Net income of US$1.18 billion (euro900 million) was down US$147.5 million (euro112.43 million) from 2005, the privately held company said in its annual report.

“Growth stocks, in which many Fidelity funds had a large exposure, performed poorly,” Chairman and CEO Edward C. Johnson III said in the report. “This pulled down several funds, including Contrafund and Magellan, our two largest domestic equity portfolios.”

The company continued to grow in India and launched new operations in the North African nation of Tunisia.

In the United States, Fidelity opened a new regional center in Florida and announced future expansions in Rhode Island, North Carolina and near Cincinnati.

Fidelity’s 2006 revenue rose 16 percent to US$12.8 billion (euro9.76 billion) — a new high — from US$11.1 billion (euro8.46 billion) in 2005.

Fidelity’s average assets under management last year were US$1.3 trillion (euro990 mrillion), up 14 percent from the prior year. The Boston-based company had nearly US$3 trillion (euro2.29 trillion) in administered assets, up 19 percent from the year before.

The company added research analysts for its core funds, and at its Pyramis Global Advisors, a new division that focuses on institutional clients. In October, the company launched a new initiative — myPlan — to recruit investors into retirement plans.

Fidelity in December agreed to pay US$42 million (euro32 million) to funds affected by allegations that its traders improperly steered business to brokerage firms that gave them travel, entertainment, gifts and gratuities.

The company said, however, that an independent investigation failed to unearth evidence to prove or disprove unethical conduct. It also agreed to make comparable distributions to institutional accounts.

Fidelity added 5,000 employees in 2006, bringing the total number of workers to 41,900.

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