Fidelity’s Net Income Increases 20% in ’05

Fidelity Investments said Thursday that its 2005 profit grew 20% to $1.3 billion, even though the nation’s largest mutual fund manager fell far behind rivals in drawing new investors.

The privately held company has diversified in recent years by adding new businesses beyond its core mutual funds, and the financial numbers it included in its annual report showed several bright spots in non-core areas. For example, assets that Fidelity administers in brokerage and retirement accounts increased 17% from the previous year, with overall assets under management rising 9% to $1.2 trillion.

Fidelity’s net income grew to $1.33 billion last year from $1.11 billion in 2004, the second-biggest annual profit for the company. Fidelity’s 2005 revenue rose 10% to $11.1 billion -- the highest since 2001’s record year -- from $10.1 billion in 2004.

But recent years’ mediocre performance for some of Fidelity’s top funds -- such as its once-stellar Magellan Fund -- have enabled rivals to surpass Fidelity in attracting new investors.