Fidelity Strategic Dividend & Income Fund

[Pages:10]PORTFOLIO MANAGER Q&A | AS OF MAY 31, 2023

Fidelity? Strategic Dividend & Income? Fund

Key Takeaways

? For the semiannual reporting period ending May 31, 2023, the fund's

Retail Class shares returned -2.78%, outperforming the -4.21% result of the Fidelity Strategic Dividend & Income Composite IndexSM.

? Although Co-Lead Portfolio Managers Adam Kramer and Ford O'Neil

were disappointed to see the fund decline the past six months, they were encouraged by its outperformance of the Composite index, propelled by security selection.

? Versus the Composite index, security selection in the fund's dividend-

paying equity subportfolio contributed most, especially picks in the health care and industrials sectors.

? Picks in the fund's REIT subportfolio also aided relative performance,

driven by investment choices in the industrial/office, self storage and health care categories. Security selection within the preferred securities subportfolio also helped.

? In contrast, an underweight in convertible securities and security

selection among master limited partnerships detracted this period.

? Noteworthy positioning changes that Adam and Ford made the past

six months included reducing the fund's overweight in MLPs and reinvesting the proceeds in infrastructure stocks, while also increasing exposure to convertible securities.

? As of May 31, the co-lead managers were focused on keeping the

fund's allocation close to the Composite index. They were also scrutinizing market conditions and standing ready to adjust the portfolio as needed to respond to meaningful changes in the economic backdrop.

Not FDIC Insured ? May Lose Value ? No Bank Guarantee

MARKET RECAP

For the six months ending May 31, 2023, investors managed multiple crosscurrents. Early in the period, record inflation led the U.S. Federal Reserve to aggressively tighten monetary policy, and market interest rates eclipsed their highest level in a decade, stoking recession fears. Since March 2022, the Fed has raised its benchmark rate 10 times, by 5 percentage points, while also shrinking its massive asset portfolio. In March, a banking crisis led the Fed to reconsider its aggressive rate-hike campaign, and the central bank stepped down to increases of 25 basis points in February, March and May. Against this backdrop, the Fidelity Strategic Dividend & Income Composite Index had return of -4.21% the past six months. Within the index, U.S. large-cap, income-paying stocks lagged most. The MSCI USA High Dividend Yield Index returned -7.62%, as value stocks underperformed their growth counterparts. Elsewhere, real estate investment trusts, indicated by the FTSE NAREIT Equity REITs Index, returned -4.94%. Every segment of the REIT market lost ground this period, with office REITs struggling in particular, as work-from-home trends reduced occupancy. Meanwhile, convertible securities returned -0.04%, according to the ICE BofA? All U.S. Convertibles Index. Lastly, preferred stocks, as measured by the ICE BofA? Fixed Rate Preferred Securities Index, gained 1.58%, as large financial institutions within the index better weathered the banking crisis that engulfed smaller competitors.

PORTFOLIO MANAGER Q&A | AS OF MAY 31, 2023

Q&A

Adam Kramer Co-Lead Manager

Fund Facts

Trading Symbol: Start Date: Size (in millions):

Ford O'Neil Co-Lead Manager

FSDIX December 23, 2003 $5,040.64

Investment Approach

? Fidelity? Strategic Dividend & Income? Fund is a multiasset-class strategy that seeks to provide reasonable income, and potentially also capital appreciation, by investing in a diversified mix of dividend-oriented equity and hybrid securities.

? The fund's assets are allocated among high dividendyielding stocks, preferred stocks, real estate investment trusts (REITs) and convertible securities, using a target weighting of 50%, 20%, 15% and 15%, respectively. This strategic allocation attempts to take advantage of the low correlation among these equity/hybrid classes with a goal of optimizing total returns while containing volatility over time.

? Specialized subportfolio managers are responsible for security selection in their respective areas of expertise and represent the primary source of alpha (risk-adjusted excess return), while the lead portfolio managers have the flexibility to make tactical allocation shifts around the target mix to help manage risk and capitalize on relativevalue opportunities.

An interview with Co-Lead Managers Adam Kramer and Ford O'Neil

Q: Ford, how did the fund perform for the six months ending May 31, 2023

F.O. Although we're disappointed whenever the fund declines, we were encouraged by its outperformance of the Composite benchmark the past six months.

The fund's Retail Class shares returned -2.78%, outperforming the -4.21% result of the Fidelity Strategic Dividend & Income Composite IndexSM. The fund trailed the peer group average.

Relative to the Composite index, security selection by the fund's subportfolio managers carried the day, while asset class positioning, the primary way that Adam and I, as the fund's co-managers, can directly influence the fund's performance, had a minimal impact this period.

Looking slightly longer term, the fund returned -2.77% for the past 12 months, again topping the Composite index but lagging the peer group average.

Q: What contributed most compared with the Composite index the past six months

F.O. The largest positive impact on the fund's relative performance came from security selection in the fund's dividend-paying equity subportfolio.

This subportfolio outperformed its category benchmark, the MSCI USA High Dividend Yield Index, by 264 basis points, or 2.64 percentage points. Picks in the health care and industrials sectors proved especially beneficial.

On the other hand, an underweight in the lagging information technology category ? particularly semiconductors & semiconductor equipment companies ? detracted from the fund's relative result.

Our picks in the REIT subportfolio also aided the portfolio's relative performance this period. Compared with its category benchmark, the FTSE NAREIT Equity REITs Index, the subportfolio outperformed by 291 basis points, driven the most by investment choices among industrial/office, selfstorage and health care REITs.

A lack of exposure to the weak-performing diversified REIT category and security selection within the preferred securities subportfolio helped, as well.

2 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

PORTFOLIO MANAGER Q&A | AS OF MAY 31, 2023

Q: What detracted from relative performance this period, Adam

A.K. In a period of positive relative performance, a few notable investments pressured the fund's relative result the past six months.

One was an underweight in convertible securities. This asset class produced a roughly flat return for the reporting period, well ahead of the Composite index, so having less exposure to this group detracted from relative performance, even though security selection in the group was slightly positive.

Another modest negative was security selection among master limited partnerships. The MLP subportfolio returned about -7% and finished well short of the category benchmark, the Alerian MLP Index, which rose 0.4% for the reporting period. Underpinning this detrimental result was the subportfolio's out-of-benchmark exposure to energy exploration and production companies, which were weak performers in an environment of generally falling commodity prices.

The fund's small out-of-benchmark exposure to MLPs, however, was somewhat beneficial, given how significantly MLPs outperformed the Composite index this period.

Q: What notable shifts did you and Ford make to the portfolio

A.K. Before I describe the changes, let me remind shareholders that the fund is designed to be a vehicle for income, along with providing the potential for capital appreciation.

As co-lead managers, Ford and I allocate assets across several dividend- and income-paying categories. Based on Fidelity's research, we've established a target (neutral) mix of 50% dividend-paying common equities, 20% preferred stocks, 15% convertible securities and 15% REITs. As the fund's neutral positioning, this is the combination of asset classes and weightings that, over time, we believe should provide the most favorable risk/reward.

Our approach to managing the fund is always highly tactical, meaning we make shifts to the fund's asset mix based on where we see opportunities in the marketplace at any given time. This period, two of our most notable shifts took place in May. We reduced the fund's target overweight in MLPs and reinvested the proceeds in infrastructure stocks. This out-ofComposite subportfolio is an equity asset class consisting of globally diversified utilities and industrial companies.

We like infrastructure securities for their potential to broaden the fund's exposure to dividend-paying stocks and to help us manage risk in an increasingly volatile market environment.

Although we continue to like MLPs and maintain out-ofComposite exposure to the category as of May 31, we

preferred to boost our allocation to infrastructure stocks because we believed the category offered a favorable risk/reward trade-off relative to other segments of the fund's investment universe.

As of period end, the fund's out-of-Composite target weights in the infrastructure and MLP categories were 115 and 60 basis points, respectively. Note that, due to market movement, the fund's actual weightings will often differ from its target weightings.

Another notable change to the portfolio involved increasing the fund's exposure to convertible securities. In January, we reduced the fund's target underweight from 175 to 75 basis points because we began to see better opportunity in the asset class and wanted to move our exposure closer to the benchmark.

In the callout portion of this review, I'll further describe opportunities we're seeing in the convertibles market.

F.O. To generate the proceeds to increase the fund's exposure to convertibles, we reduced our allocation to equities and preferreds. The portfolio finished the period with a neutral target allocation in each category, given our view that better opportunities existed elsewhere within the fund's investment universe.

At the end of May, the fund's equity allocation was about 49%, while its exposure to preferreds was about 29%. Meanwhile, the fund's largest underweight on May 31 was in REITs, where we continued to see fairly unattractive yields. As of period end, REITs made up 14% of the fund's net assets.

Q: Any closing thoughts for shareholders as of May 31, Ford

F.O. As we continue to look for pockets of the market with a disconnect between asset prices and our assessment of their value, we have moved the fund's allocations closer to neutral. We believe this positioning will provide us with greater flexibility to increase stakes in investment types we like when market conditions afford us compelling opportunities to do so.

In the meantime, we continue to diversify the fund through out-of-Composite stakes in MLPs and infrastructure investments. As we await investment opportunities, we will continue to monitor market conditions and prepare to adjust the portfolio as needed to respond to meaningful changes in the economy.

3 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

PORTFOLIO MANAGER Q&A | AS OF MAY 31, 2023

Co-Lead Manager Adam Kramer sees opportunity in convertible securities:

"The past 12 months, we've seen the equity sensitivity of the convertible securities market shrink, as a lot of these investments have left the Composite index and not been replaced with new securities. "In fact, the market's sensitivity to equities, which historically has averaged around 50% through a full market cycle, recently dropped to a percentile in the 30s ? the lowest that convertibles investors have seen in years. "In fact, valuations fell to the point that about 60% of the market consisted of what I'd term 'yieldalternative convertibles' ? meaning the issuer's underlying stock is trading well below the conversion price. Because of the low equity sensitivity of the convertibles market, they have underperformed the NASDAQ Composite Index, on which many convertibles issuers' stocks trade. "Now, however, the market has started to figure out that many of these issuers, despite being out of favor with the market, are often solid businesses unlikely to go bankrupt. In fact, many are innovative companies with a solid business model that are cutting costs and generating cash flow. DraftKings or Unity Software ? to name just two examples in the fund as of May 31 ? are likely to have staying power and are at the forefront of transforming their respective markets, in my view." "Against this backdrop, these and other companies have seen value in their own convertibles and choosing to buy back their own securities at a discount. In my opinion, this is a big support signal and a vote of confidence. "Given the challenging environment for dividendpaying equities and REITs, I think convertibles are an increasingly attractive place to invest. It's why we reduced the fund's underweight in convertibles this period. And, if supply increases in this segment of the market, we'd consider further adding to the asset class."

4 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

PORTFOLIO MANAGER Q&A | AS OF MAY 31, 2023

SUBPORTFOLIO COMPOSITION

Asset Class

Portfolio Weight Strategic Allocation Relative Weight

Relative Change From Six Months

Ago

Dividend-Paying Equities

49.48%

50.00%

-0.52%

-1.45%

Domestic Equities

43.84%

--

--

--

International Equities

4.87%

--

--

--

Cash & Net Other Assets

0.77%

--

--

--

Preferred Stock

20.27%

20.00%

0.27%

0.29%

Preferred Stock/Convertible Preferred

7.61%

--

--

--

Corporate Bonds

12.14%

--

--

--

Cash & Net Other Assets

0.51%

--

--

--

Convertibles

14.51%

15.00%

-0.49%

1.52%

Convertibles

11.48%

--

--

--

Domestic Equities

0.76%

--

--

--

International Equities

0.13%

--

--

--

Corporate Bonds

0.24%

--

--

--

Cash & Net Other Assets

1.91%

--

--

--

REITs

14.06%

15.00%

-0.94%

-0.20%

REITs & Related Investments

13.94%

--

--

--

Cash & Net Other Assets

0.12%

--

--

--

MLPs

0.66%

--

0.66%

-0.65%

MLPs & Related Investments

0.65%

--

--

--

Cash & Net Other Assets

0.01%

--

--

--

Top Level Fund

1.01%

--

1.01%

0.48%

Top-Level Cash & Net Other Assets

1.01%

--

--

--

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

5 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

PORTFOLIO MANAGER Q&A | AS OF MAY 31, 2023

MARKET-SEGMENT DIVERSIFICATION

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

Portfolio Portfolio Weight Weight Six Months Ago

15.10%

14.91%

12.28%

13.41%

10.71%

9.54%

10.47%

13.33%

9.49%

8.59%

7.24%

6.82%

5.55%

5.09%

4.86%

4.85%

4.10%

3.76%

3.03%

5.02%

1.53%

1.70%

0.00%

0.00%

6 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

PORTFOLIO MANAGER Q&A | AS OF MAY 31, 2023

10 LARGEST HOLDINGS

Holding

Market Segment

Portfolio Weight

Portfolio Weight Six Months Ago

Procter & Gamble Co.

Consumer Staples

2.31%

2.28%

Prologis (REIT), Inc.

Real Estate

2.04%

1.83%

The Coca-Cola Co.

Consumer Staples

1.88%

1.98%

Merck & Co., Inc.

Health Care

1.88%

1.72%

Cisco Systems, Inc.

Information Technology

1.70%

1.56%

AbbVie, Inc.

Health Care

1.66%

1.92%

PepsiCo, Inc.

Consumer Staples

1.65%

1.59%

Equinix, Inc.

Real Estate

1.56%

1.34%

McDonald's Corp.

Consumer Discretionary

1.50%

1.36%

NextEra Energy, Inc.

Utilities

1.35%

1.41%

10 Largest Holdings as a % of Net Assets

17.54%

17.59%

Total Number of Holdings

645

706

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

FISCAL PERFORMANCE SUMMARY: Periods ending May 31, 2023

Cumulative

6 Month

YTD

1 Year

Annualized

3 Year

5 Year

10 Year/ LOF1

Fidelity Strategic Dividend & Income Fund Gross Expense Ratio: 0.68%2

-2.78%

0.30%

-2.77%

8.59%

7.23%

7.69%

S&P 500 Index

3.33%

9.65%

2.92%

12.92%

11.01%

11.99%

Fidelity Strategic Dividend & Income Composite Index

-4.21%

-1.07%

-4.85%

6.81%

5.96%

7.80%

Morningstar Fund Moderately Aggressive Allocation

0.00%

3.62%

-1.61%

7.80%

5.08%

6.48%

% Rank in Morningstar Category (1% = Best)

--

--

78%

26%

9%

13%

# of Funds in Morningstar Category

--

--

321

293

280

219

1 Life of Fund (LOF) if performance is less than 10 years. Fund inception date: 12/23/2003. 2 This expense ratio is from the prospectus in effect as of the date shown above and generally is based on amounts incurred during that fiscal year, or estimated amounts for the current fiscal year in the case of a newly launched fund. It does not include any fee waivers or reimbursements, which would be reflected in the fund's net expense ratio.

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 shares. Current performance may be higher or lower than the performance stated. Performance shown is that of the fund's Retail Class shares (if multiclass). You may own another share class of the fund with a different expense structure and, thus, have different returns. To learn more or to obtain the most recent month-end or other share-class performance, visit performance, institutional. , or . Total returns are historical and include change in share value and reinvestment of dividends and capital gains, if any. Cumulative total returns are reported as of the period indicated. Please see the last page(s) of this Q&A document for most-recent calendar-quarter performance.

7 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

PORTFOLIO MANAGER Q&A | AS OF MAY 31, 2023

Definitions and Important Information

Information provided in, and presentation of, this document are for informational and educational purposes only and are not a recommendation to take any particular action, or any action at all, nor an offer or solicitation to buy or sell any securities or services presented. It is not investment advice. Fidelity does not provide legal or tax advice.

Before making any investment decisions, you should consult with your own professional advisers and take into account all of the particular facts and circumstances of your individual situation. Fidelity and its representatives may have a conflict of interest in the products or services mentioned in these materials because they have a financial interest in them, 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.

FUND RISKS Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. Fixed income investments entail interest rate risk (as interest rates rise bond prices usually fall), the risk of issuer default, issuer credit risk and inflation risk. Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks. Changes in real estate values or economic downturns can have a significant negative effect on issuers in the real estate industry. Lower-quality bonds can be more volatile and have greater risk of default than higher-quality bonds. Value stocks can perform differently than other types of stocks and can continue to be undervalued by the market for long periods of time.

IMPORTANT FUND INFORMATION Relative positioning data presented in this commentary is based on the fund'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.

Fidelity Strategic Dividend & Income Composite Index is a customized blend of unmanaged indices, weighted as follows: MSCI USA High Dividend Yield - 50%; ICE BofA Fixed Rate Preferred Index- 20%; FTSE NAREIT Equity REITs - 15% and ICE BofA U.S. Convertibles Index - 15%. The composition differed in periods prior to December 18, 2010.

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.

The Alerian MLP Index is an industry gauge of energy Master Limited Partnerships (MLPs). The float-adjusted, capitalizationweighted index, whose 50 constituents represent approximately 75% of total market capitalization, is disseminated real-time on a price-return basis (AMZ) and on a total-return basis (AMZX).

FTSE NAREIT All Equity REITs Index is a free-float adjusted, market capitalization-weighted index of U.S. equity REITs. Constituents of

the index include all tax-qualified REITs with more than 50 percent of total assets in qualifying real estate assets other than mortgages secured by real property.

ICE BofA Fixed Rate Preferred Securities Index is designed to replicate the total return of a diversified group of investment-grade preferred securities.

ICE BofA All US Convertibles Index consists of convertible bonds traded in the U.S. dollar denominated investment grade and noninvestment grade convertible securities sold into the U.S. market and publicly traded in the United States. The Index constituents are market value weighted based on the convertible securities prices and outstanding shares, and the underlying index is rebalanced daily.

MSCI USA High Dividend Yield Index is based on the MSCI USA Index, its parent index, and includes large and mid-cap stocks. The index is designed to reflect the performance of equities in the parent index (excluding REITs) with higher dividend income and quality characteristics than average dividend yields that are both sustainable and persistent.

Nasdaq Composite Index is a market capitalization?weighted index that is designed to represent the performance of NASDAQ stocks.

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

RANKING INFORMATION ? 2023 Morningstar, Inc. All rights reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or redistributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Fidelity does not review the Morningstar data and, for mutual fund performance, you should check the fund's current prospectus for the most up-to-date information concerning applicable loads, fees and expenses.

% Rank in Morningstar Category is the fund's total-return percentile rank relative to all funds that have the same Morningstar Category. The highest (or most favorable) percentile rank is 1 and the lowest (or least favorable) percentile rank is 100. The topperforming fund in a category will always receive a rank of 1%. % Rank in Morningstar Category is based on total returns which include reinvested dividends and capital gains, if any, and exclude sales charges. Multiple share classes of a fund have a common portfolio but impose different expense structures.

8 |

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