Fidelity Contrafund Commingled Pool

QUARTERLY REVIEW | AS OF DECEMBER 31, 2022

Fidelity? Contrafund? Commingled Pool

Investment Approach

? Fidelity? Contrafund? Commingled Pool is an opportunistic, diversified equity strategy with a large-cap growth bias.

? Philosophically, we believe stock prices follow companies' earnings, and those companies that can deliver durable multiyear earnings growth provide attractive investment opportunities.

? As a result, our investment approach seeks companies we believe are poised for sustained, above-average earnings growth that is not accurately reflected in the stocks' current valuation.

? In particular, we emphasize companies with "best-of-breed" qualities, including those with a strong competitive position, high returns on capital, solid free cash flow generation and management teams that are stewards of shareholder capital.

? We strive to uncover these investment opportunities through in-depth bottom-up, fundamental analysis, working in concert with Fidelity's global research team.

PERFORMANCE SUMMARY

Cumulative

3 Month

YTD

1 Year

Annualized

3 Year

5 Year

10 Year/ LOP1

Fidelity Contrafund Commingled Pool Gross Expense Ratio: 0.43% 2

4.62% -27.19% -27.19% 6.03% 8.91% 10.50%

S&P 500 Index

7.56% -18.11% -18.11% 7.66% 9.42% 10.66%

1 Life of Pool (LOP) if performance is less than 10 years. Pool inception date: 01/17/2014. 2 This expense ratio is from the most recent annual report.

Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate; therefore, you may have a gain or loss when you sell your holdings. Current performance may be higher or lower than the performance stated. To learn more or to obtain the most recent month-end performance visit or call your plan's toll free number. Cumulative total returns are reported as of the period indicated.

The Fidelity Contrafund Commingled Pool is a collective investment trust under the Fidelity Group Trust for Employee Benefit Plans and is managed by Fidelity Management Trust Company (FMTC). It is not a mutual fund. This information is only intended to provide a brief overview of this investment option, which is available only to certain qualified plans and is not offered to the general public. Investments in the pool are not guaranteed by the manager, the plan sponsor or insured by the FDIC.

For definitions and other important information, please see the Definitions and Important Information section of this Quarterly Review.

Manager: William Danoff

Start Date: January 17, 2014

Size (in millions): $32,725.46 The value of the fund's domestic and foreign investments will vary from day to day in response to many factors. Stock values may fluctuate in response to the activities of individual companies, and general market and economic conditions, and the value of an individual security or particular type of security can be more volatile than, or can perform differently from, the market as a whole. Investments in foreign securities involve greater risk than U.S. investments, including increased political and economic risk, as well as exposure to currency fluctuations. You may have a gain or loss when you sell your units.

Not FDIC Insured ? May Lose Value ? No Bank Guarantee

QUARTERLY REVIEW: Fidelity? Contrafund? Commingled Pool | AS OF DECEMBER 31, 2022

Performance Review

The pool gained 4.62% for the quarter, lagging the 7.56% advance of the benchmark S&P 500? index. U.S. stocks staged a rally in Q4, as slowing inflation raised hopes at the end of a tumultuous year that recorded steep capital market declines. The Federal Reserve further tightened monetary policy, and the U.S. and global economies faced rising risk of recession. Against this dynamic backdrop, the pool's focus on fast-growing, "best-of-breed" firms detracted from performance versus the benchmark, which was largely driven by value stocks and defensive sectors .

In the fourth quarter, the Fed continued its more-restrictive policy stance and hiked its benchmark rate two times ? by 75 basis points (0.75%) in early November and a stepped-down 50 basis points (0.50%) in mid-December ? while taking substantive steps to shrink its massive asset portfolio.

Stocks opened the quarter with a sharp reversal, as the S&P 500? gained 8.10% in October, driven by optimism on inflation and policy easing. November (+5.59%) began with another rate hike and ended on a high note as the Fed signaled its intent to slow its pace of rate rises. The central bank, in its December forecast, again signaled plans to end its hiking cycle in 2023 amid lower inflation and higher unemployment. As of year-end, market expectations project a lower inflation rate and higher unemployment rate in 2023, with a Fed pivot toward easing policy in the second half of the year.

For the quarter, value shares handily outperformed growth, while larger-cap stocks surpassed small-caps. Looking at sectors, energy gained 23% to lead the way, benefiting from elevated prices for oil and gas. Industrials (+19%) and materials (+15%) also stood out. In contrast, the growth-oriented consumer discretionary and communication services sectors returned -10% and -1%, respectively, hampered by selling pressure among high-growth and tech-related names. Information technology, the largest sector in the index for the quarter, gained about 5% in Q4, due in part to strength among semiconductor-related companies.

The pool's relative shortfall the past three months largely reflects weak security selection in these lagging groups, especially among tech-related names. Our stock picks in health care and energy also hurt. The biggest individual relative detractor was . The stock returned roughly -26% the past three months, declining after the online retailer provided a disappointing financial forecast for the holiday quarter.

Overall, Amazon's Q3 sales and earnings were roughly in line with consensus expectations, but revenue growth for AWS did not meet the 32% increase Wall Street had anticipated. In Q4, we modestly reduced our commitment to Amazon because it did not generate free cash flow, but we consider it a very well-run company. Amazon ended the year as our No. 5 holding and a notable overweight.

In communication services, our sizable stake in Meta Platforms returned roughly -11% in the fourth quarter, falling sharply on October 27 after the parent of Facebook and Instagram reported disappointing quarterly financial results that reflected a continued pullback in ad spending. Revenue declined for the second quarter in a row, while net profit declined for the fourth consecutive quarter. In November, Meta said it would cut roughly 11,000 workers. Although Meta is categorized within media & entertainment, we see it as a leading, founder-led tech company that has generated healthy operating margins and free cash flow. We added to the pool's commitment to Meta because its valuation is attractive relative to its expected rebound in free cash flow next year. It was our No. 4 holding at year-end and our third-largest overweight.

The pool's position in Google parent Alphabet returned about -8% and detracted. In October, Alphabet reported weaker-thanexpected third-quarter revenue and earnings, hurt especially by declining year-over-year advertising revenue for its YouTube platform. On a brighter note, the Google Cloud business grew at a rapid clip, but it's still a small component of overall revenue. We reduced exposure to Alphabet the past three months, but as of yearend it was the pool's No. 9 holding and a notable overweight.

In contrast, the top relative contributor was an underweight in shares of electric-vehicle maker Tesla (-54%). In October, the company reported mixed financial results for the third quarter, but investors seemed to focus on how demand will hold up if the global economy heads into recession, the potential for production disruption, and CEO Elon Musk's takeover of Twitter. The stock was too expensive for us, thus the pool held only a negligible position as of year-end.

The pool's large holding in Berkshire Hathaway gained roughly 15% the past three months, as operating profit rose 20% in third quarter, driven by higher investment income. Berkshire was the pool's top position and overweight as of year-end.

LARGEST CONTRIBUTORS VS. BENCHMARK

Holding

Market Segment

Average Relative Relative Contribution Weight (basis points)*

Tesla, Inc.

Consumer Discretionary

-1.51%

135

Berkshire Hathaway, Inc. Class A

Financials

5.60%

42

Apple, Inc.

Information Technology

-2.22%

30

Netflix, Inc.

Communication Services

0.90%

14

Eli Lilly & Co.

Health Care

1.83%

10

* 1 basis point = 0.01%.

LARGEST DETRACTORS VS. BENCHMARK

Holding

Market Segment

Average Relative Relative Contribution Weight (basis points)*

, Inc.

Consumer Discretionary

2.20%

-89

Meta Platforms, Inc. Class Communication

A

Services

3.45%

-75

Alphabet, Inc. Class A

Communication Services

1.12%

-20

Procter & Gamble Co. Consumer Staples -1.02%

-13

Broadcom, Inc.

Information Technology

-0.62%

-11

* 1 basis point = 0.01%.

2 | For definitions and other important information, please see Definitions and Important Information section of this Quarterly Review.

QUARTERLY REVIEW: Fidelity? Contrafund? Commingled Pool | AS OF DECEMBER 31, 2022

Outlook and Positioning

Aggressive monetary tightening by the world's major central banks continued in the fourth quarter, bringing global short-term interest rates to their highest level in more than a decade. After an abrupt rise through September, bond yields held steady in the final three months of the year amid signs that rapid inflationary pressure was coming off the boil. For companies, profit growth and margins remain strong, despite rising costs.

Labor markets showed signs of cooling late in the year. Job openings dropped from all-time highs, although there remained many more unfilled openings than unemployed workers. We believe several long-term trends may keep labor conditions tighter than usual, including demographic factors, such as slower growth in working-age population and aging demographics that lead to a lower labor-force participation rate. Strong employment markets boosted nominal wage growth to a multidecade high, but wage gains slowed toward the end of the year.

Entering 2023, we believe the U.S. is in the late-cycle expansion phase, with rising likelihood that recession may be on the horizon. The Fed is closer to the end than the beginning of its hiking cycle, but global monetary tightening has dampened liquidity and heightened risk. The markets appear overly optimistic about how quickly and painlessly the Fed can pivot to easing monetary policy.

Looking ahead, we believe that slower growth in liquidity, persistent inflation risk, slowing growth momentum and greater uncertainty related to monetary policy raise the odds that volatility will remain elevated in 2023. Markets already reflect some of these challenging dynamics, in the form of much more attractive valuations.

Due to price depreciation and stock sales, the pool's exposure to the tech and communication services sectors fell to 32% at year-end, from 35% on September 30 and about 50% at the start of 2022. In Q4, we reduced overweights in longtime holdings Adobe and because valuations for each became stretched amid the euphoria of last year's work-from-anywhere trend. Both are wellrun companies and important holdings. We remain bullish on big tech-related firms, including founder-led firms Meta and Amazon, because they are very profitable, have grown at above-average rates, and operate in large and expanding markets ? advantages that make them attractive even if growth slows modestly.

Amid consistently high oil prices this quarter, we modestly increased our commitment to the energy sector, where earnings and freecash-flow estimates jumped sharply. The pool's allocation to energy rose to 7% of assets, from roughly 6% as of September 30, as we added to positions in Exxon Mobil, Chevron and ConocoPhillips. The pool's allocation to the health care sector, which includes many high-margin, innovative biotech and pharmaceutical companies that were less vulnerable to a slowing economy, was slightly higher at year-end, representing about 18% of assets. Here, we notably raised our position in health and insurance services provider Cigna, as well as drugmakers Merck and Regeneron Pharmaceuticals.

Looking ahead to 2023, we see a tremendous opportunity to analyze the thousands of firms in the market and try to determine which will emerge as bigger and more valuable in a few years. Based on the uncertain outlook, we favor profitable companies with a strong balance sheet and free-cash-flow generation, a leading and growing market share, and an experienced management team. Therefore, the pool's tilt toward more-defensive holdings feels right to us at year-end. Thank you for your confidence in Contrafund and for your patience during difficult market conditions in 2022.

MARKET-SEGMENT DIVERSIFICATION

Market Segment Information Technology Health Care Financials Communication Services Consumer Discretionary Energy Industrials Consumer Staples Materials Utilities Real Estate Other

Index Pool Weight Weight

Relative Weight

Relative Change From Prior Quarter

20.76% 18.47% 15.20%

25.74% 15.82% 11.66%

-4.98% 2.65% 3.54%

-1.17% 0.41% 1.11%

11.26%

7.28%

3.98%

-0.22%

9.24% 7.14% 5.34% 3.70% 3.62% 0.43% 0.10% 0.00%

9.80% 5.23% 8.65% 7.20% 2.73% 3.18% 2.71% 0.00%

-0.56% 1.91% -3.31% -3.50% 0.89% -2.75% -2.61% 0.00%

-0.15% 0.78% -0.09% -0.38% 0.25% -0.21% -0.05% 0.00%

CHARACTERISTICS

Valuation Price/Earnings Trailing Price/Earnings (IBES 1-Year Forecast) Price/Book Price/Cash Flow Return on Equity (5-Year Trailing) Growth Sales/Share Growth 1-Year (Trailing) Earnings/Share Growth 1-Year (Trailing) Earnings/Share Growth 1-Year (IBES Forecast) Earnings/Share Growth 5-Year (Trailing) Size Weighted Average Market Cap ($ Billions) Weighted Median Market Cap ($ Billions) Median Market Cap ($ Billions)

Pool

20.1x 17.4x 3.6x 12.9x 17.4%

27.0% -2.8% 3.2% 27.4%

429.6 281.1 40.9

Index

19.4x 17.0x 3.9x 13.8x 17.7%

19.8% 7.0% 4.5% 19.3%

412.6 150.4 29.6

3 | For definitions and other important information, please see Definitions and Important Information section of this Quarterly Review.

QUARTERLY REVIEW: Fidelity? Contrafund? Commingled Pool | AS OF DECEMBER 31, 2022

LARGEST OVERWEIGHTS BY HOLDING

Holding

Market Segment

Berkshire Hathaway, Inc. Class A

Financials

UnitedHealth Group, Inc.

Health Care

Meta Platforms, Inc. Class A Communication Services

Regeneron Pharmaceuticals, Inc.

Health Care

Eli Lilly & Co.

Health Care

Relative Weight

6.08% 4.40% 3.77% 1.98% 1.89%

LARGEST UNDERWEIGHTS BY HOLDING

Holding Apple, Inc. Procter & Gamble Co. Tesla, Inc. Johnson & Johnson Pfizer, Inc.

Market Segment Information Technology Consumer Staples Consumer Discretionary Health Care Health Care

Relative Weight

-2.05% -1.11% -1.02% -0.99% -0.83%

10 LARGEST HOLDINGS

Holding

Market Segment

Berkshire Hathaway, Inc. Class A

Financials

UnitedHealth Group, Inc. Microsoft Corp. Meta Platforms, Inc. Class A , Inc.

Health Care Information Technology Communication Services Consumer Discretionary

Apple, Inc.

Information Technology

Eli Lilly & Co.

Health Care

Regeneron Pharmaceuticals, Inc.

Health Care

Alphabet, Inc. Class A

Communication Services

Amphenol Corp. Class A

10 Largest Holdings as a % of Net Assets

Information Technology 40.21%

Total Number of Holdings

331

The 10 largest holdings are as of the end of the reporting period, and may not be representative of the pool's current or future investments. Holdings do not include money market investments.

ASSET ALLOCATION

Asset Class

Index Pool Weight Weight

Relative Weight

Relative Change From Prior Quarter

Domestic Equities

89.34% 100.00% -10.66% 0.13%

International Equities 5.91%

0.00%

5.91%

0.16%

Developed Markets

5.11%

0.00%

5.11%

0.10%

Emerging Markets 0.80%

0.00%

0.80%

0.06%

Tax-Advantaged Domiciles

0.00%

0.00%

0.00%

0.00%

Bonds

0.01%

0.00%

0.01%

0.00%

Cash & Net Other Assets

4.74%

0.00%

4.74%

-0.29%

Net Other Assets can include pool receivables, pool payables, and offsets to other derivative positions, as well as certain assets that do not fall into any of the pool composition categories. Depending on the extent to which the pool invests in derivatives and the number of positions that are held for future settlement, Net Other Assets can be a negative number.

3-YEAR RISK/RETURN STATISTICS

Beta Standard Deviation Sharpe Ratio Tracking Error Information Ratio R-Squared 3 years of data required.

Pool 0.99 21.69% 0.25 5.80% -0.28 0.93

Index 1.00 21.16% 0.33

----

4 | For definitions and other important information, please see Definitions and Important Information section of this Quarterly Review.

QUARTERLY REVIEW: Fidelity? Contrafund? Commingled Pool | AS OF DECEMBER 31, 2022

Definitions and Important Information

Information provided in this document is for informational and educational purposes only. To the extent any investment information in this material is deemed to be a recommendation, it is not meant to be impartial investment advice or advice in a fiduciary capacity and is not intended to be used as a primary basis for you or your client's investment decisions. Fidelity, and its representatives may have a conflict of interest in the products or services mentioned in this material because they have a financial interest in, and receive compensation, directly or indirectly, in connection with the management, distribution and/or servicing of these products or services including Fidelity funds, certain third-party funds and products, and certain investment services.

CHARACTERISTICS Earnings-Per-Share Growth measures the growth in reported earnings per share over the specified past time period.

Median Market Cap identifies the median market capitalization of the pool or benchmark as determined by the underlying security market caps.

Price-to-Book (P/B) Ratio is the ratio of a company's current share price to reported accumulated profits and capital.

Price/Cash Flow is the ratio of a company's current share price to its trailing 12-months cash flow per share.

Price-to-Earnings (P/E) Ratio (IBES 1-Year Forecast) is the ratio of a company's current share price to Wall Street analysts' estimates of earnings.

Price-to-Earnings (P/E) Ratio Trailing is the ratio of a company's current share price to its trailing 12-months earnings per share.

Return on Equity (ROE) 5-Year Trailing is the ratio of a company's last five years historical profitability to its shareholders' equity. Preferred stock is included as part of each company's net worth.

Sales-Per-Share Growth measures the growth in reported sales over the specified past time period.

Weighted Average Market Cap identifies the market capitalization of the average equity holding as determined by the dollars invested in the pool or benchmark.

Weighted Median Market Cap identifies the market capitalization of the median equity holding as determined by the dollars invested in the pool or benchmark.

IMPORTANT POOL INFORMATION

Relative positioning data presented in this commentary is based on the pool's primary benchmark (index) unless a secondary benchmark is provided to assess performance.

INDICES It is not possible to invest directly in an index. All indices represented are unmanaged. All indices include reinvestment of dividends and interest income unless otherwise noted.

S&P 500 Index is a market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry

group representation to represent U.S. equity performance.

MARKET-SEGMENT WEIGHTS Market-segment weights illustrate examples of sectors or industries in which the pool may invest, and may not be representative of the pool's current or future investments. They should not be construed or used as a recommendation for any sector or industry.

RELATIVE WEIGHTS Relative weights represents the % of pool assets in a particular market segment, asset class or credit quality relative to the benchmark. A positive number represents an overweight, and a negative number is an underweight. The pool's benchmark is listed immediately under the pool name in the Performance Summary.

5 |

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download