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Associated Press

BOSTON – said Thursday its operating profit rose 5 percent last year compared with 2008, and the nation’s largest mutual fund company also saw fund performance improve.

Fidelity is privately held and doesn’t report quarterly financial numbers. But the company said in its annual report that its operating income last year was $2.51 billion, excluding interest expenses and taxes.

One of its major operations is located in Research Triangle Park, N.C.

That’s up from $2.39 billion in 2008, when sharply declining markets eroded the value of assets that Fidelity and rival fund companies manage and rely on for fee income. A market turnaround helped lift results last year.

In a letter to shareholders, Fidelity CEO and Chairman Edward "Ned" Johnson III said more than half of last year’s profit increase came from the company’s distribution operations, which offer investment products to Fidelity clients, including those from other fund companies.

Fidelity reported a nearly 11 percent decline in revenue last year, to $11.48 billion. The drop came as Fidelity cut thousands of jobs the past couple years, reducing its work force to about 37,000 from a peak of more than 46,000 in 2007.

Fidelity said its mutual funds performed better than 74 percent of their competitors last year, up from 56 percent in 2008. The improvement was biggest at Fidelity’s stock funds, which beat two-thirds of their peers, up from just over one-third the year before.

Fidelity’s fund performance has been spotty in recent years, and the company has faced growing competitive challenges from Vanguard Group and Capital Group’s American Funds.

At the end of last year, Fidelity managed $1.5 trillion in assets. That’s up nearly 21 percent from year-end 2008, when assets fell sharply from the previous year as falling market eroded asset values.

Total administered assets also were up more than 20 percent last year, to $3.2 trillion, due both to market gains and new money flowing in. Administered assets includes money for which Fidelity performs record-keeping and other administrative services.

Fidelity has recently accelerated its shift into areas outside its core fund operations, such as individual retirement planning, employee benefit management and brokerage operations.

Johnson, who is 79, has held the CEO and chairman titles at Fidelity since 1977. His family owns a 49 percent stake in the company, with key employees owning the rest.