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Fidelity® Contrafund® K FCNKX

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Fidelity's Equity Division Comes Under Fire; Parent Rating Remains Intact

Analyst Note

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Reports of sexual harassment and a hostile work environment have roiled Fidelity's equity division, as first reported by The Wall Street Journal. The turmoil has led to the departures of a few portfolio managers, including Gavin Baker of Fidelity OTC FOCPX. Morningstar is monitoring the situation. For now Fidelity retains its Positive Parent rating. While the reported issues within Fidelity's equity division are disturbing, it's encouraging that the firm has parted ways with some of the alleged offenders and that CEO Abby Johnson has conveyed a zero-tolerance attitude for future offenses. What's more, the Parent rating encompasses Fidelity's entire fund complex and weighs the positive and negative aspects across asset classes. The fixed-income division, based largely in Merrimack, New Hampshire, embraces a team-oriented, risk-aware investment culture that's made it one of the industry's best. Fidelity's cost-conscious index offerings and reasonable lineup of target-date funds are other bright spots. Plus, Fidelity's equity division has made strides in recent years by more thoughtfully considering manager transitions and embracing a career analyst track to boost experience.

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