Fidelity Contrafund Fund

Fund Overview

Crisis sometimes breeds opportunity, and that old maxim is especially true when it comes to the Fidelity Contrafund. It was big news in the mutual fund world in late 2008 when Fidelity decided to reopen the renowned fund to new investors after its portfolio was battered during the economic downturn.

As of April 04, 2012, the fund has assets totaling $84.05 billion. Its portfolio consists primarily of stocks in well-known companies.

Lately, the fund has been heavy on blue-chip household names. This is indicative of the defensive strategy it assumed during the downturn. The strategy helped the fund minimize losses as the market bottomed, but it also hampered returns when riskier parts of equity markets flourished in 2009. Contrafund's lack of opportunistic shifts during this period stems in part from its still-large size, which can make short-term movements difficult. Manager Will Danoff has fairly large positions in Google, Apple, and Berkshire Hathaway, but as of  the end of the first quarter, the fund's eight percent cash position demonstrates a defensive mood. The fund has returned 9.40 percent over the past year and 22.85 percent over the past three years.

Contrafund boasts a long record of steady gains. Over the years, it's been able to perform well even as its assets ballooned. In 2006, its swelling size caused management to shut its doors to new investors, but during the downturn, redemptions and shrinking assets brought assets down to a more reasonable level. The fund has returned 5.18 percent over the past five years and 8.15 percent over the past decade.

Investment Strategy

The fund tends to hold growth stocks with strong fundamentals. Says Morningstar, "[Manager William] Danoff's strategy has always been to invest where there are real, tangible sings of improvement." The fund prefers large-cap companies that are big enough to handle its asset base, but it also has what Morningstar calls a "substantial stake" in mid-caps. Meanwhile, its size has also prompted it to overlook short-term movements in favor of strong long-term picks.

Role in Portfolio

Morningstar calls it a "core" holding.

Fund Opinion

The fund appears on the 2011 "Kiplinger 25" list of the best no-load mutual funds.

Kiplinger 25 2011-04-13

In the April 2010 edition of Morningstar's Fund Family Reports, Chris Davis says, "After the speculative flurry subsided in 2003, the fund got back in the saddle, topping its rivals handsomely between 2004 and 2007 as the rally matured, while holding up relatively well in the 2008 crash. Should the economic recovery continue apace, I don’t see why Contrafund can’t repeat that feat."

Morningstar 2010-06-02

The fund's Value Line Overall Rank, a measure of risk-adjusted performance and relative growth in fund returns, is 1 on a scale of 1 to 5, with 1 being the best and 5 the worst.

Value Line 2012-03-09

Management

William Danoff has been in charge since 1990. He's known for his steady hand, obsessive and comprehensive use of Fidelity's deep research bench, and ability to weather bear markets more successfully than the competition.

In the annual Lipper/Barron's Fund Families Survey for 2010, Fidelity ranks 33rd out of 57 fund families surveyed.

Lipper

Morningstar gives this fund a stewardship rating of C on a scale of A to F, saying, "This fund has some good things going for it on the stewardship front, including low fees, a manager with skin in the game, and a generally attractive culture. However, other factors, including an insufficiently independent board, keep its overall grade from being higher."

Morningstar 2011-04-06

In the September 2010 edition of Fidelity Insight, John Bonnanzio says, "Throughout Will's career on Contra, we've known him to be an excellent steward of his shareholder's money."

2010-09-14

Performance

The fund has returned 9.40 percent over the past year, 22.85 percent over the past three years, 5.18 percent over the past five years, and 8.15 percent over the past decade.

Hypothetical Growth of $10,000

Updated 03.31.2012

Morningstar's Chris Davis writes, "September 2010 marked Will Danoff's 20th anniversary at the helm of Fidelity Contrafund. It's a feat worth celebrating not solely because of the length of Danoff's tenure but also his tremendous success: The fund's 12.8% annualized return since his start smokes the 8.8% return posted by the S&P 500 Index."

Morningstar 2011-01-04

In the October 2009 edition of Fidelity Insight, Eric M. Kobren says, "It's important to remember that Contra is somewhat more defensively positioned than Fidelity's more tech-heavy growth funds. It will likely lag them a bit when stocks are really running (but fare better when the market is less kind)."

2010-01-26

The fund's Value Line Growth Persistence rank, which awards funds that consistently outperform their broad universes, is 2 for one year, 2 for five years, and 1 for 10 years. Scores are on a 1 to 5 scale, with 1 being the best and 5 the worst.

Value Line 2012-03-09

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Holdings

The fund primarily invests in large, blue-chip companies that show room for growth. It tends to hold stocks for the long term.

Asset Allocation

	% Long	% Net
Cash	3.25	3.25
Stocks	82.93	82.93
Bonds	0.11	0.11
Other	0.0	0.0
Foreign Bonds	0.05	0.05
Foreign Stocks	13.59	13.59
Convertible	0.0	0.0
Preferred	0.07	0.07

Updated 02.29.2012

Top Holdings

Performance as of 03.31.2012

Portfolio as of 02.29.2012

	Ticker	YTD Return %	% Net Assets
Apple, Inc.	AAPL	52.75	9.43
Google, Inc. Class A	GOOG	0.16	4.61
Berkshire Hathaway Inc Class A	BRK.A	6.92	2.99
McDonald's Corporation	MCD	-1.27	2.77
Coca-Cola Co	KO	6.69	2.42

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Fees

Fidelity Contrafund has an expense ratio of 0.81 percent.

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Risk

Like any stock fund, this one comes with some risks. Morningstar says that this fund has "below average" risk overall.

The fund's Value Line Risk Rank, a measure of volatility, is 2 on a scale of 1 to 5, with 1 being the least volatile and 5 the most.

Value Line 2012-03-09

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