The top 5 holdings of this fund are Facebook (FB, 11.45% of assets); Alphabet (GOOGL, 6.46%); Gilead Sciences (GILD, 5.14%); Apple (AAPL, 2.84%) and Amazon (AMZN, 2.71%).
Fidelity Growth Discovery (FDSVX)
From Moneyletter
The original name of Fidelity Growth Discovery (FDSVX) was Fidelity Contrafund II. This fund was launched when Fidelity closed the original Contrafund to new investors at the end of March 1998.The subsequently renamed Growth Discovery gained Jason Weiner as its manager in February 2007, and with him in charge it has outperformed its peers and benchmarks over most time periods.
In 2015 the fund returned 7.16% compared to 5.09% for the Russell 3000 Growth Index, 1.38% for S&P 500, and 3.60% for Morningstar’s large growth category. Over longer time periods, the fund has ranked within the top 20% of its category in trailing three-, five-, and ten-year returns.
The fund has a flexible strategy, meaning it can invest in companies of any size, and can also look beyond the US for investment opportunities. Over the years, the fund has definitely tipped strongly toward large-cap investments. Most recently, 73% of assets were invested in large firms, with 19% in mid-caps, and the remainder in small issues. Domestic stocks accounted for 83% of assets, with 11% in non-US fare, and the remainder in cash. The non-US portion was diversified between Europe, Canada, Asia-Pacific (ex-Japan), Japan, and emerging markets.
Weiner has used a consistent approach during his tenure with the fund. Based on the premise that, historically, stock prices have followed earnings growth, Weiner says, “The heart of my investment philosophy is my belief that companies that can grow earnings faster than the market average should outperform over time. I employ a bottom-up, stock-by-stock approach aimed at identifying what I consider the best of the best: the fast growers, usually industry leaders or companies with business models or product innovations that reinforce their earnings growth.” He is looking for rewards from stocks via earnings growth and P/E expansion.
The fund is overweight the technology sector, but its consumer discretionary and health care stakes are below that of the Russell 3000 Growth Index. Facebook is far and away the largest holding—and Weiner bought the stock when it was shrouded in doubt and controversy, after “it botched its IPO [initial public offering].” Weiner bought after the May 2012 IPO, after the stock had declined significantly. Facebook has been a major contributor to fund performance since, and gained 34% this past year.
Other strong performers within the top ten holdings in 2015 included number two holding Alphabet (parent of Google), Amazon.com, Starbucks, and Avago Technologies (semiconductor products). Among these, the big winner is Amazon, which more than doubled during 2015.
In the fund’s June annual report, Weiner noted that the fund’s turnover rate (representing frequency of holdings that have changed over a year) continues to decrease (recently 51%), and is trending near its historical low. He notes, “I think it’s fair to say that lower turnover is an expression of the high conviction I have in my stock choices.”
Walter Frank, Moneyletter, www.moneyletter.com, 800-890-9670, January 2016