | 5,950,093 | ||||||||
Fidelity Securities Lending Cash Central Fund, | ||||||||||
4.35% (b)(c) | 389,825,525 | 389,826 | ||||||||
TOTAL MONEY MARKET FUNDS | ||||||||||
(Cost $6,339,919) | 6,339,919 | |||||||||
TOTAL INVESTMENT PORTFOLIO 100.9% | ||||||||||
(Cost $44,110,909) | 60,676,020 | |||||||||
NET OTHER ASSETS – (0.9)% | (533,292) | |||||||||
NET ASSETS 100% | $ | 60,142,728 |
Legend (a) Non-income producing (b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund’s holdings as of its most recent quarter end is available upon request. (c) Investment made with cash collateral received from securities on loan. (d) Security or a portion of the security is on loan at period end. (e) Affiliated company |
(f) 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 $41,411,000 or 0.1% of net assets. (g) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. (h) Restricted securities – Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $42,800,000 or 0.1% of net assets. |
See accompanying notes which are an integral part of the financial statements.
Annual Report 26
Additional information on each holding is as follows:
Acquisition | Acquisition | |||||
Security | Date | Cost (000s) | ||||
MannKind Corp. | ||||||
warrants 8/3/10 | 8/3/05 | $ | 8 | |||
The Weinstein Co. | ||||||
Holdings, LLC | ||||||
Class A 1 | 10/19/05 | 41,234 |
Affiliated Central Funds
Information regarding income received by the fund from the affiliated Central funds during the period is as follows:
Income received | ||||
Fund | (Amounts in thousands) | |||
Fidelity Cash Central Fund | $ | 162,584 | ||
Fidelity Securities Lending Cash Central Fund | 10,870 | |||
Total | $ | 173,454 |
Other Affiliated Issuers
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:
Value, | ||||||||||||||||||||
Affiliates | beginning of | Sales | Dividend | Value, end of | ||||||||||||||||
(Amounts in thousands) | period | Purchases | Proceeds | Income | period | |||||||||||||||
Advanced | ||||||||||||||||||||
Neuromodulation | ||||||||||||||||||||
Systems, Inc. | $ | 61,398 | $ | 24,655 | $ | 121,024 | $ | — | $ | — | ||||||||||
African Platinum PLC | 21,399 | — | 11,071 | |||||||||||||||||
Altiris, Inc. | 92,964 | — | — | — | 44,317 | |||||||||||||||
Anadys | ||||||||||||||||||||
Pharmaceuticals, Inc. | — | 18,386 | 148 | — | 14,939 | |||||||||||||||
Anteon International | ||||||||||||||||||||
Corp. | 79,115 | — | 21,064 | — | — | |||||||||||||||
Arena Pharmaceuticals, | ||||||||||||||||||||
Inc. | — | 26,621 | — | — | 34,354 | |||||||||||||||
Avon Products, Inc. | 1,000,161 | 22,854 | 412,653 | 14,248 | — | |||||||||||||||
Blackrock Ventures, Inc. | 20,314 | 50,439 | — | — | 89,853 | |||||||||||||||
C.H. Robinson | ||||||||||||||||||||
Worldwide, Inc. | 226,177 | 54,242 | 23,922 | 3,117 | 342,379 | |||||||||||||||
DENTSPLY | ||||||||||||||||||||
International, Inc. | 309,113 | 21,097 | 91,772 | 1,284 | 223,556 |
See accompanying notes which are an integral part of the financial statements.
27 Annual Report
Investments continued | ||||||||||||||||||||
Value, | ||||||||||||||||||||
Affiliates | beginning of | Sales | Dividend | Value, end of | ||||||||||||||||
(Amounts in thousands) | period | Purchases | Proceeds | Income | period | |||||||||||||||
Ditech Communications | ||||||||||||||||||||
Corp. | $ | 26,847 | $ | — | $ | 13,451 | $ | — | $ | — | ||||||||||
Eagle Materials, Inc. | 30,499 | 21,186 | 6,619 | 599 | 65,585 | |||||||||||||||
Everest Re Group Ltd. | 263,890 | 97,922 | 22,660 | 1,368 | 372,110 | |||||||||||||||
FLIR Systems, Inc. | 191,026 | 5,689 | 77,560 | — | — | |||||||||||||||
Foxhollow | ||||||||||||||||||||
Technologies, Inc. | 752 | 88,354 | 27,471 | — | 52,386 | |||||||||||||||
Glamis Gold Ltd. | 144,251 | 49,126 | 17,266 | — | 263,267 | |||||||||||||||
Goldcorp, Inc. | 195,510 | 35,928 | 18,547 | 7,100 | — | |||||||||||||||
Intuitive Surgical, Inc. | 25,016 | 118,213 | 22,427 | — | 277,909 | |||||||||||||||
IPSCO, Inc. | 124,062 | 46,945 | 66,578 | 1,012 | — | |||||||||||||||
iVillage, Inc. | — | 29,596 | — | — | 31,794 | |||||||||||||||
Kyphon, Inc. | — | 97,558 | — | — | 101,181 | |||||||||||||||
Marchex, Inc. Class B | — | 28,934 | 21,762 | — | — | |||||||||||||||
Mariner Energy, Inc. | — | 25,861 | — | — | 32,788 | |||||||||||||||
Marvell Technology | ||||||||||||||||||||
Group Ltd. | 546,100 | 170,954 | — | — | 1,097,866 | |||||||||||||||
Merge Technologies, | ||||||||||||||||||||
Inc. | — | 38,031 | — | — | 35,964 | |||||||||||||||
Montpelier Re Holdings | ||||||||||||||||||||
Ltd. | 193,054 | — | 70,838 | 32,838 | — | |||||||||||||||
NII Holdings, Inc. | 166,210 | 80,926 | 6,552 | — | 391,001 | |||||||||||||||
Panera Bread Co. | ||||||||||||||||||||
Class A | 71,770 | 65,549 | 6,537 | — | 191,119 | |||||||||||||||
Patterson Companies, | ||||||||||||||||||||
Inc. | 533,931 | 13,584 | 79,284 | — | 353,807 | |||||||||||||||
Premcor, Inc. | 272,588 | 20,316 | 457,706 | 396 | — | |||||||||||||||
Red Robin Gourmet | ||||||||||||||||||||
Burgers, Inc. | 61,039 | 9,078 | 60,840 | — | — | |||||||||||||||
Republic Airways | ||||||||||||||||||||
Holdings, Inc. | — | 31,522 | — | — | 34,351 | |||||||||||||||
Resources Connection, | ||||||||||||||||||||
Inc. | 55,012 | 16,587 | — | — | 69,522 | |||||||||||||||
Seattle Genetics, Inc. | 16,177 | — | — | — | 11,693 | |||||||||||||||
Shuffle Master, Inc. | 65,734 | 9,045 | 40,385 | — | — | |||||||||||||||
Sonic Solutions, Inc. | 39,820 | — | 29,181 | — | — | |||||||||||||||
SRA International, Inc. | ||||||||||||||||||||
Class A | 104,851 | 14,372 | — | — | 113,798 | |||||||||||||||
Station Casinos, Inc. | 151,693 | 49,550 | 17,028 | 3,153 | — | |||||||||||||||
Ultralife Batteries, Inc. | 20,778 | — | — | — | 12,819 | |||||||||||||||
USI Holdings Corp. | 36,199 | — | 35,382 | — | — | |||||||||||||||
Wet Seal, Inc. Class A | — | 19,509 | — | — | 18,089 | |||||||||||||||
Total | $ | 5,147,450 | $ | 1,402,629 | $ | 1,779,728 | $ | 65,115 | $ | 4,276,447 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
28 |
Other Information
Distribution of investments by country of issue, as a percentage of total net assets, is as follows:
United States of America | 74.6% | |
Canada | 5.6% | |
Bermuda | 3.7% | |
United Kingdom | 3.0% | |
Switzerland | 2.5% | |
Korea (South) | 1.6% | |
Mexico | 1.3% | |
Australia | 1.1% | |
Netherlands Antilles | 1.0% | |
Others (individually less than 1%) . | 5.6% | |
100.0% |
See accompanying notes which are an integral part of the financial statements.
29 Annual Report
Financial Statements | ||||||||
Statement of Assets and Liabilities | ||||||||
Amounts in thousands (except per share amount) | December 31, 2005 | |||||||
Assets | ||||||||
Investment in securities, at value (including securities | ||||||||
loaned of $378,523) See accompanying schedule: | ||||||||
Unaffiliated issuers (cost $35,327,967) | $ | 50,059,654 | ||||||
Affiliated Central Funds (cost $6,339,919) | 6,339,919 | |||||||
Other affiliated issuers (cost $2,443,023) | 4,276,447 | |||||||
Total Investments (cost $44,110,909) | $ | 60,676,020 | ||||||
Cash | 449 | |||||||
Receivable for investments sold | 67,069 | |||||||
Receivable for fund shares sold | 185,007 | |||||||
Dividends receivable | 56,487 | |||||||
Interest receivable | 22,751 | |||||||
Prepaid expenses | 251 | |||||||
Other affiliated receivables | 278 | |||||||
Other receivables | 3,975 | |||||||
Total assets | 61,012,287 | |||||||
Liabilities | ||||||||
Payable to custodian bank | $ | 5,239 | ||||||
Payable for investments purchased | 300,246 | |||||||
Payable for fund shares redeemed | 126,146 | |||||||
Distributions payable | 1,867 | |||||||
Accrued management fee | 35,172 | |||||||
Other affiliated payables | 9,630 | |||||||
Other payables and accrued expenses | 1,433 | |||||||
Collateral on securities loaned, at value | 389,826 | |||||||
Total liabilities | 869,559 | |||||||
Net Assets | $ | 60,142,728 | ||||||
Net Assets consist of: | ||||||||
Paid in capital | $ | 42,396,477 | ||||||
Undistributed net investment income | 14,566 | |||||||
Accumulated undistributed net realized gain (loss) on | ||||||||
investments and foreign currency transactions | 1,166,869 | |||||||
Net unrealized appreciation (depreciation) on | ||||||||
investments and assets and liabilities in foreign | ||||||||
currencies | 16,564,816 | |||||||
Net Assets, for 928,707 shares outstanding | $ | 60,142,728 | ||||||
Net Asset Value, offering price and redemption price per | ||||||||
share ($60,142,728 ÷ 928,707 shares) | $ | 64.76 |
See accompanying notes which are an integral part of the financial statements.
Annual Report 30
Statement of Operations | ||||||
Amounts in thousands | Year ended December 31, 2005 | |||||
Investment Income | ||||||
Dividends (including $65,115 received from other | ||||||
affiliated issuers) | $ | 475,578 | ||||
Interest | 30,656 | |||||
Income from affiliated Central Funds | 173,454 | |||||
Total income | 679,688 | |||||
Expenses | ||||||
Management fee | ||||||
Basic fee | $ | 289,649 | ||||
Performance adjustment | 70,920 | |||||
Transfer agent fees | 90,849 | |||||
Accounting and security lending fees | 2,449 | |||||
Independent trustees’ compensation | 220 | |||||
Appreciation in deferred trustee compensation account | 127 | |||||
Custodian fees and expenses | 3,025 | |||||
Registration fees | 1,507 | |||||
Audit | 364 | |||||
Legal | 330 | |||||
Interest | 1 | |||||
Miscellaneous | 668 | |||||
Total expenses before reductions | 460,109 | |||||
Expense reductions | (12,879) | 447,230 | ||||
Net investment income (loss) | 232,458 | |||||
Realized and Unrealized Gain (Loss) | ||||||
Net realized gain (loss) on: | ||||||
Investment securities: | ||||||
Unaffiliated issuers (net of foreign taxes of $26) | 3,257,443 | |||||
Other affiliated issuers | 551,423 | |||||
Foreign currency transactions | (104) | |||||
Total net realized gain (loss) | 3,808,762 | |||||
Change in net unrealized appreciation (depreciation) on: | ||||||
Investment securities (net of increase in deferred for- | ||||||
eign taxes of $234) | 3,905,910 | |||||
Assets and liabilities in foreign currencies | (239) | |||||
Total change in net unrealized appreciation | ||||||
(depreciation) | 3,905,671 | |||||
Net gain (loss) | 7,714,433 | |||||
Net increase (decrease) in net assets resulting from | ||||||
operations | $ | 7,946,891 |
See accompanying notes which are an integral part of the financial statements.
31 Annual Report
Financial Statements continued | ||||||||
Statement of Changes in Net Assets | ||||||||
Year ended | Year ended | |||||||
December 31, | December 31, | |||||||
Amounts in thousands | 2005 | 2004 | ||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 232,458 | $ | 32,371 | ||||
Net realized gain (loss) | 3,808,762 | 1,370,693 | ||||||
Change in net unrealized appreciation (depreciation) . | 3,905,671 | 4,248,703 | ||||||
Net increase (decrease) in net assets resulting | ||||||||
from operations | 7,946,891 | 5,651,767 | ||||||
Distributions to shareholders from net investment income . | (209,102) | (34,673) | ||||||
Distributions to shareholders from net realized gain | (880,727) | — | ||||||
Total distributions | (1,089,829) | (34,673) | ||||||
Share transactions | ||||||||
Proceeds from sales of shares | 14,203,241 | 7,814,682 | ||||||
Reinvestment of distributions | 1,065,991 | 33,913 | ||||||
Cost of shares redeemed | (6,460,467) | (4,921,518) | ||||||
Net increase (decrease) in net assets resulting from | ||||||||
share transactions | 8,808,765 | 2,927,077 | ||||||
Total increase (decrease) in net assets | 15,665,827 | 8,544,171 | ||||||
Net Assets | ||||||||
Beginning of period | 44,476,901 | 35,932,730 | ||||||
End of period (including undistributed net investment | ||||||||
income of $14,566 and distributions in excess of net | ||||||||
investment income of $7,648, respectively) | $ | 60,142,728 | $ | 44,476,901 | ||||
Other Information | ||||||||
Shares | ||||||||
Sold | 236,315 | 150,977 | ||||||
Issued in reinvestment of distributions | 16,305 | 616 | ||||||
Redeemed | (107,831) | (95,759) | ||||||
Net increase (decrease) | 144,789 | 55,834 |
See accompanying notes which are an integral part of the financial statements.
Annual Report |
32 |
Financial Highlights | ||||||||||
Years ended December 31, | 2005 | 2004 | 2003 | 2002 | 2001 | |||||
Selected Per Share Data | ||||||||||
Net asset value, beginning of | ||||||||||
period | $ 56.74 | $ 49.35 | $ 38.60 | $ 42.77 | $ 49.18 | |||||
Income from Investment | ||||||||||
Operations | ||||||||||
Net investment income (loss)C | 27 | .04 | —E | .06 | .21 | |||||
Net realized and unrealized | ||||||||||
gain (loss) | 8.95 | 7.40 | 10.79 | (4.18) | (6.40) | |||||
Total from investment operations | 9.22 | 7.44 | 10.79 | (4.12) | (6.19) | |||||
Distributions from net investment | ||||||||||
income | (.23) | (.05) | (.04) | (.05) | (.22) | |||||
Distributions from net realized | ||||||||||
gain | (.97) | — | — | — | — | |||||
Total distributions | (1.20) | (.05) | (.04) | (.05) | (.22) | |||||
Net asset value, end of period | $ 64.76 | $ 56.74 | $ 49.35 | $ 38.60 | $ 42.77 | |||||
Total ReturnA,B | 16.23% | 15.07% | 27.95% | (9.63)% | (12.59)% | |||||
Ratios to Average Net AssetsD | ||||||||||
Expenses before reductions | 91% | .94% | 1.00% | 1.03% | .96% | |||||
Expenses net of fee waivers, if | ||||||||||
any | 91% | .94% | 1.00% | 1.03% | .96% | |||||
Expenses net of all reductions | 88% | .92% | .98% | .99% | .91% | |||||
Net investment income (loss) | 46% | .08% | .01% | .14% | .49% | |||||
Supplemental Data | ||||||||||
Net assets, end of period (in | ||||||||||
millions) | $60,143 | $44,477 | $35,933 | $27,586 | $32,159 | |||||
Portfolio turnover rate | 60% | 64% | 67% | 80% | 141% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the fund. E Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
33 Annual Report
Notes to Financial Statements
For the period ended December 31, 2005 (Amounts in thousands except ratios) |
1. Significant Accounting Policies.
Fidelity Contrafund (the fund) is a fund of Fidelity Contrafund (the trust) and is autho rized to issue an unlimited number of shares. The trust is registered under the Invest ment Company Act of 1940, as amended (the 1940 Act), as an open end management investment company organized as a Massachusetts business trust. The fund may invest in affiliated money market central funds (Money Market Central Funds) which are open end investment companies available to investment companies and other accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, 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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open end mutual funds, are valued at their closing net asset value each business day. Short term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securi ties markets, reviewing developments in foreign markets and evaluating the perfor mance of ADRs, futures contracts and exchange traded funds. Because the fund’s utilization of fair value pricing depends on market activity, the frequency with which fair
Annual Report |
34 |
1. Significant Accounting Policies continued | ||
Security Valuation continued |
value pricing is used can not be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts’ terms.
Foreign denominated assets, including investment securities, and liabilities are trans lated into U.S. dollars at the exchange rate at period end. Purchases and sales of invest ment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transac tion date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex dividend date, except for certain dividends from foreign securities where the ex dividend date may have passed, which 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securi ties. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each fund in the trust.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent 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
35 Annual Report
Notes to Financial Statements continued |
(Amounts in thousands except ratios) |
1. Significant Accounting Policies continued |
Deferred Trustee Compensation continued |
though equivalent dollar amounts had been invested in shares of the fund or are invested in a cross section of other Fidelity funds, and are marked to market. Deferred amounts remain in the fund until distributed in accordance with the Plan.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund’s understanding of the tax rules and rates that exist in the foreign markets in which it invests.
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. In addition, the fund will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book tax differences will reverse in a subsequent period.
Book tax differences are primarily due to short term capital gains, foreign currency transactions, passive foreign investment companies (PFIC), market discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The tax basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ | 16,910,729 | ||
Unrealized depreciation | (426,382) | |||
Net unrealized appreciation (depreciation) | 16,484,347 | |||
Undistributed ordinary income | 87,710 | |||
Undistributed long term capital gain | 1,123,482 | |||
Cost for federal income tax purposes | $ | 44,191,673 |
The tax character of distributions paid was as follows:
December 31, 2005 | December 31, 2004 | |||||||
Ordinary Income | $ | 217,056 | $ | 34,673 | ||||
Long term Capital Gains | 872,773 | — | ||||||
Total | $ | 1,089,829 | $ | 34,673 |
Annual Report |
36 |
2. Operating Policies. |
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non government securities. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. The fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transac tions 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. Information regarding restricted securities is included at the end of the fund’s Schedule of Investments.
Loans and Other Direct Debt Instruments. The fund may invest in loans and loan participations, trade claims or other receivables. These investments may include standby financing commitments, including revolving credit facilities, that obligate the fund to supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary. The fund may be contrac tually obligated to receive approval from the agent bank and/or borrower prior to the sale of these investments.
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short term securities and U.S. government securities, aggregated $33,332,311 and $26,487,523, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment manage ment related services for which the fund pays a monthly management fee. The manage ment fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund’s average net assets and a group fee rate that averaged .27% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is
37 Annual Report
Notes to Financial Statements continued | ||
(Amounts in thousands except ratios) | ||
4. Fees and Other Transactions with Affiliates continued | ||
Management Fee continued |
subject to a performance adjustment (up to a maximum of ±.20% of the fund’s average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the fund’s relative investment performance as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .71% of the fund’s average net assets.
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 ac count. FSC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annual rate of .18% of average net assets.
Accounting and Security Lending Fees. FSC maintains the fund’s accounting rec ords. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Affiliated Central Funds. The fund may invest in Money Market Central Funds which seek preservation of capital and current income and are managed by Fidelity Invest ments Money Management, Inc. (FIMM), an affiliate of FMR.
The Money Market Central Funds do not pay a management fee.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $749 for the period.
5. Committed Line of Credit. |
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the “line of credit”) to be utilized for temporary or emergency purposes to fund share holder redemptions or for other short term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
6. Security Lending. |
The fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned
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38 |
6. Security Lending continued
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. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the fund’s Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Net income from lending portfolio securities during the period amounted to $10,870.
7. 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 balance during the period for which loans were outstanding amounted to $5,920. The weighted average interest rate was 3.50% . At period end, there were no bank borrowings outstanding.
8. Expense Reductions. |
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $11,726 for the period. In addition, through arrangements with the fund’s custodian and transfer agent, credits realized as a result of uninvested cash balances were used to reduce the fund’s expenses. During the period, these credits reduced the fund’s custody and transfer agent expenses by $30 and $1,123, respectively.
9. Other. |
The fund’s organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the perfor mance of their duties to the fund. In the normal course of business, the fund may also enter into contracts that provide general indemnifications. The fund’s maximum expo sure under these arrangements is unknown as this would be dependent on future claims that may be made against the fund. The risk of material loss from such claims is considered remote.
39 Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Contrafund and the Shareholders of Fidelity Contrafund:
In our opinion, the accompanying statement of assets and liabilities, including the sched ule 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 (a fund of Fidelity Contrafund) at December 31, 2005 and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fidelity Contrafund’s manage ment; 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 esti mates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2005 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Boston, Massachusetts February 7, 2006 |
Annual Report |
40 |
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund’s activities, review contractual arrangements with companies that provide services to the fund, and review the fund’s performance. Except for William O. McCoy and Albert R. Gamper, Jr., each of the Trustees oversees 326 funds advised by FMR or an affiliate. Mr. McCoy oversees 328 funds advised by FMR or an affiliate. Mr. Gamper oversees 235 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instru ment signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*: |
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation Edward C. Johnson 3d (75) |
Year of Election or Appointment: 1984
Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR Corp.; a Di rector and Chairman of the Board and of the Executive Committee of FMR; Chairman and a Director of Fidelity Management & Research (Far East) Inc.; Chairman and a Director of Fidelity Investments Money Man agement, Inc.; and Chairman (2001 present) and a Director (2000 present) of FMR Co., Inc.
41 Annual Report
Trustees and Officers - continued
Name, Age; Principal Occupation Stephen P. Jonas (52) |
Year of Election or Appointment: 2005
Mr. Jonas is Senior Vice President of Contrafund (2005 present). He also serves as Senior Vice President of other Fidelity funds (2005 present). Mr. Jonas is Executive Director of FMR (2005 present). Pre viously, Mr. Jonas served as President of Fidelity Enterprise Operations and Risk Services (2004 2005), Chief Administrative Officer (2002 2004), and Chief Financial Officer of FMR Co. (1998 2000). Mr. Jonas has been with Fidelity Investments since 1987 and has held vari ous financial and management positions including Chief Financial Offi cer of FMR. In addition, he serves on the Boards of Boston Ballet (2003 present) and Simmons College (2003 present).
Robert L. Reynolds (53) |
Year of Election or Appointment: 2003
Mr. Reynolds is a Director (2003 present) and Chief Operating Officer (2002 present) of FMR Corp. He also serves on the Board at Fidelity Investments Canada, Ltd. (2000 present). Previously, Mr. Reynolds served as President of Fidelity Investments Institutional Retirement Group (1996 2000).
* Trustees have been determined to be “Interested Trustees” by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
Independent Trustees: |
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205 5235.
Name, Age; Principal Occupation Dennis J. Dirks (57) |
Year of Election or Appointment: 2005
Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999 2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Com pany (DTC) (1999 2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999 2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001 2003) and Chief Executive Officer and Board member of the Mortgage Backed Securities Clearing Corporation (2001 2003). Mr. Dirks also serves as a Trustee of Manhattan College (2005 present).
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42 |
Name, Age; Principal Occupation Albert R. Gamper, Jr. (63) |
Year of Election or Appointment: 2006
Mr. Gamper also serves as a Trustee (2006 present) or Member of the Advisory Board (2005 present) of other investment companies advised by FMR. Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). Dur ing his tenure with CIT Group Inc. Mr. Gamper served in numerous sen ior management positions, including Chairman (1987 1989; 1999 2001; 2002 2004), Chief Executive Officer (1987 2004), and President (1989 2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001 present), Chairman of the Board of Governors, Rutgers University (2004 present), and Chairman of the Board of Saint Barnabas Health Care System.
Robert M. Gates (62) |
Year of Election or Appointment: 1997
Dr. Gates is Chairman of the Independent Trustees (2006 present). Dr. Gates is President of Texas A&M University (2002 present). He was Director of the Central Intelligence Agency (CIA) from 1991 to 1993. From 1989 to 1991, Dr. Gates served as Assistant to the President of the United States and Deputy National Security Advisor. Dr. Gates is a Director of NACCO Industries, Inc. (mining and manufacturing), Parker Drilling Co., Inc. (drilling and rental tools for the energy industry, 2001 present), and Brinker International (restaurant management, 2003 present). Previously, Dr. Gates served as a Director of LucasVarity PLC (automotive components and diesel engines), a Director of TRW Inc. (automotive, space, defense, and information technology), and Dean of the George Bush School of Government and Public Service at Texas A&M University (1999 2001). Dr. Gates also is a Trustee of the Forum for International Policy.
43 Annual Report
Trustees and Officers - continued
Name, Age; Principal Occupation George H. Heilmeier (69) |
Year of Election or Appointment: 2004
Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (commu nication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineer ing and information technology support for the government), and HRL Laboratories (private research and development, 2004 present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE) (2000 present). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Acad emy of Arts and Sciences, and the Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Pre viously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992 2002), Compaq (1994 2002), Automatic Data Processing, Inc. (ADP) (technology based business outsourcing, 1995 2002), INET Technologies Inc. (telecommunications network surveillance, 2001 2004), and Teletech Holdings (cus tomer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid display.
Marie L. Knowles (59) |
Year of Election or Appointment: 2001
Prior to Ms. Knowles’ retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996 2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare ser vice, 2002 present). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California.
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44 |
Name, Age; Principal Occupation Ned C. Lautenbach (61) |
Year of Election or Appointment: 2000
Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Italtel Holding S.p.A. (telecommunications (Milan, Italy), 2004 present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005 present), as well as a member of the Council on Foreign Relations.
William O. McCoy (72) |
Year of Election or Appointment: 1997
Prior to his retirement in December 1994, Mr. McCoy was Vice Chair man of the Board of BellSouth Corporation (telecommunications) and President of BellSouth Enterprises. He is currently a Director of Liberty Corporation (holding company), Duke Realty Corporation (real estate), and Progress Energy, Inc. (electric utility). He is also a partner of Franklin Street Partners (private investment management firm) and a member of the Research Triangle Foundation Board. In addition, Mr. McCoy served as the Interim Chancellor (1999 2000) and a member of the Board of Visitors for the University of North Carolina at Chapel Hill and currently serves on the Board of Directors of the University of North Carolina Health Care System and the Board of Visitors of the Kenan Flagler Business School (University of North Carolina at Chapel Hill). He also served as Vice President of Finance for the University of North Car olina (16 school system).
Cornelia M. Small (61) |
Year of Election or Appointment: 2005
Ms. Small is a member (2000 present) and Chairperson (2002 present) of the Investment Committee, and a member (2002 present) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999 2000), Director of Global Equity Investments (1996 1999), and a member of the Board of Directors of Scudder, Ste vens & Clark (1990 1997) and Scudder Kemper Investments (1997 1998). In addition, Ms. Small served as Co Chair (2000 2003) of the Annual Fund for the Fletcher School of Law and Diplomacy.
45 Annual Report
Trustees and Officers - continued
Name, Age; Principal Occupation William S. Stavropoulos (66) |
Year of Election or Appointment: 2001
Mr. Stavropoulos is Chairman of the Board (2000 present) and a Mem ber of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993 2000; 2002 2003), CEO (1995 2000; 2002 2004), and Chair man of the Executive Committee (2000 2004). Currently, he is a Direc tor of NCR Corporation (data warehousing and technology solutions), BellSouth Corporation (telecommunications), Chemical Financial Corpo ration, Maersk Inc. (industrial conglomerate, 2002 present), and Metal mark Capital (private equity investment firm, 2005 present). He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science.
Kenneth L. Wolfe (66) |
Year of Election or Appointment: 2005
Prior to his retirement in 2001, Mr. Wolfe was Chairman and Chief Executive Officer of Hershey Foods Corporation (1993 2001). He cur rently serves as a member of the boards of Adelphia Communications Corporation (2003 present), Bausch & Lomb, Inc., and Revlon Inc. (2004 present).
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation Peter S. Lynch (61) |
Year of Election or Appointment: 2003
Member of the Advisory Board of Fidelity Contrafund. Vice Chairman and a Director of FMR, and Vice Chairman (2001 present) and a Direc tor (2000 present) of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990 2003). In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield, John F. Kennedy Library, and the Museum of Fine Arts of Boston.
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46 |
Name, Age; Principal Occupation Dwight D. Churchill (52) |
Year of Election or Appointment: 2005
Vice President of Contrafund. Mr. Churchill also serves as Vice President of certain Equity Funds (2005 present) and certain High Income Funds (2005 present). Previously, he served as Head of Fidelity’s Fixed Income Division (2000 2005), Vice President of Fidelity’s Money Market Funds (2000 2005), Vice President of Fidelity’s Bond Funds, and Senior Vice President of FIMM (2000) and FMR. Mr. Churchill joined Fidelity in 1993 as Vice President and Group Leader of Taxable Fixed Income Investments.
William Danoff (45) |
Year of Election or Appointment: 1998
Vice President of Contrafund. Mr. Danoff serves as Vice President of other funds advised by FMR. Mr. Prior to assuming his current responsibilities, Mr. Danoff worked as a research analyst and portfolio man ager. Mr. Danoff also serves as Senior Vice President of FMR and FMR Co., Inc. (2001).
Eric D. Roiter (57) |
Year of Election or Appointment: 1998
Secretary of Contrafund. He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001 present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001 present), Fidelity Management & Research (Far East) Inc. (2001 present), and Fidelity Investments Money Management, Inc. (2001 present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003 present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corpora tion (FDC) (1998 2005).
Stuart Fross (46) |
Year of Election or Appointment: 2003
Assistant Secretary of Contrafund. Mr. Fross also serves as Assistant Secretary of other Fidelity funds (2003 present), Vice President and Secretary of FDC (2005 present), and is an employee of FMR.
Christine Reynolds (47) |
Year of Election or Appointment: 2004
President, Treasurer, and Anti Money Laundering (AML) officer of Contrafund. Ms. Reynolds also serves as President, Treasurer, and AML offi cer of other Fidelity funds (2004) and is a Vice President (2003) and an employee (2002) of FMR. Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980 2002), where she was most recently an audit partner with PwC’s investment management practice.
47 Annual Report
Trustees and Officers - continued
Name, Age; Principal Occupation Paul M. Murphy (58) |
Year of Election or Appointment: 2005
Chief Financial Officer of Contrafund. Mr. Murphy also serves as Chief Financial Officer of other Fidelity funds (2005 present). He also serves as Senior Vice President of Fidelity Pricing and Cash Management Services Group (FPCMS).
Kenneth A. Rathgeber (58) |
Year of Election or Appointment: 2004
Chief Compliance Officer of Contrafund. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004) and Executive Vice President of Risk Oversight for Fidelity Investments (2002). Pre viously, he served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc.
(1998 2002).
John R. Hebble (47) |
Year of Election or Appointment: 2003
Deputy Treasurer of Contrafund. Mr. Hebble also serves as Deputy Treasurer of other Fidelity funds (2003), and is an employee of FMR. Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002 2003) and Assistant Treasurer of the Scudder Funds (1998 2003).
Bryan A. Mehrmann (44) |
Year of Election or Appointment: 2005
Deputy Treasurer of Contrafund. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005 present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998 2004).
Kimberley H. Monasterio (42) |
Year of Election or Appointment: 2004
Deputy Treasurer of Contrafund. Ms. Monasterio also serves as Deputy Treasurer of other Fidelity funds (2004) and is an employee of FMR (2004). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000 2004) and Chief Financial Officer (2002 2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000 2004).
Annual Report |
48 |
Name, Age; Principal Occupation Kenneth B. Robins (36) |
Year of Election or Appointment: 2005
Deputy Treasurer of Contrafund. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2004 present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG’s department of professional practice (2002 2004) and a Senior Manager (1999 2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000 2002).
Robert G. Byrnes (39) |
Year of Election or Appointment: 2005
Assistant Treasurer of Contrafund. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2005 present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003 2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000 2003).
John H. Costello (59) |
Year of Election or Appointment: 1986
Assistant Treasurer of Contrafund. Mr. Costello also serves as Assistant Treasurer of other Fidelity funds and is an employee of FMR.
Peter L. Lydecker (51) |
Year of Election or Appointment: 2004
Assistant Treasurer of Contrafund. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR.
Mark Osterheld (50) |
Year of Election or Appointment: 2002
Assistant Treasurer of Contrafund. Mr. Osterheld also serves as Assistant Treasurer of other Fidelity funds (2002) and is an employee of FMR.
Gary W. Ryan (47) |
Year of Election or Appointment: 2005
Assistant Treasurer of Contrafund. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2005 present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999 2005).
49 Annual Report
Trustees and Officers - continued
Name, Age; Principal Occupation Salvatore Schiavone (40) |
Year of Election or Appointment: 2005
Assistant Treasurer of Contrafund. Mr. Schiavone also serves as Assis tant Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2005 present). Before joining Fidelity Investments, Mr. Schiavone worked at Deutsche Asset Management, where he most recently served as Assistant Treasurer (2003 2005) of the Scudder Funds and Vice President and Head of Fund Reporting (1996 2003).
Annual Report |
50 |
Distributions |
The Board of Trustees of Fidelity Contrafund voted to pay on February 6, 2006, to shareholders of record at the opening of business on February 3, 2006, a distribution of $1.28 per share derived from capital gains realized from sales of portfolio securities.
The fund hereby designates as a capital gain dividend with respect to the taxable year ended December, 31 2005, $1,996,254,786, or, if subsequently determined to be different, the net capital gain of such year.
The fund designates 100% of the dividends distributed during the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2006 of amounts for use in preparing 2005 income tax returns.
51 Annual Report
Proxy Voting Results
A special meeting of the fund’s shareholders was held on January 19, 2005. The results of votes taken among shareholders on proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||||
To amend the Declaration of Trust to | ||||
allow the Board of Trustees, if per- | ||||
mitted by applicable law, to authorize | ||||
fund mergers without shareholder | ||||
approval.* | ||||
# of | % of | |||
Votes | Votes | |||
Affirmative | 16,233,274,660.19 | 68.528 | ||
Against | 5,296,799,647.67 | 22.362 | ||
Abstain | 882,603,665.94 | 3.725 | ||
Broker | ||||
Non Votes . | 1,275,700,696.03 | 5.385 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
PROPOSAL 2 | ||||
To elect a Board of Trustees.* | ||||
# of | % of | |||
Votes | Votes | |||
Laura B. Cronin | ||||
Affirmative | 21,964,545,020.52 | 92.723 | ||
Withheld | 1,723,833,649.31 | 7.277 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Dennis J. Dirks | ||||
Affirmative | 22,473,495,368.70 | 94.871 | ||
Withheld | 1,214,883,301.13 | 5.129 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Robert M. Gates | ||||
Affirmative | 22,429,215,739.51 | 94.684 | ||
Withheld | 1,259,162,930.32 | 5.316 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
George H. Heilmeier | ||||
Affirmative | 22,427,222,693.12 | 94.676 | ||
Withheld | 1,261,155,976.71 | 5.324 | ||
TOTAL | 23,688,378,669.83 | 100.000 |
# of | % of | |||
Votes | Votes | |||
Abigail P. Johnson | ||||
Affirmative | 22,344,921,447.52 | 94.329 | ||
Withheld | 1,343,457,222.31 | 5.671 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Edward C. Johnson 3d | ||||
Affirmative | 22,331,899,258.73 | 94.274 | ||
Withheld | 1,356,479,411.10 | 5.726 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Marie L. Knowles | ||||
Affirmative | 22,457,370,997.41 | 94.803 | ||
Withheld | 1,231,007,672.42 | 5.197 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Ned C. Lautenbach | ||||
Affirmative | 22,461,566,287.67 | 94.821 | ||
Withheld | 1,226,812,382.16 | 5.179 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Marvin L. Mann | ||||
Affirmative | 22,418,349,134.25 | 94.639 | ||
Withheld | 1,270,029,535.58 | 5.361 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
William O. McCoy | ||||
Affirmative | 22,421,999,778.88 | 94.654 | ||
Withheld | 1,266,378,890.95 | 5.346 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Robert L. Reynolds | ||||
Affirmative | 22,450,709,253.08 | 94.775 | ||
Withheld | 1,237,669,416.75 | 5.225 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Cornelia M. Small | ||||
Affirmative | 22,437,020,012.08 | 94.717 | ||
Withheld | 1,251,358,657.75 | 5.283 | ||
TOTAL | 23,688,378,669.83 | 100.000 |
Annual Report 52
# of | % of | |||
Votes | Votes | |||
William S. Stavropoulos | ||||
Affirmative | 22,435,472,051.80 | 94.711 | ||
Withheld | 1,252,906,618.03 | 5.289 | ||
TOTAL | 23,688,378,669.83 | 100.000 | ||
Kenneth L. Wolfe | ||||
Affirmative | 22,441,579,247.31 | 94.737 | ||
Withheld | 1,246,799,422.52 | 5.263 | ||
TOTAL | 23,688,378,669.83 | 100.000 |
* Denotes trust-wide proposals and voting results. |
53 Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Contrafund
Each year, typically in July, the Board of Trustees, including the independent Trustees (together, the Board), votes on the renewal of the management contract and sub advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and independent Trustees’ counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly each month except August and takes into account throughout the year matters bearing on Advisory Contracts. The Board, acting directly and through its separate committees, considers at each of its meetings factors that are relevant to the annual renewal of the fund’s Advisory Contracts, including the services and support provided to the fund and its shareholders by Fidelity. At the time of the renewal, the Board had 11 standing committees, each composed of independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision making by the Board. Each committee has adopted a written charter outlining the structure and purposes of the committee. One such com mittee, the Equity Contract Committee, meets periodically during the first six months of each year and as necessary to consider matters specifically related to the annual renewal of Advisory Contracts. The committee requests and receives information on, and makes recommendations to the independent Trustees concerning, the approval and annual review of the Advisory Contracts.
At its July 2005 meeting, the Board of Trustees, including the independent Trustees, unanimously determined to renew the Advisory Contracts for the fund. In reaching its determination, the Board considered all factors it believed relevant, including (1) the nature, extent, and quality of the services to be provided to the fund and its shareholders by Fidelity (including the investment performance of the fund); (2) the competitiveness of the management fee and total expenses of the fund; (3) the total costs of the services to be provided by and the profits to be realized by the investment adviser and its affiliates from the relationship with the fund; (4) the extent to which economies of scale would be realized as the fund grows; and (5) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders.
In determining whether to renew the Advisory Contracts for the fund, the Board ulti mately reached a determination, with the assistance of fund counsel and independent Trustees’ counsel, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity’s fidu ciary duty under applicable law. In addition to evaluating the specific factors noted above, the Board, in reaching its determination, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund’s shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its
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prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Nature, Extent, and Quality of Services Provided by Fidelity. The Board consid ered staffing within the investment adviser, FMR, and the sub advisers (together, the Investment Advisers), including the background of the fund’s portfolio manager and the fund’s investment objective and discipline. The independent Trustees also had discus sions with senior management of Fidelity’s investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Fidelity Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers’ invest ment staff, their use of technology, and the Investment Advisers’ approach to recruiting, training, and retaining portfolio managers and other research, advisory, and manage ment personnel. The Board considered Fidelity’s extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board noted that Fidelity’s analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board also considered that Fidelity’s portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund’s portfolio, as well as an electronic communication system that provides immediate real time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered the nature, extent, quality, and cost of administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund. The Board also considered the nature and extent of the Investment Advisers’ supervision of third party service providers, principally custodians and subcustodians. The Board reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of “soft” commission dollars to pay for research services. The Board also considered that Fidelity voluntarily decided in 2004 to stop using “soft” commission dollars to pay for market data and, instead, to pay for that data out of its own resources. The Board also considered the resources devoted to, and the record of compliance with, the fund’s compliance policies and procedures.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24 hour access to
55 Annual Report
Board Approval of Investment Advisory Contracts and Management Fees continued
account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund’s prospectus, without paying a sales charge. The Board noted that, since the last Advisory Contract renewals in July 2004, Fidelity has taken a number of actions that benefited particular funds, including (i) voluntarily deciding in 2004 to stop using “soft” commission dollars to pay for market data and, instead, to pay for that data out of its own resources, (ii) contractually agreeing to impose management fee reductions and expense limitations on its five Spartan stock index funds and its stock index fund available through variable insurance products, (iii) contractually agreeing to eliminate the management fees on the Fidelity Freedom Funds and the Fidelity Advisor Freedom Funds, (iv) contractually agreeing to reduce the management fees on most of its investment grade taxable bond funds, and (v) contractually agreeing to impose expense limitations on its retail and Spartan investment grade taxable bond funds.
Investment Performance and Compliance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund’s absolute investment performance, as well as the fund’s relative investment performance measured against (i) a broad based securities market index, and (ii) a peer group of mutual funds deemed appropriate by the Board over multiple periods. The following charts considered by the Board show, over the one , three , and five year periods ended December 31, 2004, the fund’s returns, the returns of a broad based securities market index (“benchmark”), and a range of returns of a peer group of mutual funds identified by Lipper Inc. as having an investment objec tive similar to that of the fund. The box within each chart shows the 25th percentile return (bottom of box) and the 75th percentile return (top of box) of the Lipper peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten number noted below each chart corresponds to the percentile box and represents the percentage of funds in the Lipper peer group whose performance was equal to or lower than that of the fund.
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![](https://capedge.com/proxy/N-CSR/0000795422-06-000011/contraannx57x1.jpg)
The Board reviewed the fund’s relative investment performance against its Lipper peer group and stated that the performance of the fund was in the first quartile for the one , three , and five year periods. The Board also stated that the relative investment perfor mance of the fund has compared favorably to its benchmark over time.
The Board also considered that the fund’s management fee is subject to upward or downward adjustment depending upon whether, and to what extent, the fund’s invest ment performance for the performance period exceeds, or is exceeded by, the record (over the same period) of a Board approved performance adjustment index. The Board realizes that the performance adjustment provides FMR with a strong economic incen tive to seek to achieve superior performance for the fund’s shareholders and helps to more closely align the interests of FMR and the fund’s shareholders.
The Board has had thorough discussions with FMR throughout the year about the Board’s and FMR’s concerns about equity research, equity fund performance, and compliance with internal policies governing gifts and entertainment. FMR has taken steps that it believes will refocus and strengthen equity research and equity portfolio management and compliance. The Board noted with favor FMR’s recent reorganization of its senior management team and FMR’s plans to dedicate additional resources to investment research, and participated in the process that led to those changes.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided by Fidelity will benefit the fund’s shareholders, particularly in light of the
57 Annual Report
Board Approval of Investment Advisory Contracts and Management Fees continued
Board’s view that the fund’s shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund’s management fee and total expenses compared to “mapped groups” of competitive funds and classes. Fidelity creates “mapped groups” by combining similar Lipper investment objective categories that have comparable management fee charac teristics. Combining Lipper investment objective categories aids the Board’s manage ment fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.
The Board considered two proprietary management fee comparisons for the 12 month periods shown in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the “Total Mapped Group” and, for the reasons explained above, is broader than the Lipper peer group used by the Board for performance comparisons. The Total Mapped Group comparison focuses on a fund’s standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. “TMG %” represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund’s. For example, a TMG % of 15% means that 85% of the funds in the Total Mapped Group had higher management fees than the fund. The “Asset Size Peer Group” (ASPG) comparison focuses on a fund’s standing relative to non Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile (“quadrant”) in which the fund’s management fee ranked and the impact of the fund’s performance adjustment, is also included in the chart and considered by the Board.
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The Board noted that the fund’s management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2004. The Board also noted the effect of the fund’s positive performance adjustment on the fund’s management fee ranking.
Based on its review, the Board concluded that the fund’s management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of the fund’s total expenses, the Board considered the fund’s management fee as well as other fund expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses, as well as the fund’s positive performance adjustment. As part of its review, the Board also considered current and historical total expenses of the fund compared to competitive fund median expenses. The fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that the fund’s total expenses ranked below its competitive median for 2004.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
59 Annual Report
Board Approval of Investment Advisory Contracts and Management Fees continued
Based on its review, the Board concluded that the fund’s total expenses were reasonable in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, market ing, distributing, managing, administering and servicing the fund and its shareholders. The Board also considered the level of Fidelity’s profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity’s profitability for the fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year’s methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board’s assessment of the results of Fidelity’s profitability analysis. PwC’s engagement includes the review and assessment of Fidelity’s methodologies used in determining the revenues and expenses attributable to Fidelity’s mutual fund business, and completion of agreed upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC’s reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity’s profitabil ity methodologies are reasonable in all material respects.
The Board has also reviewed Fidelity’s non fund businesses and any fall out benefits related to the mutual fund business as well as cases where Fidelity’s affiliates may benefit from or be related to the fund’s business. In addition, a special committee of the Board reviewed services provided to Fidelity by its affiliates and determined that the fees that Fidelity paid for such services were reasonable.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or
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expense reductions, including reductions that occur through operation of the transfer agent agreement. The transfer agent fee varies in part based on the number of accounts in the fund. If the number of accounts decreases or the average account size increases, the overall transfer agent fee rate decreases.
The Board recognized that the fund’s management contract incorporates a “group fee” structure, which provides for lower fee rates as total fund assets under FMR’s manage ment increase, and for higher fee rates as total fund assets under FMR’s management decrease. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity’s costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR’s management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Advisory Contracts, the Board requested additional information regarding (i) equity fund transfer agency fees; (ii) Fidelity’s fund profitability methodology and the impact of various changes in the methodology over time; (iii) benefits to shareholders from economies of scale; (iv) composition and characteristics of various fund and industry data used in comparisons; and (v) com pensation of portfolio managers and research analysts.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the existing advisory fee structures are fair and reasonable, and that the fund’s existing Advisory Contracts should be renewed.
61 Annual Report
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
![](https://capedge.com/proxy/N-CSR/0000795422-06-000011/contraannx62x1.jpg)
![](https://capedge.com/proxy/N-CSR/0000795422-06-000011/contraannx62x2.jpg)
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.
* 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 guar anteed 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.
Annual Report 62
To Write Fidelity
We’ll give your correspondence immediate attention and send you written confirmation upon completion of your request.
![](https://capedge.com/proxy/N-CSR/0000795422-06-000011/contraannx63x1.jpg)
(such as changing name, address, bank, etc.) Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0002 |
![](https://capedge.com/proxy/N-CSR/0000795422-06-000011/contraannx63x2.jpg)
Buying shares Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0003 Overnight Express Fidelity Investments Attn: Distribution Services 100 Crosby Parkway KC1H Covington, KY 41015 Selling shares Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0035 Overnight Express Fidelity Investments Attn: Distribution Services 100 Crosby Parkway KC1H Covington, KY 41015 General Correspondence Fidelity Investments P.O. Box 500 Merrimack, NH 03054-0500 |
![](https://capedge.com/proxy/N-CSR/0000795422-06-000011/contraannx63x3.jpg)
Buying shares Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0003 Selling shares Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0035 Overnight Express Fidelity Investments Attn: Distribution Services 100 Crosby Parkway KC1H Covington, KY 41015 General Correspondence Fidelity Investments P.O. Box 500 Merrimack, NH 03054-0500 |
63 Annual Report
Investment Adviser Fidelity Management & Research Company Boston, MA Investment Sub Advisers FMR Co., Inc. Fidelity Management & Research (U.K.) Inc. Fidelity Management & Research (Far East) Inc. Fidelity Investments Japan Limited Fidelity International Investment Advisors Fidelity International Investment Advisors (U.K.) Limited General Distributor Fidelity Distributors Corporation Boston, MA Transfer and Service Agent Fidelity Service Company, Inc. Boston, MA Custodian Brown Brothers Harriman & Co. Boston, MA |
The Fidelity Telephone Connection | ||
Mutual Fund 24-Hour Service | ||
Exchanges/Redemptions | ||
and Account Assistance | 1-800-544-6666 | |
Product Information | 1-800-544-6666 | |
Retirement Accounts | 1-800-544-4774 | |
(8 a.m. - 9 p.m.) | ||
TDD Service | 1-800-544-0118 | |
for the deaf and hearing impaired | ||
(9 a.m. - 9 p.m. Eastern time) | ||
Fidelity Automated Service | ||
Telephone (FAST®) (automated phone logo) | 1-800-544-5555 | |
(automated phone logo) Automated line for quickest service |
CON-UANN-0206 1.787729.102 |
Item 2. Code of Ethics
As of the end of the period, December 31, 2005, Fidelity Contrafund (the trust) has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its President and Treasurer and its Chief Financial Officer. A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
Item 3. Audit Committee Financial Expert
The Board of Trustees of the trust has determined that Marie L. Knowles is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Ms. Knowles is independent for purposes of Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services
(a) Audit Fees.
For the fiscal years ended December 31, 2005 and December 31, 2004, the aggregate Audit Fees billed by PricewaterhouseCoopers LLP (PwC) for professional services rendered for the audits of the financial statements, or services that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years, for the Fidelity Advisor New Insights Fund and Fidelity Contrafund (the funds) and for all funds in the Fidelity Group of Funds are shown in the table below.
Fund | 2005A | 2004A |
Fidelity Advisor New Insights Fund | $45,000 | $29,000 |
Fidelity Contrafund | $251,000 | $150,000 |
All funds in the Fidelity Group of Funds audited by PwC | $12,300,000 | $10,800,000 |
A | Aggregate amounts may reflect rounding. |
(b) Audit-Related Fees.
In each of the fiscal years ended December 31, 2005 and December 31, 2004 the aggregate Audit-Related Fees billed by PwC for services rendered for assurance and related services to each fund that are reasonably related to the performance of the audit or review of the fund's financial statements, but not reported as Audit Fees, are shown in the table below.
Fund | 2005A | 2004A |
Fidelity Advisor New Insights Fund | $0 | $0 |
Fidelity Contrafund | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended December 31, 2005 and December 31, 2004, the aggregate Audit-Related Fees that were billed by PwC that were required to be approved by the Audit Committee for services rendered on behalf of Fidelity Management & Research Company (FMR) and entities controlling, controlled by, or under common control with FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the funds ("Fund Service Providers") for assurance and related services that relate directly to the operations and financial reporting of each fund that are reasonably related to the performance of the audit or review of the fund's financial statements, but not reported as Audit Fees, are shown in the table below.
Billed By | 2005A | 2004A |
PwC | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
Fees included in the audit-related category comprise assurance and related services (e.g., due diligence services) that are traditionally performed by the independent registered public accounting firm. These audit-related services include due diligence related to mergers and acquisitions, accounting consultations and audits in connection with acquisitions, internal control reviews, attest services that are not required by statute or regulation and consultation concerning financial accounting and reporting standards.
(c) Tax Fees.
In each of the fiscal years ended December 31, 2005 and December 31, 2004, the aggregate Tax Fees billed by PwC for professional services rendered for tax compliance, tax advice, and tax planning for each fund is shown in the table below.
Fund | 2005A | 2004A |
Fidelity Advisor New Insights Fund | $2,400 | $2,100 |
Fidelity Contrafund | $3,400 | $3,200 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended December 31, 2005 and December 31, 2004, the aggregate Tax Fees billed by PwC that were required to be approved by the Audit Committee for professional services rendered on behalf of the Fund Service Providers for tax compliance, tax advice, and tax planning that relate directly to the operations and financial reporting of each fund is shown in the table below.
Billed By | 2005A | 2004A |
PwC | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
Fees included in the Tax Fees category comprise all services performed by professional staff in the independent registered public accounting firm's tax division except those services related to the audit. Typically, this category would include fees for tax compliance, tax planning, and tax advice. Tax compliance, tax advice, and tax planning services include preparation of original and amended tax returns, claims for refund and tax payment-planning services, assistance with tax audits and appeals, tax advice related to mergers and acquisitions and requests for rulings or technical advice from taxing authorities.
(d) All Other Fees.
In each of the fiscal years ended December 31, 2005 and December 31, 2004, the aggregate Other Fees billed by PwC for all other non-audit services rendered to the funds is shown in the table below.
Fund | 2005A | 2004A |
Fidelity Advisor New Insights Fund | $2,700 | $1,500 |
Fidelity Contrafund | $42,700 | $33,000 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended December 31, 2005 and December 31, 2004, the aggregate Other Fees billed by PwC that were required to be approved by the Audit Committee for all other non-audit services rendered on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund is shown in the table below.
Billed By | 2005A | 2004A |
PwC | $190,000 | $490,000 |
A | Aggregate amounts may reflect rounding. |
Fees included in the All Other Fees category include services related to internal control reviews, strategy and other consulting, financial information systems design and implementation, consulting on other information systems, and other tax services unrelated to the fund.
(e) (1) | Audit Committee Pre-Approval Policies and Procedures: |
The trust's Audit Committee must pre-approve all audit and non-audit services provided by the independent registered public accounting firm relating to the operations or financial reporting of the funds. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The trust's Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee's consideration of non-audit services by the audit firms that audit the Fidelity funds. The policies and procedures require that any non-audit service provided by a fund audit firm to a Fidelity Fund and any non-audit service provided by a fund auditor to a Fund Service Provider that relates directly to the operations and financial reporting of a Fidelity fund (Covered Service) are subject to approval by the Audit Committee before such service is provided. Non-audit services provided by a fund audit firm for a Fund Service Provider that do not relate directly to the operations and financial reporting of a Fidelity fund (Non-Covered Service) but that are expected to exceed $50,000 are also subject to pre-approval by the Audit Committee.
All Covered Services, as well as Non-Covered Services that are expected to exceed $50,000, must be approved in advance of provision of the service either: (i) by formal resolution of the Audit Committee, or (ii) by oral or written approval of the service by the Chair of the Audit Committee (or if the Chair is unavailable, such other member of the Audit Committee as may be designated by the Chair to act in the Chair's absence). The approval contemplated by (ii) above is permitted where the Treasurer determines that action on such an engagement is necessary before the next meeting of the Audit Committee. Neither pre-approval nor advance notice of Non-Covered Service engagements for which fees are not expected to exceed $50,000 is required; such engagements are to be reported to the Audit Committee monthly.
(e) (2) | Services approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X: |
Audit-Related Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended December 31, 2005 and December 31, 2004 on behalf of each fund.
There were no amounts that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended December 31, 2005 and December 31, 2004 on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund.
Tax Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended December 31, 2005 and December 31, 2004 on behalf of each fund.
There were no amounts that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended December 31, 2005 and December 31, 2004 on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund.
All Other Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended December 31, 2005 and December 31, 2004 on behalf of each fund.
There were no amounts that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended December 31, 2005 and December 31, 2004 on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund.
(f) Not applicable.
(g) For the fiscal years ended December 31, 2005 and December 31, 2004, the aggregate fees billed by PwC of $3,600,000A and $2,700,000A for non-audit services rendered on behalf of the funds, FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and Fund Service Providers relating to Covered Services and Non-Covered Services are shown in the table below.
2005A | 2004A | |
Covered Services | $250,000 | $550,000 |
Non-Covered Services | $3,350,000 | $2,150,000 |
A | Aggregate amounts may reflect rounding. |
(h) The trust's Audit Committee has considered Non-Covered Services that were not pre-approved that were provided by PwC to Fund Service Providers to be compatible with maintaining the independence of PwC in its audit of the funds, taking into account representations from PwC, in accordance with Independence Standards Board Standard No.1, regarding its independence from the funds and their related entities.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Schedule of Investments
Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may recommend nominees to the trust's Board of Trustees.
Item 11. Controls and Procedures
(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the trust's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(a)(ii) There was no change in the trust's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the trust's internal control over financial reporting.
Item 12. Exhibits
(a) | (1) | Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE ETH. |
(a) | (2) | Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. |
(a) | (3) | Not applicable. |
(b) | Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Fidelity Contrafund
By: | /s/Christine Reynolds |
Christine Reynolds | |
President and Treasurer | |
Date: | February 17, 2006 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/Christine Reynolds |
Christine Reynolds | |
President and Treasurer | |
Date: | February 17, 2006 |
By: | /s/Paul M. Murphy |
Paul M. Murphy | |
Chief Financial Officer | |
Date: | February 17, 2006 |