Fidelity Strategic Dividend & Income Fund

PORTFOLIO MANAGER Q&A | AS OF NOVEMBER 30, 2023

Fidelity? Strategic Dividend & Income? Fund

Key Takeaways

? For the fiscal year ending November 30, 2023, the fund's Retail Class

shares gained 1.55%, outperforming the 0.46% advance of the Fidelity Strategic Dividend & Income Composite IndexSM.

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

security selection drove the portfolio's outperformance of the Composite index the past 12 months, while asset allocation, the primary way they can directly influence the fund's result, had a minimal impact this period.

? Versus the Composite index, security selection among dividend-

paying equities contributed most by far, especially investment choices in the health care, industrials and consumer staples sectors.

? Picks among real estate investment trusts helped relative

performance, driven by health care and shopping center REITs. Security selection among preferred securities also contributed.

? In contrast, picks in master limited partnerships, primarily due to an

out-of-Composite allocation to energy exploration and production companies, along with non-index exposure to infrastructure equities, modestly detracted for the period.

? Noteworthy positioning changes that Adam and Ford made the past

12 months included boosting exposure to infrastructure stocks, adding to the fund's underweight in convertible securities and shifting from an underweight to roughly Composite-neutral exposure to REITs.

? As of November 30, the co-lead managers say the feel optimistic

about prospects for inflation and a soft economic landing. They were keeping the fund's allocation close to the Composite index as they await better opportunities to capture value through asset allocation.

? On January 1, 2024, Rick Gandhi assumed co-management

responsibilities for the fund and the fund's preferred sleeve. He also assumes co-management responsibilities for the convertible sleeve, joining Co-Manager Adam Kramer.

Not FDIC Insured ? May Lose Value ? No Bank Guarantee

MARKET RECAP

A slowing in the pace of inflation and a resilient U.S. economy provided a favorable backdrop for risk assets throughout much of the 12 months ending November 30, 2023. Monetary tightening by the U.S. Federal Reserve continued until late July, when the Fed said it was too soon to tell if its latest hike would conclude a series of increases aimed at cooling the economy and bringing down inflation. Since March 2022, the Fed has raised its benchmark interest rate 11 times before pausing and twice deciding to hold rates at a 22-year high while it observes the effect on inflation and the economy. Against this backdrop, the Fidelity Strategic Dividend & Income Composite Index rose 0.46% the past 12 months. Within the index, preferred stocks, as measured by the ICE BofA? Fixed Rate Preferred Securities Index, gained 5.18%, benefiting late in the period from mounting expectations for lower interest rates. Convertible securities, which have seen declining equity sensitivity in recent years, also rallied in the period's final months, finishing with an increase of 3.08%, according to the ICE BofA? All U.S. Convertibles Index. Meanwhile, dividend-paying equities, as measured by the MSCI USA High Dividend Yield Index, returned -1.76%, as value stocks significantly trailed their growth counterparts. Of final note, real estate investment trusts, indicated by the FTSE NAREIT Equity REITs Index, returned -1.85%, hampered the most by lackluster performance among office and apartment REITs.

PORTFOLIO MANAGER Q&A | AS OF NOVEMBER 30, 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 $4,994.39

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 fiscal

year ending November 30, 2023

F.O. The fund's Retail Class shares gained 1.55% the past 12 months, outperforming the 0.46% advance of the Fidelity Strategic Dividend & Income Composite IndexSM. The portfolio trailed the peer group average.

Relative to the Composite index, security selection by our subportfolio managers was the main driver of the fund's outperformance.

Meanwhile, asset class positioning, the primary way Adam and I, as the fund's co-lead managers, can directly influence performance, had a minimal impact this period. This was not an unsurprising result, given how close we've kept many of the portfolio's allocations to their respective Composite weights.

Q: What contributed most compared with the Composite index the past 12 months

F.O. The largest positive impact on the fund's relative performance by far came from security selection among dividend-paying equities.

This subportfolio outperformed its category benchmark, the MSCI USA High Dividend Yield Index, by 2.37 percentage points. More specifically, picks in the health care, industrials and consumer staples sectors proved especially beneficial.

On the other hand, investment choices and an underweight in the market-leading information technology category dertracted from relative performance.

REIT picks also aided the portfolio's relative performance this period. Compared with its category benchmark, the FTSE NAREIT Equity REITs Index, the fund's investments outperformed by 2.36 percentage points. Security selection among health care and shopping center REITs helped most.

Picks in the preferred stock category added further value, as these securities within the portfolio outpaced their category benchmark, the ICE BofA? Fixed Rate Preferred Securities Index, by 1.10 percentage points. An increased emphasis on fixed-to-floating rate preferreds fared particularly well. In terms of industry exposure, investment choices in the banking and financial services categories provided the biggest lift for the 12 months.

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 NOVEMBER 30, 2023

Q: Adam, what else notably influenced the fund's relative performance this period

A.K. Security selection in convertible securities ? especially picks in information technology ? was modestly favorable, as was out-of-Composite exposure to master limited partnerships, a category that gained 23% the past 12 months.

Fortunately, little meaningfully pressured the fund's relative result this period. Picks among MLPs hurt a bit, primarily due to an out-of-index allocation to energy exploration and production companies, which struggled due to generally falling commodity prices. Also, the fund's non-Composite exposure to infrastructure equities modestly detracted.

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

we continue to like MLPs and held a 0.60 percentage-point target overweight in the asset class throughout the period's second half, we felt infrastructure assets offered a more favorable investment opportunity.

Elsewhere, in July we significantly reduced the portfolio's allocation to convertible securities, moving from a 0.75 to a 2.50 percentage-point target underweight. With these sale proceeds, we further added to our infrastructure holdings, as well as to REITs. Regarding REITs, if the trend of rising rates were to reverse, we believe the asset class has the potential to bounce back after a prior sell-off.

Other notable smaller portfolio shifts that occurred early in the 12 months include a reduction in the fund's slight target overweights among both equities and preferreds. In both cases, we shifted to a neutral allocation that we kept in place for the rest of the reporting period.

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 portfolio is always highly tactical, meaning we make shifts to the asset mix based on where we see opportunities in the marketplace at any given time.

Generally, we kept the fund's target allocations fairly close to their Composite index weightings, as we saw few obvious value opportunities in the marketplace. For the past 12 months, the biggest shifts included adding to the portfolio's non-Composite exposure to infrastructure stocks, increasing the size of the convertible securities underweight, and shifting from an underweight to a roughly Composite-neutral stake in REITs.

Starting with infrastructure, about midway through the period we increased our target allocation to the category from 0.5 to 1.15 percentage points. The proceeds for this increase came from reducing our non-Composite target allocation to MLPs by an equivalent amount. Note that the fund's target weightings and actual weightings will differ due to market movement.

Q: Any closing thoughts for shareholders as of November 30, Ford

F.O. In managing the fund, our approach is to respond to value and income opportunities as they emerge, rather than trying to predict where the economy or financial markets are headed.

As of November 30, we believe infrastructure investments provide the best available opportunity within our investment universe. Meanwhile, we see limited near-term upside for convertibles, although we do expect conditions to improve for the asset class over the long term. In the callout portion of this review, Adam will more fully discuss the fund's convertible securities and infrastructure positioning.

In the fund's remaining asset classes, meanwhile, we're positioned neutrally or close to it, as we await episodic selloffs and other market events that open up new opportunities we hope to take advantage of.

We feel optimistic about the coming year ? inflation has moderated and the odds of a soft economic landing and a Federal Reserve pivot toward lower rates in 2024 appears to have increased. Investors no longer appear to be pricing in a recession, and we're cognizant of avoiding asset classes already reflecting either too much good or bad news.

This is why we're sticking close to the Composite index. Currently, there isn't much margin for error in the marketplace, so for now we're comfortable relying on security selection as a potential source of outperformance, as we await better opportunities to capture value through asset allocation.

We decided to boost the fund's infrastructure exposure because we saw less potential earnings pressure in this category relative to other areas of the equity market, given the long-duration nature of infrastructure assets. Although

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 NOVEMBER 30, 2023

Adam Kramer on convertibles and infrastructure equities:

"The convertibles market is undergoing a metamorphosis ? equity sensitivity has declined to one of the lowest levels on record, while supply has plunged as issues leave the market without being replaced by new supply. Against this backdrop, many convertibles, with their lack of equity sensitivity, minimal yield and duration, have begun behaving more like short-term bonds. "At the same time, we've seen hedge funds aggressively buying up short-dated convertibles, which, in turn, has lifted their prices and caused their yields to sharply fall to the point that we thought they made little sense in a market where cash equivalents are offering yields around 5%. "As of November 30, however, the new-issue market for convertibles appears to be getting back on track. We are more optimistic about the opportunity for this asset class in 2024, as issuers look for attractive ways to refinance high-cost debt. In fact, late in the period we started to see deals coming to market with more attractive terms. We expect this trend to accelerate and, if it does, would anticipate adding back convertibles in the future. "As I mentioned, upon reducing our convertibles exposure, we moved many of the proceeds into non-Composite infrastructure stocks, the fund's largest overweight at period end. "Because of the longer-duration nature of infrastructure securities, these stocks tend to be fairly sensitive to interest rates. If we ultimately see better-than-expected economic news that leads to rates staying higher for longer, we'd expect infrastructure to outperform REITs, another higheryielding asset class that also can be sensitive to rate movement in the short term. "But if the economic environment weakens instead, leading to falling rates and a weaker U.S. dollar, we see the opportunity for infrastructure to help dampen volatility in the portfolio."

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 NOVEMBER 30, 2023

SUBPORTFOLIO COMPOSITION

Asset Class

Portfolio Weight Strategic Allocation Relative Weight

Relative Change From Six Months

Ago

Dividend-Paying Equities

50.08%

50.00%

0.08%

0.60%

Domestic Equities

42.40%

--

--

--

International Equities

6.07%

--

--

--

Cash & Net Other Assets

1.61%

--

--

--

Preferred Stock

20.10%

20.00%

0.10%

-0.17%

Preferred Stock/Convertible Preferred

7.29%

--

--

--

Corporate Bonds

11.30%

--

--

--

Cash & Net Other Assets

1.52%

--

--

--

Convertibles

12.19%

15.00%

-2.81%

-2.32%

Convertibles

9.30%

--

--

--

Domestic Equities

0.36%

--

--

--

International Equities

0.02%

--

--

--

Corporate Bonds

0.18%

--

--

--

Cash & Net Other Assets

2.33%

--

--

--

REITs

15.34%

15.00%

0.34%

1.28%

REITs & Related Investments

15.25%

--

--

--

Cash & Net Other Assets

0.10%

--

--

--

MLPs

0.59%

--

0.59%

-0.07%

MLPs & Related Investments

0.57%

--

--

--

Cash & Net Other Assets

0.01%

--

--

--

Top Level Fund

1.70%

--

1.70%

0.69%

Top-Level Cash & Net Other Assets

1.70%

--

--

--

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.

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