Fidelity Strategic Dividend & Income Fund invests in four kinds of income-oriented equity and hybrid securities: common stocks with the potential to pay higher dividends; preferred stocks and convertible securities, which are hybrids with characteristics of both bonds and stocks; and real estate securities including investment trusts (REITs). The fund seeks to provide reasonable income, and potentially also capital appreciation. In an economy when capital growth is slow, income may contribute a significant proportion of a stock fund's total return.
The fund's strategy offers investors the potential for higher income and lower volatility than the broader equity market — with the possibility of more capital appreciation (with likely more volatility in total returns) than a typical bond fund. The four markets in which the fund invests respond to different economic factors, and thus changes in their performance have the potential to offset each other and reduce the volatility of the overall portfolio.
Who may want to invest
The Fidelity Strategic Dividend & Income Fund may be appropriate for investors whose primary objective is to derive non-bond income from dividend-oriented equity securities, and possibly also growth of capital, through a fund managed by a team of Fidelity portfolio managers and research analysts using a disciplined strategy to invest across multiple markets. The fund may also be appropriate for risk-savvy investors seeking to diversify a bond portfolio with income-generating stocks.
Things to keep in mind
Each of the fund's investment categories may experience periods of volatile returns, and it is possible for all investment categories to decline at the same time.
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