By Beth Healy Globe Staff

Fidelity Investments said Friday its operating income dropped 29 percent last year, to $2.3 billion, as revenues slipped and expenses rose.

The Boston-based mutual fund giant, in its annual report, said its revenues fell 1 percent to $12.6 billion, despite a year of strong gains in the markets. Chairman Edward C. Johnson III said in his annual letter that revenues were hurt by investors continuing to move out of the firm’s stock funds. He also said “extremely low” interest rates, price pressures and lower trading volumes by customers affected revenues.

Fidelity’s total assets under management increased 9.5 percent to $1.67 trillion.

Johnson said that “Although we kept a tight rein on core operation spending,” total operating expenses rose nine percent to $10.3 billion, due to a number of strategic investments and related hiring.

The firm said its stock fund performance improved in the year, with funds beating 74 percent of their peers, up from 53 percent in 2011.

Beth Healy can be reached at bhealy@globe.com.