Fidelity® Equity-Income Strategy

A separately managed account that seeks to deliver long-term growth of capital and dividend income, with the potential for less volatility than the US stock market

Investment strategy: Focuses on higher-quality dividend-paying stocks that have the potential to sustain and grow dividends over time


Types of investments: Primarily higher-quality dividend-paying equity stocks1 within the S&P 500® Index

Investment minimum: $100,000


Gross annual advisory fee: 0.30% – 0.90%2 (varies based on total assets invested)

Strategic Advisers LLC (Strategic Advisers) will actively manage the strategy in an effort to deliver long-term capital growth and dividend income greater than the S&P 500® Index. They seek securities primarily from a diversified core of dividend paying companies and supplement the portfolio with those securities of either companies transitioning to a more of quality dividend-orientation or those they find that provide a unique opportunity to offer value.


EI_tab1_image1

For illustrative purposes only. The graphics are intended to show approximations and may vary through time depending on market conditions.

Stocks that pay dividends have been a key contributor to the S&P 500's total return


As shown below, dividends have produced approximately 40% of the S&P 500's total return over time, with the remainder coming from price appreciation (the increase in a stock's value). This powerful combination of income and growth may help provide increased long-term returns.


Bar chart depicts the role that dividends have played in the S&P 500 Index's total return on a decade-by-decade basis, starting with the decade beginning in 1930 and ending in the decade beginning in 2010. Individual bars represent, in order, the index's total return, the role that dividends played in that return, and the role that price appreciation played in that return. During different decades, dividend return, and price appreciation played different roles in the index's total return. Between the years 1930 and 2018 dividends produced approximately 40% of the S&P 500 index's return.

Source: Fidelity Management & Research Company. Data as of 12/31/2019.

Past performance and dividend rates are historical and do not guarantee future results. The index performance includes the reinvestment of dividends and interest income. An investment cannot be made in an index. Securities indices are not subject to fees and expenses typically associated with managed accounts. This chart is for illustrative purposes only and is not intended to represent the actual or future performance of any investment option or strategy. Keep in mind that investing, including investing in dividend paying stocks, involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

For each decade, the total return for the S&P 500 was calculated and then converted into an average annual return number. The total return for each decade was also decomposed into its two constituent parts: price appreciation and dividend income. The bars for each decade represent annualized total return, annualized return from price appreciation only, and annualized return from dividends (which are assumed to be reinvested in the index).

S&P 500 is a registered service mark of Standard & Poor's Financial Services LLC. It 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.


A history of weathering different market conditions


Companies that have paid stable dividends are often well-run, high-quality businesses. As a result, these high-dividend-paying stocks* have a history of competitive returns, with dividends contributing to returns even in down markets. High-dividend-paying stocks also have had less volatility than stocks that did not pay dividends†, making for the potential of less extreme ups and downs when participating in the long-term growth of the stock market.


High-dividend-paying stocks had attractive returns and lower volatility (1994–2020)
Bar chart shows a comparison of how three classifications of stocks — the S&P 500 Index, non-dividend-paying stocks, and high dividend paying stocks — have performed in three types of markets between 12/31/1994 and 12/31/2018. Returns are shown for three types of markets: strong markets, weak markets, and overall for the time period. During strong markets returns for the S&P 500 Index were 11.4%, for non-dividend paying stocks 16.2%, and for high-dividend paying stocks 10.8%. During weak markets returns for the S&P 500 Index were negative 1.6%, for non-dividend paying stocks negative 3.5%, and for high-dividend paying stocks 0.1%. Overall returns for the S&P 500 Index were 9.8%, for non-dividend paying stocks 12.1%, and for high-dividend paying stocks 10.9%.

Source: Fidelity Investments and FactSet, as of 12/31/2019. Analysis shows equal-weighted geometric average annual total return and standard deviation of non-dividend-paying and high-dividend-paying stocks in the S&P 500® Index from 11/30/94 to 12/31/19, rebalanced monthly. Note: This strategy will not focus exclusively on high-dividend-paying stocks and will include other stocks. Returns for the non-dividend-paying stocks, and high-dividend-paying stocks can deviate and have historically deviated significantly from the average returns over the period displayed above.

* High-dividend-paying stocks represent the top third of S&P 500® stocks by dividend yield.

† Volatility as measured by standard deviation. Standard deviation is a measure of the dispersion of a set of values from its mean. It is an annualized figure that measures how much a return varies over an extended period of time. The more variable the returns, the larger the standard deviation. A higher standard deviation indicates a wider dispersion of past returns and thus greater historical volatility. Standard deviation indicates the volatility of the index return over time, not the actual performance of the index.

Past performance is no guarantee of future results. The index performance includes the reinvestment of dividends and interest income. An investment cannot be made in an index. Securities indices are not subject to fees and expenses typically associated with managed accounts. This chart is for illustrative purposes only and is not intended to represent the actual or future performance of any investment option or strategy.

The power of Fidelity's active management

Experienced and reliable with deep investment and research capabilities


Strategic Advisers LLC (Strategic Advisers) provides portfolio management capabilities for this strategy and has partnered with Fidelity Management & Research Company LLC (FMRCo) to leverage their investment research capabilities. FMRCo provides model holdings and Strategic Advisers executes the trades and provides ongoing active management of the portfolios, including the use of tax-sensitive investment management techniques.3


FMRCo leverages its in-depth experience, access to corporations, and proprietary tools to identify stocks they believe to be consistent with the investment strategy.


Pyramid depicts the elements of the power behind Fidelity's active management. At the top of the pyramid is reliability; the firm has $3 trillion in global assets under management. Next is Deep, Diverse Capabilities; there are currently 2,000+ stocks covered by the equity research team and 22,700 research notes published by equity analysts in 2018. Next level down is experience; Fidelity Management and Research Company has a 70+ year of investing and portfolio management experience, 25+ years of managing models that seek to align to risk profiles, and 180+ portfolio managers across Fidelity Asset Management.

Source: Fidelity Investments, as of 12/31/2019.

* FMR Equity Analysts

† Not all resources and Fidelity Funds are available to the Fidelity Equity-Income Strategy.

We take a disciplined and thoughtful approach to building and maintaining a portfolio focused on capital appreciation and dividend income, with the potential for less volatility than the US stock market, in an effort to help you achieve your financial goals.


Investment Process