Domestic Equity - Fidelity Investments
Domestic equity
Fundamentals for investors
? 2023 FMR LLC. All rights reserved.
Equity mutual funds provide growth potential often necessary for you to achieve your long-term investment goals. And, if you don't own equities, your portfolio may be missing out.
Not FDIC Insured ? May Lose Value ? No Bank Guarantee
Opportunities for building wealth
Historically, equities have been one of the best ways to build wealth, outpacing bonds or short-term investments, albeit with greater price volatility. Yet many investors are wary of equities, either underinvesting in the asset class or jumping in and out of the market--often at the wrong time. In either case, investors may be missing opportunities.
EQUITIES: MORE GROWTH THAN BONDS OR CASH OVER THE LONG TERM
$1,000,000 $800,000 $600,000 $400,000
Stocks
? Bonds ? 30-Day T-Bill ?? Inflation
Stick with stocks for long-term growth potential. The market doesn't go up in a straight line. Corrections and bear markets are normal. The challenge for investors is to ride out setbacks and remember that over time, the market has gone up.
$200,000
0 12/82 12/87 12/92 12/97 12/02 12/07 12/12 12/17 12/22
Past performance is no guarantee of future results. Indices are unmanaged. It is not possible to invest directly in an index. Index performance is not intended to represent the performance of any Fidelity fund. Morningstar, as of 12/31/22. Hypothetical growth of $10,000. Stocks are represented by the S&P 500? Index, a market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance. Bonds are represented by the IA SBBI U.S. Intermediate-Term Government Bond Index. IA SBBI U.S. Intermediate-Term Government Bond Index is a custom index designed to measure the performance of intermediate-term U.S. government bonds. 30-day Treasury Bills are represented by the IA SBBI U.S. 30-day Treasury Bill Index, a custom unmanaged index designed to measure the performance of U.S. 30-day Treasury Bills. Inflation is measured by the Consumer Price Index, an inflationary indicator that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food, and transportation.
Domestic equity 3
Equities and equity mutual funds--How they work
Equities--also known as stocks--represent ownership in a public company. When you invest in equities you can benefit from dividends, a portion of the company's profits, and capital appreciation when the price of a company's stock rises. Of course, not all companies pay dividends, and stock prices may decline as well. Equity mutual funds offer a simple way to invest in stocks, allowing you to pool your money with other investors' money. The price of the mutual fund is its net asset value (NAV). Like the price of a stock, the NAV fluctuates daily based on the value of the securities in the fund. Investors in an equity mutual fund do not actually own the securities; they own shares in the fund itself.
Equity mutual funds can be a smart way to invest because you get:
Diversification
One share in a mutual fund could equal an investment in hundreds of companies. While diversification does not ensure a profit or guarantee against a loss, this diversification can reduce the risk of a loss in any one security from hurting your investment as a whole.
Professional management
Fund managers have the experience and resources to research companies, industries, the markets, and the economy when deciding which stocks to buy or sell.
Liquidity and convenience
Mutual funds allow you to buy or sell fund shares using the NAV at the market close. You can also automatically reinvest income from dividends and capital gains, if any, back into the fund.
It's important to know that some funds charge fees when you buy or sell shares, and all funds charge management fees that cover the expenses incurred by the fund. Fees can impact a fund's performance.
Diversification does not ensure a profit or guarantee against a loss.
Domestic equity 4
EQUITIES AND EQUITY MUTUAL FUNDS
Equity fund categories
Equity mutual funds are often categorized by the size, or market capitalization, of the companies that the fund invests in.
MARKET CAPITALIZATION IS THE VALUE OF ALL OF A COMPANY'S SHARES OF STOCKS.
x = Outstanding shares
Stock price
Market cap
For example, a company with 20 million shares
selling at $50 a share
would have a market cap of $1 billion.
For illustrative purposes only.
Large cap companies
Mid cap companies
Small cap companies
Market cap: $10 billion or more
Stage: Large cap firms often have a reputation for producing quality goods and services, steady growth, and may also have a history of consistent dividend payments.
Market cap: $2 billion to $10 billion
Stage: Typically, these are established companies experiencing or expected to experience rapid growth.
Market cap: $300 million to $2 billion
Stage: Young companies that can be more sensitive to an upturn or a downturn.
Less risk Less growth
More risk More growth
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