Fund |
Ticker |
Fidelity®
SAI Small-Mid Cap 500 Index Fund |
FZFLX |
Fund of Fidelity Salem Street Trust
STATEMENT OF ADDITIONAL INFORMATION
September 29, 2023
Offered
exclusively to certain clients of the Adviser, or its affiliates, including
Strategic Advisers LLC (Strategic Advisers) - not available for sale to the
general public. Fidelity® SAI is a product name of Fidelity® funds dedicated to
certain programs affiliated with Strategic Advisers.
This
Statement of Additional Information (SAI) is not a prospectus. Portions of the
fund's
annual report are incorporated herein. The annual
report(s) are supplied with this SAI.
To obtain
a free additional copy of a prospectus or SAI, dated September 29, 2023, or an
annual report, please call Fidelity at 1-800-544-3455 or visit Fidelity's web
site at www.fidelity.com.
For more
information on any Fidelity® fund, including charges and expenses, call Fidelity
at the number indicated above for a free prospectus. Read it carefully before
investing or sending money.
245 Summer
Street, Boston, MA 02210
SV3-PTB-0923
1.9866048.109
TABLE OF CONTENTS
The
following policies and limitations supplement those set forth in the prospectus.
Unless otherwise noted, whenever an investment policy or limitation states a
maximum percentage of the fund's assets that may be invested in any security or
other asset, or sets forth a policy regarding quality standards, such standard
or percentage limitation will be determined immediately after and as a result of
the fund's acquisition of such security or other asset. Accordingly, any
subsequent change in values, net assets, or other circumstances will not be
considered when determining whether the investment complies with the fund's
investment policies and limitations.
The
fund's fundamental investment policies and limitations cannot be changed without
approval by a "majority of the outstanding voting securities" (as defined in the
Investment Company Act of 1940 (1940 Act)) of the fund. However, except for the
fundamental investment limitations listed below, the investment policies and
limitations described in this Statement of Additional Information (SAI) are not
fundamental and may be changed without shareholder approval.
The
following are the fund's fundamental investment limitations set forth in their
entirety.
Diversification
The
fund may not with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities, or securities of other
investment companies) if, as a result, (a) more than 5% of the fund's total
assets would be invested in the securities of that issuer, or (b) the fund would
hold more than 10% of the outstanding voting securities of that issuer.
Senior
Securities
The
fund may not issue senior securities, except in connection with the insurance
program established by the fund pursuant to an exemptive order issued by the
Securities and Exchange Commission or as otherwise permitted under the
Investment Company Act of 1940.
Borrowing
The
fund may not borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed this
amount will be reduced within three days (not including Sundays and holidays) to
the extent necessary to comply with the 33 1/3% limitation.
Underwriting
The
fund may not underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities or in connection with
investments in other investment companies.
Concentration
The
fund may not purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total assets
would be invested in the securities of companies whose principal business
activities are in the same industry.
For
purposes of the fund's concentration limitation discussed above, with respect to
any investment in repurchase agreements collateralized by U.S. Government
securities, Fidelity Management & Research Company LLC (FMR) looks through
to the U.S. Government securities.
For
purposes of the fund's concentration limitation discussed above, with respect to
any investment in Fidelity® Money Market Central Fund and/or any non-money
market Central fund, FMR looks through to the holdings of the Central
fund.
For
purposes of the fund's concentration limitation discussed above, FMR may analyze
the characteristics of a particular issuer and security and assign an industry
or sector classification consistent with those characteristics in the event that
the third-party classification provider used by FMR does not assign a
classification.
Real
Estate
The
fund may not purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
fund from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business).
Commodities
The
fund may not purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not prevent the
fund from purchasing or selling options and futures contracts or from investing
in securities or other instruments backed by physical commodities).
Loans
The
fund may not lend any security or make any other loan if, as a result, more than
33 1/3% of its total assets would be lent to other parties, but this limitation
does not apply to purchases of debt securities or to repurchase agreements, or
to acquisitions of loans, loan participations or other forms of debt
instruments.
The
following investment limitations are not fundamental and may be changed without
shareholder approval.
Short
Sales
The
fund does not currently intend to sell securities short, unless it owns or has
the right to obtain securities equivalent in kind and amount to the securities
sold short, and provided that transactions in futures contracts and options are
not deemed to constitute selling securities short.
Margin
Purchases
The
fund does not currently intend to purchase securities on margin, except that the
fund may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments in connection with futures
contracts and options on futures contracts shall not constitute purchasing
securities on margin.
Borrowing
The
fund may borrow money only (a) from a bank or from a registered investment
company or portfolio for which FMR or an affiliate serves as investment adviser
or (b) by engaging in reverse repurchase agreements with any party (reverse
repurchase agreements are treated as borrowings for purposes of the fundamental
borrowing investment limitation).
Illiquid
Securities
The
fund does not currently intend to purchase any security if, as a result, more
than 10% of its net assets would be invested in securities that are deemed to be
illiquid because they are subject to legal or contractual restrictions on resale
or because they cannot be sold or disposed of in the ordinary course of business
at approximately the prices at which they are valued.
For
purposes of the fund's illiquid securities limitation discussed above, if
through a change in values, net assets, or other circumstances, the fund were in
a position where more than 10% of its net assets were invested in illiquid
securities, it would consider appropriate steps to protect liquidity.
Loans
The
fund does not currently intend to lend assets other than securities to other
parties, except by (a) lending money (up to 15% of the fund's net assets) to a
registered investment company or portfolio for which FMR or an affiliate serves
as investment adviser or (b) assuming any unfunded commitments in connection
with the acquisition of loans, loan participations, or other forms of debt
instruments. (This limitation does not apply to purchases of debt securities, to
repurchase agreements, or to acquisitions of loans, loan participations or other
forms of debt instruments.)
In
addition to the fund's fundamental and non-fundamental investment limitations
discussed above:
In
order to qualify as a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986, as amended, the fund currently intends to comply
with certain diversification limits imposed by Subchapter M.
For
the fund's policies and limitations on futures and options transactions, see
"Investment Policies and Limitations - Futures, Options, and Swaps."
The
following pages contain more detailed information about types of instruments in
which the fund may invest, techniques the fund's adviser (or a sub-adviser) may
employ in pursuit of the fund's investment objective, and a summary of related
risks. The fund's adviser (or a sub-adviser) may not buy all of these
instruments or use all of these techniques unless it believes that doing so will
help the fund achieve its goal. However, the fund's adviser (or a sub-adviser)
is not required to buy any particular instrument or use any particular technique
even if to do so might benefit the fund.
On
the following pages in this section titled "Investment Policies and
Limitations," and except as otherwise indicated, references to "an adviser" or
"the adviser" may relate to the fund's adviser or a sub-adviser, as
applicable.
Affiliated
Bank Transactions. A Fidelity® fund may engage in transactions with financial
institutions that are, or may be considered to be, "affiliated persons" of the
fund under the 1940 Act. These transactions may involve repurchase agreements
with custodian banks; short-term obligations of, and repurchase agreements with,
the 50 largest U.S. banks (measured by deposits); municipal securities; U.S.
Government securities with affiliated financial institutions that are primary
dealers in these securities; short-term currency transactions; and short-term
borrowings. In accordance with exemptive orders issued by the Securities and
Exchange Commission (SEC), the Board of Trustees has established and
periodically reviews procedures applicable to transactions involving affiliated
financial institutions.
Borrowing.
If a fund borrows money, its share price may be subject to greater fluctuation
until the borrowing is paid off. If a fund makes additional investments while
borrowings are outstanding, this may be considered a form of leverage.
Cash
Management. A fund may hold uninvested cash or may invest it in cash equivalents
such as money market securities, repurchase agreements, or shares of short-term
bond or money market funds, including (for Fidelity® funds and other advisory
clients only) shares of Fidelity® Central funds. Generally, these securities
offer less potential for gains than other types of securities.
Central
Funds are special types of investment vehicles created by Fidelity for use by
the Fidelity® funds and other advisory clients. Central funds are used to invest
in particular security types or investment disciplines, or for cash management.
Central funds incur certain costs related to their investment activity (such as
custodial fees and expenses), but generally do not pay additional management
fees. The investment results of the portions of a Fidelity® fund's assets
invested in the Central funds will be based upon the investment results of those
funds.
Commodity
Futures Trading Commission (CFTC) Notice of Exclusion. The Adviser, on behalf of
the Fidelity® fund to which this SAI relates, has filed with the National
Futures Association a notice claiming an exclusion from the definition of the
term "commodity pool operator" (CPO) under the Commodity Exchange Act, as
amended, and the rules of the CFTC promulgated thereunder, with respect to the
fund's operation. Accordingly, neither a fund nor its adviser is subject to
registration or regulation as a commodity pool or a CPO. As of the date of this
SAI, the adviser does not expect to register as a CPO of the fund. However,
there is no certainty that a fund or its adviser will be able to rely on an
exclusion in the future as the fund's investments change over time. A fund may
determine not to use investment strategies that trigger additional CFTC
regulation or may determine to operate subject to CFTC regulation, if
applicable. If a fund or its adviser operates subject to CFTC regulation, it may
incur additional expenses.
Common
Stock represents an equity or ownership interest in an issuer. In the event an
issuer is liquidated or declares bankruptcy, the claims of owners of bonds and
preferred stock take precedence over the claims of those who own common stock,
although related proceedings can take time to resolve and results can be
unpredictable. For purposes of a Fidelity® fund's policies related to investment
in common stock Fidelity considers depositary receipts evidencing ownership of
common stock to be common stock.
Convertible
Securities are bonds, debentures, notes, or other securities that may be
converted or exchanged (by the holder or by the issuer) into shares of the
underlying common stock (or cash or securities of equivalent value) at a stated
exchange ratio. A convertible security may also be called for redemption or
conversion by the issuer after a particular date and under certain circumstances
(including a specified price) established upon issue. If a convertible security
held by a fund is called for redemption or conversion, the fund could be
required to tender it for redemption, convert it into the underlying common
stock, or sell it to a third party.
Convertible
securities generally have less potential for gain or loss than common stocks.
Convertible securities generally provide yields higher than the underlying
common stocks, but generally lower than comparable non-convertible securities.
Because of this higher yield, convertible securities generally sell at prices
above their "conversion value," which is the current market value of the stock
to be received upon conversion. The difference between this conversion value and
the price of convertible securities will vary over time depending on changes in
the value of the underlying common stocks and interest rates. When the
underlying common stocks decline in value, convertible securities will tend not
to decline to the same extent because of the interest or dividend payments and
the repayment of principal at maturity for certain types of convertible
securities. However, securities that are convertible other than at the option of
the holder generally do not limit the potential for loss to the same extent as
securities convertible at the option of the holder. When the underlying common
stocks rise in value, the value of convertible securities may also be expected
to increase. At the same time, however, the difference between the market value
of convertible securities and their conversion value will narrow, which means
that the value of convertible securities will generally not increase to the same
extent as the value of the underlying common stocks. Because convertible
securities may also be interest-rate sensitive, their value may increase as
interest rates fall and decrease as interest rates rise. Convertible securities
are also subject to credit risk, and are often lower-quality securities.
Debt
Securities are used by issuers to borrow money. The issuer usually pays a fixed,
variable, or floating rate of interest, and must repay the amount borrowed,
usually at the maturity of the security. Some debt securities, such as zero
coupon bonds, do not pay interest but are sold at a deep discount from their
face values. Debt securities include corporate bonds, government securities,
repurchase agreements, and mortgage and other asset-backed securities.
Disruption
to Financial Markets and Related Government Intervention. Economic downturns can
trigger various economic, legal, budgetary, tax, and regulatory reforms across
the globe. Instability in the financial markets in the wake of events such as
the 2008 economic downturn led the U.S. Government and other governments to take
a number of then-unprecedented actions designed to support certain financial
institutions and segments of the financial markets that experienced extreme
volatility, and in some cases, a lack of liquidity. Federal, state, local,
foreign, and other governments, their regulatory agencies, or self-regulatory
organizations may take actions that affect the regulation of the instruments in
which a fund invests, or the issuers of such instruments, in ways that are
unforeseeable. Reforms may also change the way in which a fund is regulated and
could limit or preclude a fund's ability to achieve its investment objective or
engage in certain strategies. Also, while reforms generally are intended to
strengthen markets, systems, and public finances, they could affect fund
expenses and the value of fund investments in unpredictable ways.
Similarly,
widespread disease including pandemics and epidemics, and natural or
environmental disasters, such as earthquakes, droughts, fires, floods,
hurricanes, tsunamis and climate-related phenomena generally, have been and can
be highly disruptive to economies and markets, adversely impacting individual
companies, sectors, industries, markets, currencies, interest and inflation
rates, credit ratings, investor sentiment, and other factors affecting the value
of a fund's investments. Economies and financial markets throughout the world
have become increasingly interconnected, which increases the likelihood that
events or conditions in one region or country will adversely affect markets or
issuers in other regions or countries, including the United States.
Additionally, market disruptions may result in increased market volatility;
regulatory trading halts; closure of domestic or foreign exchanges, markets, or
governments; or market participants operating pursuant to business continuity
plans for indeterminate periods of time. Further, market disruptions can (i)
prevent a fund from executing advantageous investment decisions in a timely
manner, (ii) negatively impact a fund's ability to achieve its investment
objective, and (iii) may exacerbate the risks discussed elsewhere in a fund's
registration statement, including political, social, and economic risks.
The
value of a fund's portfolio is also generally subject to the risk of future
local, national, or global economic or natural disturbances based on unknown
weaknesses in the markets in which a fund invests. In the event of such a
disturbance, the issuers of securities held by a fund may experience significant
declines in the value of their assets and even cease operations, or may receive
government assistance accompanied by increased restrictions on their business
operations or other government intervention. In addition, it remains uncertain
that the U.S. Government or foreign governments will intervene in response to
current or future market disturbances and the effect of any such future
intervention cannot be predicted.
Exchange
Traded Funds (ETFs) are shares of other investment companies, commodity pools,
or other entities that are traded on an exchange. Assets underlying the ETF
shares may consist of stocks, bonds, commodities, or other instruments,
depending on an ETF's investment objective and strategies. An ETF may seek to
replicate the performance of a specific index or may be actively managed.
Typically,
shares of an ETF that tracks an index are expected to increase in value as the
value of the underlying benchmark increases. However, in the case of inverse
ETFs (also called "short ETFs" or "bear ETFs"), ETF shares are expected to
increase in value as the value of the underlying benchmark decreases. Inverse
ETFs seek to deliver the opposite of the performance of the benchmark they track
and are often marketed as a way for investors to profit from, or at least hedge
their exposure to, downward moving markets. Investments in inverse ETFs are
similar to holding short positions in the underlying benchmark.
ETF
shares are redeemable only in large blocks of shares often called "creation
units" by persons other than a fund, and are redeemed principally in-kind at
each day's next calculated net asset value per share (NAV). ETFs typically incur
fees that are separate from those fees incurred directly by a fund. A fund's
purchase of ETFs results in the layering of expenses, such that the fund would
indirectly bear a proportionate share of any ETF's operating expenses. Further,
while traditional investment companies are continuously offered at NAV, ETFs are
traded in the secondary market (e.g., on a stock exchange) on an intra-day basis
at prices that may be above or below the value of their underlying
portfolios.
Some
of the risks of investing in an ETF that tracks an index are similar to those of
investing in an indexed mutual fund, including tracking error risk (the risk of
errors in matching the ETF's underlying assets to the index or other benchmark);
and the risk that because an ETF that tracks an index is not actively managed,
it cannot sell stocks or other assets as long as they are represented in the
index or other benchmark. Other ETF risks include the risk that ETFs may trade
in the secondary market at a discount from their NAV and the risk that the ETFs
may not be liquid. ETFs also may be leveraged. Leveraged ETFs seek to deliver
multiples of the performance of the index or other benchmark they track and use
derivatives in an effort to amplify the returns (or decline, in the case of
inverse ETFs) of the underlying index or benchmark. While leveraged ETFs may
offer the potential for greater return, the potential for loss and the speed at
which losses can be realized also are greater. Most leveraged and inverse ETFs
"reset" daily, meaning they are designed to achieve their stated objectives on a
daily basis. Leveraged and inverse ETFs can deviate substantially from the
performance of their underlying benchmark over longer periods of time,
particularly in volatile periods.
Exchange
Traded Notes (ETNs) are a type of senior, unsecured, unsubordinated debt
security issued by financial institutions that combines aspects of both bonds
and ETFs. An ETN's returns are based on the performance of a market index or
other reference asset minus fees and expenses. Similar to ETFs, ETNs are listed
on an exchange and traded in the secondary market. However, unlike an ETF, an
ETN can be held until the ETN's maturity, at which time the issuer will pay a
return linked to the performance of the market index or other reference asset to
which the ETN is linked minus certain fees. Unlike regular bonds, ETNs typically
do not make periodic interest payments and principal typically is not
protected.
ETNs
also incur certain expenses not incurred by their applicable index. The market
value of an ETN is determined by supply and demand, the current performance of
the index or other reference asset, and the credit rating of the ETN issuer. The
market value of ETN shares may differ from their intraday indicative value. The
value of an ETN may also change due to a change in the issuer's credit rating.
As a result, there may be times when an ETN's share trades at a premium or
discount to its NAV. Some ETNs that use leverage in an effort to amplify the
returns of an underlying index or other reference asset can, at times, be
relatively illiquid and, thus, they may be difficult to purchase or sell at a
fair price. Leveraged ETNs may offer the potential for greater return, but the
potential for loss and speed at which losses can be realized also are
greater.
Exposure
to Foreign and Emerging Markets. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations may
involve significant risks in addition to the risks inherent in U.S.
investments.
Foreign
investments involve risks relating to local political, economic, regulatory, or
social instability, military action or unrest, or adverse diplomatic
developments, and may be affected by actions of foreign governments adverse to
the interests of U.S. investors. Such actions may include expropriation or
nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. From time to time, a fund's adviser
and/or its affiliates may determine that, as a result of regulatory requirements
that may apply to the adviser and/or its affiliates due to investments in a
particular country, investments in the securities of issuers domiciled or listed
on trading markets in that country above certain thresholds (which may apply at
the account level or in the aggregate across all accounts managed by the adviser
and its affiliates) may be impractical or undesirable. In such instances, the
adviser may limit or exclude investment in a particular issuer, and investment
flexibility may be restricted. Additionally, governmental issuers of foreign
debt securities may be unwilling to pay interest and repay principal when due
and may require that the conditions for payment be renegotiated. There is no
assurance that a fund's adviser will be able to anticipate these potential
events or counter their effects. In addition, the value of securities
denominated in foreign currencies and of dividends and interest paid with
respect to such securities will fluctuate based on the relative strength of the
U.S. dollar.
It
is anticipated that in most cases the best available market for foreign
securities will be on an exchange or in over-the-counter (OTC) markets located
outside of the United States. Foreign stock markets, while growing in volume and
sophistication, are generally not as developed as those in the United States,
and securities of some foreign issuers may be less liquid and more volatile than
securities of comparable U.S. issuers. Foreign security trading, settlement and
custodial practices (including those involving securities settlement where fund
assets may be released prior to receipt of payment) are often less developed
than those in U.S. markets, and may result in increased investment or valuation
risk or substantial delays in the event of a failed trade or the insolvency of,
or breach of duty by, a foreign broker-dealer, securities depository, or foreign
subcustodian. In addition, the costs associated with foreign investments,
including withholding taxes, brokerage commissions, and custodial costs, are
generally higher than with U.S. investments.
Foreign
markets may offer less protection to investors than U.S. markets. Foreign
issuers are generally not bound by uniform accounting, auditing, and financial
reporting requirements and standards of practice comparable to those applicable
to U.S. issuers. Adequate public information on foreign issuers may not be
available, and it may be difficult to secure dividends and information regarding
corporate actions on a timely basis. In general, there is less overall
governmental supervision and regulation of securities exchanges, brokers, and
listed companies than in the United States. OTC markets tend to be less
regulated than stock exchange markets and, in certain countries, may be totally
unregulated. Regulatory enforcement may be influenced by economic or political
concerns, and investors may have difficulty enforcing their legal rights in
foreign countries.
Some
foreign securities impose restrictions on transfer within the United States or
to U.S. persons. Although securities subject to such transfer restrictions may
be marketable abroad, they may be less liquid than foreign securities of the
same class that are not subject to such restrictions.
American
Depositary Receipts (ADRs) as well as other "hybrid" forms of ADRs, including
European Depositary Receipts (EDRs) and Global Depositary Receipts (GDRs), are
certificates evidencing ownership of shares of a foreign issuer. These
certificates are issued by depository banks and generally trade on an
established market in the United States or elsewhere. The underlying shares are
held in trust by a custodian bank or similar financial institution in the
issuer's home country. The depository bank may not have physical custody of the
underlying securities at all times and may charge fees for various services,
including forwarding dividends and interest and corporate actions. ADRs are
alternatives to directly purchasing the underlying foreign securities in their
national markets and currencies. However, ADRs continue to be subject to many of
the risks associated with investing directly in foreign securities. These risks
include foreign exchange risk as well as the political and economic risks of the
underlying issuer's country.
The
risks of foreign investing may be magnified for investments in emerging markets.
Security prices in emerging markets can be significantly more volatile than
those in more developed markets, reflecting the greater uncertainties of
investing in less established markets and economies. In particular, countries
with emerging markets may have relatively unstable governments, may present the
risks of nationalization of businesses, restrictions on foreign ownership and
prohibitions on the repatriation of assets, and may have less protection of
property rights than more developed countries. The economies of countries with
emerging markets may be based on only a few industries, may be highly vulnerable
to changes in local or global trade conditions, and may suffer from extreme and
volatile debt burdens or inflation rates. Local securities markets may trade a
small number of securities and may be unable to respond effectively to increases
in trading volume, potentially making prompt liquidation of holdings difficult
or impossible at times.
Foreign
Currency Transactions. A fund may conduct foreign currency transactions on a
spot (i.e., cash) or forward basis (i.e., by entering into forward contracts to
purchase or sell foreign currencies). Although foreign exchange dealers
generally do not charge a fee for such conversions, they do realize a profit
based on the difference between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency at one
rate, while offering a lesser rate of exchange should the counterparty desire to
resell that currency to the dealer. Forward contracts are customized
transactions that require a specific amount of a currency to be delivered at a
specific exchange rate on a specific date or range of dates in the future.
Forward contracts are generally traded in an interbank market directly between
currency traders (usually large commercial banks) and their customers. The
parties to a forward contract may agree to offset or terminate the contract
before its maturity, or may hold the contract to maturity and complete the
contemplated currency exchange.
The
following discussion summarizes the principal currency management strategies
involving forward contracts that could be used by a fund. A fund may also use
swap agreements, indexed securities, and options and futures contracts relating
to foreign currencies for the same purposes. Forward contracts not calling for
physical delivery of the underlying instrument will be settled through payments
in U.S. dollars rather than through delivery of the underlying currency. All of
these instruments and transactions are subject to the risk that the counterparty
will default.
A
"settlement hedge" or "transaction hedge" is designed to protect a fund against
an adverse change in foreign currency values between the date a security
denominated in a foreign currency is purchased or sold and the date on which
payment is made or received. Entering into a forward contract for the purchase
or sale of the amount of foreign currency involved in an underlying security
transaction for a fixed amount of U.S. dollars "locks in" the U.S. dollar price
of the security. Forward contracts to purchase or sell a foreign currency may
also be used to protect a fund in anticipation of future purchases or sales of
securities denominated in foreign currency, even if the specific investments
have not yet been selected.
A
fund may also use forward contracts to hedge against a decline in the value of
existing investments denominated in a foreign currency. For example, if a fund
owned securities denominated in pounds sterling, it could enter into a forward
contract to sell pounds sterling in return for U.S. dollars to hedge against
possible declines in the pound's value. Such a hedge, sometimes referred to as a
"position hedge," would tend to offset both positive and negative currency
fluctuations, but would not offset changes in security values caused by other
factors. A fund could also attempt to hedge the position by selling another
currency expected to perform similarly to the pound sterling. This type of
hedge, sometimes referred to as a "proxy hedge," could offer advantages in terms
of cost, yield, or efficiency, but generally would not hedge currency exposure
as effectively as a direct hedge into U.S. dollars. Proxy hedges may result in
losses if the currency used to hedge does not perform similarly to the currency
in which the hedged securities are denominated.
A
fund may enter into forward contracts to shift its investment exposure from one
currency into another. This may include shifting exposure from U.S. dollars to a
foreign currency, or from one foreign currency to another foreign currency. This
type of strategy, sometimes known as a "cross-hedge," will tend to reduce or
eliminate exposure to the currency that is sold, and increase exposure to the
currency that is purchased, much as if a fund had sold a security denominated in
one currency and purchased an equivalent security denominated in another. A fund
may cross-hedge its U.S. dollar exposure in order to achieve a representative
weighted mix of the major currencies in its benchmark index and/or to cover an
underweight country or region exposure in its portfolio. Cross-hedges protect
against losses resulting from a decline in the hedged currency, but will cause a
fund to assume the risk of fluctuations in the value of the currency it
purchases.
Successful
use of currency management strategies will depend on an adviser's skill in
analyzing currency values. Currency management strategies may substantially
change a fund's investment exposure to changes in currency exchange rates and
could result in losses to a fund if currencies do not perform as an adviser
anticipates. For example, if a currency's value rose at a time when a fund had
hedged its position by selling that currency in exchange for dollars, the fund
would not participate in the currency's appreciation. If a fund hedges currency
exposure through proxy hedges, the fund could realize currency losses from both
the hedge and the security position if the two currencies do not move in tandem.
Similarly, if a fund increases its exposure to a foreign currency and that
currency's value declines, the fund will realize a loss. Foreign currency
transactions involve the risk that anticipated currency movements will not be
accurately predicted and that a fund's hedging strategies will be ineffective.
Moreover, it is impossible to precisely forecast the market value of portfolio
securities at the expiration of a foreign currency forward contract.
Accordingly, a fund may be required to buy or sell additional currency on the
spot market (and bear the expenses of such transaction), if an adviser's
predictions regarding the movement of foreign currency or securities markets
prove inaccurate.
A
fund may be required to limit its hedging transactions in foreign currency
forwards, futures, and options in order to maintain its classification as a
"regulated investment company" under the Internal Revenue Code (Code). Hedging
transactions could result in the application of the mark-to-market provisions of
the Code, which may cause an increase (or decrease) in the amount of taxable
dividends paid by a fund and could affect whether dividends paid by a fund are
classified as capital gains or ordinary income. There is no assurance that an
adviser's use of currency management strategies will be advantageous to a fund
or that it will employ currency management strategies at appropriate
times.
Options
and Futures Relating to Foreign Currencies. Currency futures contracts are
similar to forward currency exchange contracts, except that they are traded on
exchanges (and have margin requirements) and are standardized as to contract
size and delivery date. Most currency futures contracts call for payment or
delivery in U.S. dollars. The underlying instrument of a currency option may be
a foreign currency, which generally is purchased or delivered in exchange for
U.S. dollars, or may be a futures contract. The purchaser of a currency call
obtains the right to purchase the underlying currency, and the purchaser of a
currency put obtains the right to sell the underlying currency.
The
uses and risks of currency options and futures are similar to options and
futures relating to securities or indexes, as discussed below. A fund may
purchase and sell currency futures and may purchase and write currency options
to increase or decrease its exposure to different foreign currencies. Currency
options may also be purchased or written in conjunction with each other or with
currency futures or forward contracts. Currency futures and options values can
be expected to correlate with exchange rates, but may not reflect other factors
that affect the value of a fund's investments. A currency hedge, for example,
should protect a Yen-denominated security from a decline in the Yen, but will
not protect a fund against a price decline resulting from deterioration in the
issuer's creditworthiness. Because the value of a fund's foreign-denominated
investments changes in response to many factors other than exchange rates, it
may not be possible to match the amount of currency options and futures to the
value of the fund's investments exactly over time.
Currency
options traded on U.S. or other exchanges may be subject to position limits
which may limit the ability of the fund to reduce foreign currency risk using
such options.
Funds
of Funds and Other Large Shareholders. Certain Fidelity® funds and accounts
(including funds of funds) invest in other funds ("underlying funds") and, as a
result, may at times have substantial investments in one or more underlying
funds.
An
underlying fund may experience large redemptions or investments due to
transactions in its shares by funds of funds, other large shareholders, or
similarly managed accounts. While it is impossible to predict the overall effect
of these transactions over time, there could be an adverse impact on an
underlying fund's performance. In the event of such redemptions or investments,
an underlying fund could be required to sell securities or to invest cash at a
time when it may not otherwise desire to do so. Such transactions may increase
an underlying fund's brokerage and/or other transaction costs and affect the
liquidity of a fund's portfolio. In addition, when funds of funds or other
investors own a substantial portion of an underlying fund's shares, a large
redemption by such an investor could cause actual expenses to increase, or could
result in the underlying fund's current expenses being allocated over a smaller
asset base, leading to an increase in the underlying fund's expense ratio.
Redemptions of underlying fund shares could also accelerate the realization of
taxable capital gains in the fund if sales of securities result in capital
gains. The impact of these transactions is likely to be greater when a fund of
funds or other significant investor purchases, redeems, or owns a substantial
portion of the underlying fund's shares.
When
possible, Fidelity will consider how to minimize these potential adverse
effects, and may take such actions as it deems appropriate to address potential
adverse effects, including redemption of shares in-kind rather than in cash or
carrying out the transactions over a period of time, although there can be no
assurance that such actions will be successful. A high volume of redemption
requests can impact an underlying fund the same way as the transactions of a
single shareholder with substantial investments. As an additional safeguard,
Fidelity® fund of funds may manage the placement of their redemption requests in
a manner designed to minimize the impact of such requests on the day-to-day
operations of the underlying funds in which they invest. This may involve, for
example, redeeming its shares of an underlying fund gradually over time or
through use of a transition account.
Fund's
Rights as an Investor. Fidelity® funds do not intend to direct or administer the
day-to-day operations of any company. A fund may, however, exercise its rights
as a shareholder or lender and may communicate its views on important matters of
policy to a company's management, board of directors, and shareholders, and
holders of a company's other securities when such matters could have a
significant effect on the value of the fund's investment in the company. The
activities in which a fund may engage, either individually or in conjunction
with others, may include, among others, supporting or opposing proposed changes
in a company's corporate structure or business activities; seeking changes in a
company's directors or management; seeking changes in a company's direction or
policies; seeking the sale or reorganization of the company or a portion of its
assets; supporting or opposing third-party takeover efforts; supporting the
filing of a bankruptcy petition; or foreclosing on collateral securing a
security. This area of corporate activity is increasingly prone to litigation
and it is possible that a fund could be involved in lawsuits related to such
activities. Such activities will be monitored with a view to mitigating, to the
extent possible, the risk of litigation against a fund and the risk of actual
liability if a fund is involved in litigation. No guarantee can be made,
however, that litigation against a fund will not be undertaken or liabilities
incurred. A fund's proxy voting guidelines are included in its SAI.
Futures,
Options, and Swaps. The success of any strategy involving futures, options, and
swaps depends on an adviser's analysis of many economic and mathematical factors
and a fund's return may be higher if it never invested in such instruments.
Additionally, some of the contracts discussed below are new instruments without
a trading history and there can be no assurance that a market for the
instruments will continue to exist. Government legislation or regulation could
affect the use of such instruments and could limit a fund's ability to pursue
its investment strategies. If a fund invests a significant portion of its assets
in derivatives, its investment exposure could far exceed the value of its
portfolio securities and its investment performance could be primarily dependent
upon securities it does not own.
Fidelity®
SAI Small-Mid Cap 500 Index Fund will not: (a) sell futures contracts, purchase
put options, or write call options if, as a result, more than 25% of the fund's
total assets would be hedged with futures and options under normal conditions;
(b) purchase futures contracts or write put options if, as a result, the fund's
total obligations upon settlement or exercise of purchased futures contracts and
written put options would exceed 25% of its total assets under normal
conditions; or (c) purchase call options if, as a result, the current value of
option premiums for call options purchased by the fund would exceed 5% of the
fund's total assets. These limitations do not apply to options attached to or
acquired or traded together with their underlying securities, and do not apply
to structured notes.
The
policies and limitations regarding the fund's investments in futures contracts,
options, and swaps may be changed as regulatory agencies permit.
The
requirements for qualification as a regulated investment company may limit the
extent to which a fund may enter into futures, options on futures, and forward
contracts.
Futures
Contracts. In purchasing a futures contract, the buyer agrees to purchase a
specified underlying instrument at a specified future date. In selling a futures
contract, the seller agrees to sell a specified underlying instrument at a
specified date. Futures contracts are standardized, exchange-traded contracts
and the price at which the purchase and sale will take place is fixed when the
buyer and seller enter into the contract. Some currently available futures
contracts are based on specific securities or baskets of securities, some are
based on commodities or commodities indexes (for funds that seek commodities
exposure), and some are based on indexes of securities prices (including foreign
indexes for funds that seek foreign exposure). Futures on indexes and futures
not calling for physical delivery of the underlying instrument will be settled
through cash payments rather than through delivery of the underlying instrument.
Futures can be held until their delivery dates, or can be closed out by
offsetting purchases or sales of futures contracts before then if a liquid
market is available. A fund may realize a gain or loss by closing out its
futures contracts.
The
value of a futures contract tends to increase and decrease in tandem with the
value of its underlying instrument. Therefore, purchasing futures contracts will
tend to increase a fund's exposure to positive and negative price fluctuations
in the underlying instrument, much as if it had purchased the underlying
instrument directly. When a fund sells a futures contract, by contrast, the
value of its futures position will tend to move in a direction contrary to the
market for the underlying instrument. Selling futures contracts, therefore, will
tend to offset both positive and negative market price changes, much as if the
underlying instrument had been sold.
The
purchaser or seller of a futures contract or an option for a futures contract is
not required to deliver or pay for the underlying instrument or the final cash
settlement price, as applicable, unless the contract is held until the delivery
date. However, both the purchaser and seller are required to deposit "initial
margin" with a futures broker, known as a futures commission merchant, when the
contract is entered into. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to settle
the change in value on a daily basis. This process of "marking to market" will
be reflected in the daily calculation of open positions computed in a fund's
NAV. The party that has a gain is entitled to receive all or a portion of this
amount. Initial and variation margin payments do not constitute purchasing
securities on margin for purposes of a fund's investment limitations. Variation
margin does not represent a borrowing or loan by a fund, but is instead a
settlement between a fund and the futures commission merchant of the amount one
would owe the other if the fund's contract expired. In the event of the
bankruptcy or insolvency of a futures commission merchant that holds margin on
behalf of a fund, the fund may be entitled to return of margin owed to it only
in proportion to the amount received by the futures commission merchant's other
customers, potentially resulting in losses to the fund.
Although
futures exchanges generally operate similarly in the United States and abroad,
foreign futures exchanges may follow trading, settlement, and margin procedures
that are different from those for U.S. exchanges. Futures contracts traded
outside the United States may not involve a clearing mechanism or related
guarantees and may involve greater risk of loss than U.S.-traded contracts,
including potentially greater risk of losses due to insolvency of a futures
broker, exchange member, or other party that may owe initial or variation margin
to a fund. Because initial and variation margin payments may be measured in
foreign currency, a futures contract traded outside the United States may also
involve the risk of foreign currency fluctuation.
There
is no assurance a liquid market will exist for any particular futures contract
at any particular time. Exchanges may establish daily price fluctuation limits
for futures contracts, and may halt trading if a contract's price moves upward
or downward more than the limit in a given day. On volatile trading days when
the price fluctuation limit is reached or a trading halt is imposed, it may be
impossible to enter into new positions or close out existing positions. The
daily limit governs only price movements during a particular trading day and
therefore does not limit potential losses because the limit may work to prevent
the liquidation of unfavorable positions. For example, futures prices have
occasionally moved to the daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of positions and
subjecting some holders of futures contracts to substantial losses.
If
the market for a contract is not liquid because of price fluctuation limits or
other market conditions, it could prevent prompt liquidation of unfavorable
positions, and potentially could require a fund to continue to hold a position
until delivery or expiration regardless of changes in its value. These risks may
be heightened for commodity futures contracts, which have historically been
subject to greater price volatility than exists for instruments such as stocks
and bonds.
Because
there are a limited number of types of exchange-traded futures contracts, it is
likely that the standardized contracts available will not match a fund's current
or anticipated investments exactly. A fund may invest in futures contracts based
on securities with different issuers, maturities, or other characteristics from
the securities in which the fund typically invests, which involves a risk that
the futures position will not track the performance of the fund's other
investments.
Futures
prices can also diverge from the prices of their underlying instruments, even if
the underlying instruments match a fund's investments well. Futures prices are
affected by such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument, and the time remaining until
expiration of the contract, which may not affect security prices the same way.
Imperfect correlation may also result from differing levels of demand in the
futures markets and the securities markets, from structural differences in how
futures and securities are traded, or from imposition of daily price fluctuation
limits or trading halts. A fund may purchase or sell futures contracts with a
greater or lesser value than the securities it wishes to hedge or intends to
purchase in order to attempt to compensate for differences in volatility between
the contract and the securities, although this may not be successful in all
cases. If price changes in a fund's futures positions are poorly correlated with
its other investments, the positions may fail to produce anticipated gains or
result in losses that are not offset by gains in other investments.
In addition, the price of a commodity futures contract can reflect the
storage costs associated with the purchase of the physical commodity.
Futures
contracts on U.S. Government securities historically have reacted to an increase
or decrease in interest rates in a manner similar to the manner in which the
underlying U.S. Government securities reacted. To the extent, however, that a
fund enters into such futures contracts, the value of these futures contracts
will not vary in direct proportion to the value of the fund's holdings of U.S.
Government securities. Thus, the anticipated spread between the price of the
futures contract and the hedged security may be distorted due to differences in
the nature of the markets. The spread also may be distorted by differences in
initial and variation margin requirements, the liquidity of such markets and the
participation of speculators in such markets.
Options.
By purchasing a put option, the purchaser obtains the right (but not the
obligation) to sell the option's underlying instrument at a fixed strike price.
In return for this right, the purchaser pays the current market price for the
option (known as the option premium). Options have various types of underlying
instruments, including specific assets or securities, baskets of assets or
securities, indexes of securities or commodities prices, and futures contracts
(including commodity futures contracts). Options may be traded on an exchange or
OTC. The purchaser may terminate its position in a put option by allowing it to
expire or by exercising the option. If the option is allowed to expire, the
purchaser will lose the entire premium. If the option is exercised, the
purchaser completes the sale of the underlying instrument at the strike price.
Depending on the terms of the contract, upon exercise, an option may require
physical delivery of the underlying instrument or may be settled through cash
payments. A purchaser may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary market
exists.
The
buyer of a typical put option can expect to realize a gain if the underlying
instrument's price falls substantially. However, if the underlying instrument's
price does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium, plus
related transaction costs).
The
features of call options are essentially the same as those of put options,
except that the purchaser of a call option obtains the right (but not the
obligation) to purchase, rather than sell, the underlying instrument at the
option's strike price. A call buyer typically attempts to participate in
potential price increases of the underlying instrument with risk limited to the
cost of the option if the underlying instrument's price falls. At the same time,
the buyer can expect to suffer a loss if the underlying instrument's price does
not rise sufficiently to offset the cost of the option.
The
writer of a put or call option takes the opposite side of the transaction from
the option's purchaser. In return for receipt of the premium, the writer assumes
the obligation to pay or receive the strike price for the option's underlying
instrument if the other party to the option chooses to exercise it. The writer
may seek to terminate a position in a put option before exercise by closing out
the option in the secondary market at its current price. If the secondary market
is not liquid for a put option, however, the writer must continue to be prepared
to pay the strike price while the option is outstanding, regardless of price
changes. When writing an option on a futures contract, a fund will be required
to make margin payments to a futures commission merchant as described above for
futures contracts.
If
the underlying instrument's price rises, a put writer would generally expect to
profit, although its gain would be limited to the amount of the premium it
received. If the underlying instrument's price remains the same over time, it is
likely that the writer will also profit, because it should be able to close out
the option at a lower price. If the underlying instrument's price falls, the put
writer would expect to suffer a loss. This loss should be less than the loss
from purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the
decline.
Writing
a call option obligates the writer to sell or deliver the option's underlying
instrument or make a net cash settlement payment, as applicable, in return for
the strike price, upon exercise of the option. The characteristics of writing
call options are similar to those of writing put options, except that writing
calls generally is a profitable strategy if prices remain the same or fall.
Through receipt of the option premium, a call writer should mitigate the effects
of a price increase. At the same time, because a call writer must be prepared to
deliver the underlying instrument or make a net cash settlement payment, as
applicable, in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in price increases
and, if a call writer does not hold the underlying instrument, a call writer's
loss is theoretically unlimited.
Where
a put or call option on a particular security is purchased to hedge against
price movements in a related security, the price to close out the put or call
option on the secondary market may move more or less than the price of the
related security.
There
is no assurance a liquid market will exist for any particular options contract
at any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying instrument's
current price. In addition, exchanges may establish daily price fluctuation
limits for exchange-traded options contracts, and may halt trading if a
contract's price moves upward or downward more than the limit in a given day. On
volatile trading days when the price fluctuation limit is reached or a trading
halt is imposed, it may be impossible to enter into new positions or close out
existing positions. If the market for a contract is not liquid because of price
fluctuation limits or otherwise, it could prevent prompt liquidation of
unfavorable positions, and potentially could require a fund to continue to hold
a position until delivery or expiration regardless of changes in its
value.
Unlike
exchange-traded options, which are standardized with respect to the underlying
instrument, expiration date, contract size, and strike price, the terms of OTC
options (options not traded on exchanges) generally are established through
negotiation with the other party to the option contract. While this type of
arrangement allows the purchaser or writer greater flexibility to tailor an
option to its needs, OTC options generally are less liquid and involve greater
credit risk than exchange-traded options, which are backed by the clearing
organization of the exchanges where they are traded.
Combined
positions involve purchasing and writing options in combination with each other,
or in combination with futures or forward contracts, to adjust the risk and
return characteristics of the overall position. For example, purchasing a put
option and writing a call option on the same underlying instrument would
construct a combined position whose risk and return characteristics are similar
to selling a futures contract. Another possible combined position would involve
writing a call option at one strike price and buying a call option at a lower
price, to reduce the risk of the written call option in the event of a
substantial price increase. Because combined options positions involve multiple
trades, they result in higher transaction costs and may be more difficult to
open and close out.
A
fund may also buy and sell options on swaps (swaptions), which are generally
options on interest rate swaps. An option on a swap gives a party the right (but
not the obligation) to enter into a new swap agreement or to extend, shorten,
cancel or modify an existing contract at a specific date in the future in
exchange for a premium. Depending on the terms of the particular option
agreement, a fund will generally incur a greater degree of risk when it writes
(sells) an option on a swap than it will incur when it purchases an option on a
swap. When a fund purchases an option on a swap, it risks losing only the amount
of the premium it has paid should it decide to let the option expire
unexercised. However, when a fund writes an option on a swap, upon exercise of
the option the fund will become obligated according to the terms of the
underlying agreement. A fund that writes an option on a swap receives the
premium and bears the risk of unfavorable changes in the preset rate on the
underlying interest rate swap. Whether a fund's use of options on swaps will be
successful in furthering its investment objective will depend on the adviser's
ability to predict correctly whether certain types of investments are likely to
produce greater returns than other investments. Options on swaps may involve
risks similar to those discussed below in "Swap Agreements."
Because
there are a limited number of types of exchange-traded options contracts, it is
likely that the standardized contracts available will not match a fund's current
or anticipated investments exactly. A fund may invest in options contracts based
on securities with different issuers, maturities, or other characteristics from
the securities in which the fund typically invests, which involves a risk that
the options position will not track the performance of the fund's other
investments.
Options
prices can also diverge from the prices of their underlying instruments, even if
the underlying instruments match a fund's investments well. Options prices are
affected by such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument, and the time remaining until
expiration of the contract, which may not affect security prices the same way.
Imperfect correlation may also result from differing levels of demand in the
options and futures markets and the securities markets, from structural
differences in how options and futures and securities are traded, or from
imposition of daily price fluctuation limits or trading halts. A fund may
purchase or sell options contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price changes
in a fund's options positions are poorly correlated with its other investments,
the positions may fail to produce anticipated gains or result in losses that are
not offset by gains in other investments.
Swap
Agreements. Under a typical equity swap agreement, a counterparty such as a bank
or broker-dealer agrees to pay a fund a return equal to the dividend payments
and increase in value, if any, of an index or group of stocks, or of a stock,
and the fund agrees in return to pay a fixed or floating rate of interest, plus
any declines in value of the index. Swap agreements can also have features
providing for maximum or minimum exposure to a designated index. In order to
hedge its exposure effectively, a fund would generally have to own other assets
returning approximately the same amount as the interest rate payable by the fund
under the swap agreement.
Swap
agreements allow a fund to acquire or reduce credit exposure to a particular
issuer, asset, or basket of assets. The most significant factor in the
performance of swap agreements is the change in value of the specific index,
security, or currency, or other factors that determine the amounts of payments
due to and from a fund. If a swap agreement calls for payments by a fund, the
fund must be prepared to make such payments when due. If the creditworthiness of
a fund's swap counterparty declines, the risk that the counterparty may not
perform could increase, potentially resulting in a loss to the fund and
impairing the fund's correlation with its applicable index. Although there can
be no assurance that a fund will be able to do so, a fund may be able to reduce
or eliminate its exposure under a swap agreement either by assignment or other
disposition, or by entering into an offsetting swap agreement with the same
party or another more creditworthy party.
A
fund bears the risk of loss of the amount expected to be received under a swap
agreement in the event of the default or bankruptcy of a swap agreement
counterparty. A fund would generally be required to provide margin or collateral
for the benefit of that counterparty. If a counterparty to a swap transaction
becomes insolvent, the fund may be limited temporarily or permanently in
exercising its right to the return of related fund assets designated as margin
or collateral in an action against the counterparty.
Swap
agreements are subject to the risk that the market value of the instrument will
change in a way detrimental to a fund's interest. A fund bears the risk that an
adviser will not accurately forecast market trends or the values of assets,
reference rates, indexes, or other economic factors in establishing swap
positions for a fund. If an adviser attempts to use a swap as a hedge against,
or as a substitute for, a portfolio investment, a fund may be exposed to the
risk that the swap will have or will develop imperfect or no correlation with
the portfolio investment, which could cause substantial losses for a fund. While
hedging strategies involving swap instruments can reduce the risk of loss, they
can also reduce the opportunity for gain or even result in losses by offsetting
favorable price movements in other fund investments. Swaps are complex and often
valued subjectively.
Hybrid
and Preferred Securities. A hybrid security may be a debt security, warrant,
convertible security, certificate of deposit or other evidence of indebtedness
on which the value of the interest on or principal of which is determined by
reference to changes in the value of a reference instrument or financial
strength of a reference entity (e.g., a security or other financial instrument,
asset, currency, interest rate, commodity, index, or business entity such as a
financial institution). Another example is contingent convertible securities,
which are fixed income securities that, under certain circumstances, either
convert into common stock of the issuer or undergo a principal write-down by a
predetermined percentage if the issuer's capital ratio falls below a
predetermined trigger level. The liquidation value of such a security may be
reduced upon a regulatory action and without the need for a bankruptcy
proceeding. Preferred securities may take the form of preferred stock and
represent an equity or ownership interest in an issuer that pays dividends at a
specified rate and that has precedence over common stock in the payment of
dividends. In the event an issuer is liquidated or declares bankruptcy, the
claims of owners of bonds generally take precedence over the claims of those who
own preferred and common stock.
The
risks of investing in hybrid and preferred securities reflect a combination of
the risks of investing in securities, options, futures and currencies. An
investment in a hybrid or preferred security may entail significant risks that
are not associated with a similar investment in a traditional debt or equity
security. The risks of a particular hybrid or preferred security will depend
upon the terms of the instrument, but may include the possibility of significant
changes in the value of any applicable reference instrument. Such risks may
depend upon factors unrelated to the operations or credit quality of the issuer
of the hybrid or preferred security. Hybrid and preferred securities are
potentially more volatile and carry greater market and liquidity risks than
traditional debt or equity securities. Also, the price of the hybrid or
preferred security and any applicable reference instrument may not move in the
same direction or at the same time. In addition, because hybrid and preferred
securities may be traded over-the-counter or in bilateral transactions with the
issuer of the security, hybrid and preferred securities may be subject to the
creditworthiness of the counterparty of the security and their values may
decline substantially if the counterparty's creditworthiness deteriorates. In
addition, uncertainty regarding the tax and regulatory treatment of hybrid and
preferred securities may reduce demand for such securities and tax and
regulatory considerations may limit the extent of a fund's investments in
certain hybrid and preferred securities.
Illiquid
Investments means any investment that cannot be sold or disposed of in current
market conditions in seven calendar days or less without the sale or disposition
significantly changing the market value of the investment. Difficulty in selling
or disposing of illiquid investments may result in a loss or may be costly to a
fund. Illiquid securities may include (1) repurchase agreements maturing in more
than seven days without demand/redemption features, (2) OTC options and certain
other derivatives, (3) private placements, (4) securities traded on markets and
exchanges with structural constraints, and (5) loan participations.
Under
the supervision of the Board of Trustees, a Fidelity® fund's adviser classifies
the liquidity of a fund's investments and monitors the extent of a fund's
illiquid investments.
Various
market, trading and investment-specific factors may be considered in determining
the liquidity of a fund's investments including, but not limited to (1) the
existence of an active trading market, (2) the nature of the security and the
market in which it trades, (3) the number, diversity, and quality of dealers and
prospective purchasers in the marketplace, (4) the frequency, volume, and
volatility of trade and price quotations, (5) bid-ask spreads, (6) dates of
issuance and maturity, (7) demand, put or tender features, and (8) restrictions
on trading or transferring the investment.
Fidelity
classifies certain investments as illiquid based upon these criteria. Fidelity
also monitors for certain market, trading and investment-specific events that
may cause Fidelity to re-evaluate an investment's liquidity status and may lead
to an investment being classified as illiquid. In addition, Fidelity uses a
third-party to assist with the liquidity classifications of the fund's
investments, which includes calculating the time to sell and settle a specified
size position in a particular investment without the sale significantly changing
the market value of the investment.
Increasing
Government Debt. The total public debt of the United States and other countries
around the globe as a percent of gross domestic product has, at times, grown
rapidly. Although high debt levels do not necessarily indicate or cause economic
problems, they may create certain systemic risks if sound debt management
practices are not implemented.
A
high national debt level may increase market pressures to meet government
funding needs, which may drive debt cost higher and cause a country to sell
additional debt, thereby increasing refinancing risk. A high national debt also
raises concerns that a government will not be able to make principal or interest
payments when they are due. In the worst case, unsustainable debt levels can
decline the valuation of currencies, and can prevent a government from
implementing effective counter-cyclical fiscal policy in economic
downturns.
Rating
services have, in the past, lowered their long-term sovereign credit rating on
the United States. The market prices and yields of securities supported by the
full faith and credit of the U.S. Government may be adversely affected by rating
services' decision to downgrade the long-term sovereign credit rating of the
United States.
Indexed
Securities are instruments whose prices are indexed to the prices of other
securities, securities indexes, or other financial indicators. Indexed
securities typically, but not always, are debt securities or deposits whose
values at maturity or coupon rates are determined by reference to a specific
instrument, statistic, or measure.
Indexed
securities also include commercial paper, certificates of deposit, and other
fixed-income securities whose values at maturity or coupon interest rates are
determined by reference to the returns of particular stock indexes. Indexed
securities can be affected by stock prices as well as changes in interest rates
and the creditworthiness of their issuers and may not track the indexes as
accurately as direct investments in the indexes.
Insolvency
of Issuers, Counterparties, and Intermediaries. Issuers of fund portfolio
securities or counterparties to fund transactions that become insolvent or
declare bankruptcy can pose special investment risks. In each circumstance, risk
of loss, valuation uncertainty, increased illiquidity, and other unpredictable
occurrences may negatively impact an investment. Each of these risks may be
amplified in foreign markets, where security trading, settlement, and custodial
practices can be less developed than those in the U.S. markets, and bankruptcy
laws differ from those of the U.S.
As
a general matter, if the issuer of a fund portfolio security is liquidated or
declares bankruptcy, the claims of owners of bonds and preferred stock have
priority over the claims of common stock owners. These events can negatively
impact the value of the issuer's securities and the results of related
proceedings can be unpredictable.
If
a counterparty to a fund transaction, such as a swap transaction, a short sale,
a borrowing, or other complex transaction becomes insolvent, the fund may be
limited in its ability to exercise rights to obtain the return of related fund
assets or in exercising other rights against the counterparty. Uncertainty may
also arise upon the insolvency of a securities or commodities intermediary such
as a broker-dealer or futures commission merchant with which a fund has pending
transactions. In addition, insolvency and liquidation proceedings take time to
resolve, which can limit or preclude a fund's ability to terminate a transaction
or obtain related assets or collateral in a timely fashion. If an intermediary
becomes insolvent, while securities positions and other holdings may be
protected by U.S. or foreign laws, it is sometimes difficult to determine
whether these protections are available to specific trades based on the
circumstances. Receiving the benefit of these protections can also take time to
resolve, which may result in illiquid positions.
Interfund
Borrowing and Lending Program. Pursuant to an exemptive order issued by the SEC,
a Fidelity® fund may lend money to, and borrow money from, other funds advised
by FMR or its affiliates. A Fidelity® fund will borrow through the program only
when the costs are equal to or lower than the costs of bank loans. A Fidelity®
fund will lend through the program only when the returns are higher than those
available from an investment in repurchase agreements. Interfund loans and
borrowings normally extend overnight, but can have a maximum duration of seven
days. Loans may be called on one day's notice. A Fidelity® fund may have to
borrow from a bank at a higher interest rate if an interfund loan is called or
not renewed. Any delay in repayment to a lending fund could result in a lost
investment opportunity or additional borrowing costs.
Investment-Grade
Debt Securities. Investment-grade debt securities include all types of debt
instruments that are of medium and high-quality. Investment-grade debt
securities include repurchase agreements collateralized by U.S. Government
securities as well as repurchase agreements collateralized by equity securities,
non-investment-grade debt, and all other instruments in which a fund can perfect
a security interest, provided the repurchase agreement counterparty has an
investment-grade rating. Some investment-grade debt securities may possess
speculative characteristics and may be more sensitive to economic changes and to
changes in the financial conditions of issuers. An investment-grade rating means
the security or issuer is rated investment-grade by a credit rating agency
registered as a nationally recognized statistical rating organization (NRSRO)
with the SEC (for example, Moody's Investors Service, Inc.), or is unrated but
considered to be of equivalent quality by a fund's adviser. For purposes of
determining the maximum maturity of an investment-grade debt security, an
adviser may take into account normal settlement periods.
Loans
and Other Direct Debt Instruments. Direct debt instruments are interests in
amounts owed by a corporate, governmental, or other borrower to lenders or
lending syndicates (loans and loan participations), to suppliers of goods or
services (trade claims or other receivables), or to other parties. Direct debt
instruments involve a risk of loss in case of default or insolvency of the
borrower and may offer less legal protection to the purchaser in the event of
fraud or misrepresentation, or there may be a requirement that a fund supply
additional cash to a borrower on demand. A fund may acquire loans by buying an
assignment of all or a portion of the loan from a lender or by purchasing a loan
participation from a lender or other purchaser of a participation.
Lenders
and purchasers of loans and other forms of direct indebtedness depend primarily
upon the creditworthiness of the borrower and/or any collateral for payment of
interest and repayment of principal. If scheduled interest or principal payments
are not made, the value of the instrument may be adversely affected. Loans that
are fully secured provide more protections than an unsecured loan in the event
of failure to make scheduled interest or principal payments. However, there is
no assurance that the liquidation of collateral from a secured loan would
satisfy the borrower's obligation, or that the collateral could be liquidated.
Indebtedness of borrowers whose creditworthiness is poor involves substantially
greater risks and may be highly speculative. Different types of assets may be
used as collateral for a fund's loans and there can be no assurance that a fund
will correctly evaluate the value of the assets collateralizing the fund's
loans. Borrowers that are in bankruptcy or restructuring may never pay off their
indebtedness, or may pay only a small fraction of the amount owed. In any
restructuring or bankruptcy proceedings relating to a borrower funded by a fund,
a fund may be required to accept collateral with less value than the amount of
the loan made by the fund to the borrower. Direct indebtedness of foreign
countries also involves a risk that the governmental entities responsible for
the repayment of the debt may be unable, or unwilling, to pay interest and repay
principal when due.
Loans
and other types of direct indebtedness (which a fund may originate, acquire or
otherwise gain exposure to) may not be readily marketable and may be subject to
restrictions on resale. Some indebtedness may be difficult to dispose of readily
at what the Adviser believes to be a fair price. In addition, valuation of
illiquid indebtedness involves a greater degree of judgment in determining a
fund's net asset value than if that value were based on readily available market
quotations, and could result in significant variations in a fund's daily share
price. Some loan interests are traded among certain financial institutions and
accordingly may be deemed liquid. As the market for different types of
indebtedness develops, the liquidity of these instruments is expected to
improve.
Direct
lending and investments in loans through direct assignment of a financial
institution's interests with respect to a loan may involve additional risks. For
example, if a loan is foreclosed, the lender/purchaser could become part owner
of any collateral, and would bear the costs and liabilities associated with
owning and disposing of the collateral. In the event of a default by the
borrower, a fund may have difficulty disposing of the assets used as collateral
for a loan. In addition, a purchaser could be held liable as a co-lender. Direct
debt instruments may also involve a risk of insolvency of the lending bank or
other intermediary.
A
loan is often administered by a bank or other financial institution that acts as
agent for all holders. The agent administers the terms of the loan, as specified
in the loan agreement. Unless, under the terms of the loan or other
indebtedness, the purchaser has direct recourse against the borrower, the
purchaser may have to rely on the agent to apply appropriate credit remedies
against a borrower. If assets held by the agent for the benefit of a purchaser
were determined to be subject to the claims of the agent's general creditors,
the purchaser might incur certain costs and delays in realizing payment on the
loan or loan participation and could suffer a loss of principal or interest.
Direct loans are typically not administered by an underwriter or agent bank. The
terms of direct loans are negotiated with borrowers in private transactions.
Direct loans are not publicly traded and may not have a secondary market.
A
fund may seek to dispose of loans in certain cases, to the extent possible,
through selling participations in the loan. In that case, a fund would remain
subject to certain obligations, which may result in expenses for a fund and
certain additional risks.
Direct
indebtedness may include letters of credit, revolving credit facilities, or
other standby financing commitments that obligate lenders/purchasers, including
a fund, to make additional cash payments on demand. These commitments may have
the effect of requiring a lender/purchaser to increase its investment in a
borrower at a time when it would not otherwise have done so, even if the
borrower's condition makes it unlikely that the amount will ever be
repaid.
In
the process of originating, buying, selling and holding loans, a fund may
receive and/or pay certain fees. These fees are in addition to the interest
payments received and may include facility, closing or upfront fees, commitment
fees and commissions. A fund may receive or pay a facility, closing or upfront
fee when it buys or sells a loan. A fund may receive a commitment fee throughout
the life of the loan or as long as the fund remains invested in the loan (in
addition to interest payments) for any unused portion of a committed line of
credit. Other fees received by the fund may include prepayment fees, covenant
waiver fees, ticking fees and/or modification fees. Legal fees related to the
originating, buying, selling and holding loans may also be borne by the fund
(including legal fees to assess conformity of a loan investment with 1940 Act
provisions).
When
engaging in direct lending, if permitted by its investment policies, a fund's
performance may depend, in part, on the ability of the fund to originate loans
on advantageous terms. A fund may compete with other lenders in originating and
purchasing loans. Increased competition for, or a diminished available supply
of, qualifying loans could result in lower yields on and/or less advantageous
terms for such loans, which could reduce fund performance.
For
a Fidelity® fund that limits the amount of total assets that it will invest in
any one issuer or in issuers within the same industry, the fund generally will
treat the borrower as the "issuer" of indebtedness held by the fund. In the case
of loan participations where a bank or other lending institution serves as
financial intermediary between a fund and the borrower, if the participation
does not shift to the fund the direct debtor-creditor relationship with the
borrower, SEC interpretations require a fund, in appropriate circumstances, to
treat both the lending bank or other lending institution and the borrower as
"issuers" for these purposes. Treating a financial intermediary as an issuer of
indebtedness may restrict a fund's ability to invest in indebtedness related to
a single financial intermediary, or a group of intermediaries engaged in the
same industry, even if the underlying borrowers represent many different
companies and industries.
A
fund may choose, at its expense or in conjunction with others, to pursue
litigation or otherwise to exercise its rights as a security holder to seek to
protect the interests of security holders if it determines this to be in the
best interest of the fund's shareholders.
If
permitted by its investment policies, a fund may also obtain exposure to the
lending activities described above indirectly through its investments in
underlying Fidelity® funds or other vehicles that may engage in such activities
directly.
Real
Estate Investment Trusts (REITs). Equity REITs own real estate properties, while
mortgage REITs make construction, development, and long-term mortgage loans.
Their value may be affected by changes in the value of the underlying property
of the trusts, the creditworthiness of the issuer, property taxes, interest
rates, and tax and regulatory requirements, such as those relating to the
environment. Both types of trusts are dependent upon management skill, are not
diversified, and are subject to heavy cash flow dependency, defaults by
borrowers, self-liquidation, and the possibility of failing to qualify for
tax-free status of income under the Internal Revenue Code and failing to
maintain exemption from the 1940 Act.
Repurchase
Agreements involve an agreement to purchase a security and to sell that security
back to the original seller at an agreed-upon price. The resale price reflects
the purchase price plus an agreed-upon incremental amount which is unrelated to
the coupon rate or maturity of the purchased security. As protection against the
risk that the original seller will not fulfill its obligation, the securities
are held in a separate account at a bank, marked-to-market daily, and maintained
at a value at least equal to the sale price plus the accrued incremental amount.
The value of the security purchased may be more or less than the price at which
the counterparty has agreed to purchase the security. In addition, delays or
losses could result if the other party to the agreement defaults or becomes
insolvent. A fund may be limited in its ability to exercise its right to
liquidate assets related to a repurchase agreement with an insolvent
counterparty. A Fidelity® fund may engage in repurchase agreement transactions
with parties whose creditworthiness has been reviewed and found satisfactory by
the fund's adviser.
Restricted
Securities (including Private Placements) are subject to legal restrictions on
their sale. Difficulty in selling securities may result in a loss or be costly
to a fund. Restricted securities, including private placements of private and
public companies, generally can be sold in privately negotiated transactions,
pursuant to an exemption from registration under the Securities Act of 1933
(1933 Act), or in a registered public offering. Where registration is required,
the holder of a registered security may be obligated to pay all or part of the
registration expense and a considerable period may elapse between the time it
decides to seek registration and the time it may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the holder might obtain a less favorable
price than prevailed when it decided to seek registration of the security.
Reverse
Repurchase Agreements. In a reverse repurchase agreement, a fund sells a
security to another party, such as a bank or broker-dealer, in return for cash
and agrees to repurchase that security at an agreed-upon price and time. A
Fidelity® fund may enter into reverse repurchase agreements with parties whose
creditworthiness has been reviewed and found satisfactory by the fund's adviser.
Such transactions may increase fluctuations in the market value of a fund's
assets and, if applicable, a fund's yield, and may be viewed as a form of
leverage. Under SEC requirements, a fund needs to aggregate the amount of
indebtedness associated with its reverse repurchase agreements and similar
financing transactions with the aggregate amount of any other senior securities
representing indebtedness (e.g., borrowings, if applicable) when calculating the
fund's asset coverage ratio or treat all such transactions as derivatives
transactions.
SEC
Rule 18f-4. In October 2020, the SEC adopted a final rule related to the
use of derivatives, short sales, reverse repurchase agreements and certain other
transactions by registered investment companies (the "rule"). Subject to certain
exceptions, the rule requires the funds to trade derivatives and certain other
transactions that create future payment or delivery obligations subject to a
value-at-risk (VaR) leverage limit and to certain derivatives risk management
program, reporting and board oversight requirements. Generally, these
requirements apply to any fund engaging in derivatives transactions unless a
fund satisfies a "limited derivatives users" exception, which requires the fund
to limit its gross notional derivatives exposure (with certain exceptions) to
10% of its net assets and to adopt derivatives risk management procedures. Under
the rule, when a fund trades reverse repurchase agreements or similar financing
transactions, it needs to aggregate the amount of indebtedness associated with
the reverse repurchase agreements or similar financing transactions with the
aggregate amount of any other senior securities representing indebtedness (e.g.,
borrowings, if applicable) when calculating the fund's asset coverage ratio or
treat all such transactions as derivatives transactions. The SEC also provided
guidance in connection with the final rule regarding the use of securities
lending collateral that may limit securities lending activities. In addition,
under the rule, a fund may invest in a security on a when-issued or
forward-settling basis, or with a non-standard settlement cycle, and the
transaction will be deemed not to involve a senior security (as defined under
Section 18(g) of the 1940 Act), provided that (i) the fund intends to physically
settle the transaction and (ii) the transaction will settle within 35 days of
its trade date (the "Delayed-Settlement Securities Provision"). A fund may
otherwise engage in when-issued, forward-settling and non-standard settlement
cycle securities transactions that do not meet the conditions of the
Delayed-Settlement Securities Provision so long as the fund treats any such
transaction as a derivatives transaction for purposes of compliance with the
rule. Furthermore, under the rule, a fund will be permitted to enter into an
unfunded commitment agreement, and such unfunded commitment agreement will not
be subject to the asset coverage requirements under the 1940 Act, if the fund
reasonably believes, at the time it enters into such agreement, that it will
have sufficient cash and cash equivalents to meet its obligations with respect
to all such agreements as they come due. These requirements may limit the
ability of the funds to use derivatives, short sales, reverse repurchase
agreements and similar financing transactions, and the other relevant
transactions as part of its investment strategies. These requirements also may
increase the cost of the fund's investments and cost of doing business, which
could adversely affect investors.
Securities
Lending. A Fidelity® fund may lend securities to parties such as broker-dealers
or other institutions, including an affiliate, National Financial Services LLC
(NFS). Fidelity® funds for which Geode Capital Management, LLC (Geode) serves as
sub-adviser will not lend securities to Geode or its affiliates. Securities
lending allows a fund to retain ownership of the securities loaned and, at the
same time, earn additional income. The borrower provides the fund with
collateral in an amount at least equal to the value of the securities loaned.
The fund seeks to maintain the ability to obtain the right to vote or consent on
proxy proposals involving material events affecting securities loaned. If the
borrower defaults on its obligation to return the securities loaned because of
insolvency or other reasons, a fund could experience delays and costs in
recovering the securities loaned or in gaining access to the collateral. These
delays and costs could be greater for foreign securities. If a fund is not able
to recover the securities loaned, the fund may sell the collateral and purchase
a replacement investment in the market. The value of the collateral could
decrease below the value of the replacement investment by the time the
replacement investment is purchased. For a Fidelity® fund, loans will be made
only to parties deemed by the fund's adviser to be in good standing and when, in
the adviser's judgment, the income earned would justify the risks.
The
Fidelity® funds have retained agents, including NFS, an affiliate of the funds,
to act as securities lending agent. If NFS acts as securities lending agent for
a fund, it is subject to the overall supervision of the fund's adviser, and NFS
will administer the lending program in accordance with guidelines approved by
the fund's Trustees.
Cash
received as collateral through loan transactions may be invested in other
eligible securities, including shares of a money market fund. Investing this
cash subjects that investment, as well as the securities loaned, to market
appreciation or depreciation.
Securities
of Other Investment Companies, including shares of closed-end investment
companies (which include business development companies (BDCs)), unit investment
trusts, and open-end investment companies such as mutual funds and ETFs,
represent interests in professionally managed portfolios that may invest in any
type of instrument. Investing in other investment companies involves
substantially the same risks as investing directly in the underlying
instruments, but may involve additional expenses at the underlying investment
company-level, such as portfolio management fees and operating expenses. Fees
and expenses incurred indirectly by a fund as a result of its investment in
shares of one or more other investment companies generally are referred to as
"acquired fund fees and expenses" and may appear as a separate line item in a
fund's prospectus fee table. For certain investment companies, such as BDCs,
these expenses may be significant. Certain types of investment companies, such
as closed-end investment companies, issue a fixed number of shares that trade on
a stock exchange or over-the-counter at a premium or a discount to their NAV.
Others are continuously offered at NAV, but may also be traded in the secondary
market. Similarly, ETFs trade on a securities exchange and may trade at a
premium or a discount to their NAV.
The
securities of closed-end funds may be leveraged. As a result, a fund may be
indirectly exposed to leverage through an investment in such securities. An
investment in securities of closed-end funds that use leverage may expose a fund
to higher volatility in the market value of such securities and the possibility
that the fund's long-term returns on such securities will be diminished.
A
fund's ability to invest in securities of other investment companies may be
limited by federal securities laws. To the extent a fund acquires securities
issued by unaffiliated investment companies, the Adviser's access to information
regarding such underlying fund's portfolio may be limited and subject to such
fund's policies regarding disclosure of fund holdings.
A
fund that seeks to track the performance of a particular index could invest in
investment companies that seek to track the performance of indexes other than
the index that the fund seeks to track.
Short
Sales "Against the Box" are short sales of securities that a fund owns or has
the right to obtain (equivalent in kind or amount to the securities sold short).
If a fund enters into a short sale against the box, it will be required to set
aside securities equivalent in kind and amount to the securities sold short (or
securities convertible or exchangeable into such securities) and will be
required to hold such securities while the short sale is outstanding. A fund
will incur transaction costs, including interest expenses, in connection with
opening, maintaining, and closing short sales against the box.
Special
Purpose Acquisition Companies (SPACs). A fund may invest in stock, warrants, and
other securities of SPACs or similar special purpose entities that pool money to
seek potential acquisition opportunities. SPACs are collective investment
structures formed to raise money in an initial public offering for the purpose
of merging with or acquiring one or more operating companies (the "de-SPAC
Transaction"). Until an acquisition is completed, a SPAC generally invests its
assets in US government securities, money market securities and cash. In
connection with a de-SPAC Transaction, the SPAC may complete a PIPE (private
investment in public equity) offering with certain investors. A fund may enter
into a contingent commitment with a SPAC to purchase PIPE shares if and when the
SPAC completes its de-SPAC Transaction.
Because
SPACs do not have an operating history or ongoing business other than seeking
acquisitions, the value of their securities is particularly dependent on the
ability of the SPAC's management to identify and complete a profitable
acquisition. Some SPACs may pursue acquisitions only within certain industries
or regions, which may increase the volatility of their prices. An investment in
a SPAC is subject to a variety of risks, including that (i) an attractive
acquisition or merger target may not be identified at all and the SPAC will be
required to return any remaining monies to shareholders; (ii) an acquisition or
merger once effected may prove unsuccessful and an investment in the SPAC may
lose value; (iii) the values of investments in SPACs may be highly volatile and
may depreciate significantly over time; (iv) no or only a thinly traded market
for shares of or interests in a SPAC may develop, leaving a fund unable to sell
its interest in a SPAC or to sell its interest only at a price below what the
fund believes is the SPAC interest's intrinsic value; (v) any proposed merger or
acquisition may be unable to obtain the requisite approval, if any, of
shareholders; (vi) an investment in a SPAC may be diluted by additional later
offerings of interests in the SPAC or by other investors exercising existing
rights to purchase shares of the SPAC; (vii) the warrants or other rights with
respect to the SPAC held by a fund may expire worthless or may be repurchased or
retired by the SPAC at an unfavorable price; (viii) a fund may be delayed in
receiving any redemption or liquidation proceeds from a SPAC to which it is
entitled; and (ix) a significant portion of the monies raised by the SPAC for
the purpose of identifying and effecting an acquisition or merger may be
expended during the search for a target transaction.
Purchased
PIPE shares will be restricted from trading until the registration statement for
the shares is declared effective. Upon registration, the shares can be freely
sold, but only pursuant to an effective registration statement or other
exemption from registration. The securities issued by a SPAC, which are
typically traded either in the over-the-counter market or on an exchange, may be
considered illiquid, more difficult to value, and/or be subject to restrictions
on resale.
Structured
Securities (also called "structured notes") are derivative debt securities, the
interest rate on or principal of which is determined by an unrelated indicator.
The value of the interest rate on and/or the principal of structured securities
is determined by reference to changes in the value of a reference instrument
(e.g., a security or other financial instrument, asset, currency, interest rate,
commodity, or index) or the relative change in two or more reference
instruments. A structured security may be positively, negatively, or both
positively and negatively indexed; that is, its value or interest rate may
increase or decrease if the value of the reference instrument increases.
Similarly, its value or interest rate may increase or decrease if the value of
the reference instrument decreases. Further, the change in the principal amount
payable with respect to, or the interest rate of, a structured security may be
calculated as a multiple of the percentage change (positive or negative) in the
value of the underlying reference instrument(s); therefore, the value of such
structured security may be very volatile. Structured securities may entail a
greater degree of market risk than other types of debt securities because the
investor bears the risk of the reference instrument. Structured securities may
also be more volatile, less liquid, and more difficult to accurately price than
less complex securities or more traditional debt securities. In addition,
because structured securities generally are traded over-the-counter, structured
securities are subject to the creditworthiness of the counterparty of the
structured security, and their values may decline substantially if the
counterparty's creditworthiness deteriorates.
Transfer
Agent Bank Accounts. Proceeds from shareholder purchases of a Fidelity® fund may
pass through a series of demand deposit bank accounts before being held at the
fund's custodian. Redemption proceeds may pass from the custodian to the
shareholder through a similar series of bank accounts.
If
a bank account is registered to the transfer agent or an affiliate, who acts as
an agent for the fund when opening, closing, and conducting business in the bank
account, the transfer agent or an affiliate may invest overnight balances in the
account in repurchase agreements. Any balances that are not invested in
repurchase agreements remain in the bank account overnight. Any risks associated
with such an account are investment risks of the fund. The fund faces the risk
of loss of these balances if the bank becomes insolvent.
Warrants.
Warrants are instruments which entitle the holder to buy an equity security at a
specific price for a specific period of time. Changes in the value of a warrant
do not necessarily correspond to changes in the value of its underlying
security. The price of a warrant may be more volatile than the price of its
underlying security, and a warrant may offer greater potential for capital
appreciation as well as capital loss.
Warrants
do not entitle a holder to dividends or voting rights with respect to the
underlying security and do not represent any rights in the assets of the issuing
company. A warrant ceases to have value if it is not exercised prior to its
expiration date. These factors can make warrants more speculative than other
types of investments.
Zero
Coupon Bonds do not make interest payments; instead, they are sold at a discount
from their face value and are redeemed at face value when they mature. Because
zero coupon bonds do not pay current income, their prices can be more volatile
than other types of fixed-income securities when interest rates change. In
calculating a fund's dividend, a portion of the difference between a zero coupon
bond's purchase price and its face value is considered income.
In
addition to the investment policies and limitations discussed above, a fund is
subject to the additional operational risk discussed below.
Considerations
Regarding Cybersecurity. With the increased use of technologies such as the
Internet to conduct business, a fund's service providers are susceptible to
operational, information security and related risks. In general, cyber incidents
can result from deliberate attacks or unintentional events and may arise from
external or internal sources. Cyber attacks include, but are not limited to,
gaining unauthorized access to digital systems (e.g., through "hacking" or
malicious software coding) for purposes of misappropriating assets or sensitive
information; corrupting data, equipment or systems; or causing operational
disruption. Cyber attacks may also be carried out in a manner that does not
require gaining unauthorized access, such as causing denial-of-service attacks
on websites (i.e., efforts to make network services unavailable to intended
users). Cyber incidents affecting a fund's manager, any sub-adviser and other
service providers (including, but not limited to, fund accountants, custodians,
transfer agents and financial intermediaries) have the ability to cause
disruptions and impact business operations, potentially resulting in financial
losses, interference with a fund's ability to calculate its NAV, impediments to
trading, the inability of fund shareholders to transact business, destruction to
equipment and systems, violations of applicable privacy and other laws,
regulatory fines, penalties, reputational damage, reimbursement or other
compensation costs, or additional compliance costs. Similar adverse consequences
could result from cyber incidents affecting issuers of securities in which a
fund invests, counterparties with which a fund engages in transactions,
governmental and other regulatory authorities, exchange and other financial
market operators, banks, brokers, dealers, insurance companies and other
financial institutions (including financial intermediaries and service providers
for fund shareholders) and other parties. In addition, substantial costs may be
incurred in order to prevent any cyber incidents in the future.
While
a fund's service providers have established business continuity plans in the
event of, and risk management systems to prevent, such cyber incidents, there
are inherent limitations in such plans and systems including the possibility
that certain risks have not been identified. Furthermore, a fund cannot control
the cyber security plans and systems put in place by its service providers or
any other third parties whose operations may affect a fund or its shareholders.
A fund and its shareholders could be negatively impacted as a result.
Orders
for the purchase or sale of portfolio securities are placed on behalf of the
fund by Geode pursuant to authority contained in the management contract and the
sub-advisory agreement.
Geode
may be responsible for the placement of portfolio securities transactions for
other investment companies and investment accounts for which it has or its
affiliates have investment discretion.
The
fund will not incur any commissions or sales charges when it invests in shares
of mutual funds (including any underlying Central funds), but it may incur such
costs when it invests directly in other types of securities.
Purchases
and sales of equity securities on a securities exchange or OTC are effected
through brokers who receive compensation for their services. Generally,
compensation relating to securities traded on foreign exchanges will be higher
than compensation relating to securities traded on U.S. exchanges and may not be
subject to negotiation. Compensation may also be paid in connection with
principal transactions (in both OTC securities and securities listed on an
exchange) and agency OTC transactions executed with an electronic communications
network (ECN) or an alternative trading system. Equity securities may be
purchased from underwriters at prices that include underwriting fees.
Purchases
and sales of fixed-income securities are generally made with an issuer or a
primary market-maker acting as principal. Although there is no stated brokerage
commission paid by the fund for any fixed-income security, the price paid by the
fund to an underwriter includes the disclosed underwriting fee and prices in
secondary trades usually include an undisclosed dealer commission or markup
reflecting the spread between the bid and ask prices of the fixed-income
security. New issues of equity and fixed-income securities may also be purchased
in underwritten fixed price offerings.
The
Trustees of the fund periodically review Geode's performance of its
responsibilities in connection with the placement of portfolio securities
transactions on behalf of the fund. The Trustees also review the compensation
paid by the fund over representative periods of time to determine if it was
reasonable in relation to the benefits to the fund.
Geode.
The
Selection of Brokers
In
selecting brokers or dealers (including affiliates of FMR) to execute the fund's
portfolio transactions, Geode considers factors deemed relevant in the context
of a particular trade and in regard to Geode's overall responsibilities with
respect to the fund and other investment accounts, including any instructions
from the fund's portfolio manager, which may emphasize, for example, speed of
execution over other factors. The factors considered will influence whether it
is appropriate to execute an order using ECNs, electronic channels including
algorithmic trading, or by actively working an order. Other factors deemed
relevant may include, but are not limited to: price; the size and type of the
transaction; the reasonableness of compensation to be paid, including spreads
and commission rates; the speed and certainty of trade executions; the nature
and characteristics of the markets for the security to be purchased or sold,
including the degree of specialization of the broker in such markets or
securities; the availability of liquidity in the security, including the
liquidity and depth afforded by a market center or market-maker; the reliability
of a market center or broker; the degree of anonymity that a particular broker
or market can provide; the potential for avoiding market impact; the execution
services rendered on a continuing basis; the execution efficiency, settlement
capability, and financial condition of the firm; arrangements for payment of
fund expenses, if applicable; and the provision of additional brokerage and
research products and services, if applicable. In seeking best qualitative
execution, Geode may select a broker using a trading method for which the broker
may charge a higher commission than its lowest available commission rate. Geode
also may select a broker that charges more than the lowest commission rate
available from another broker. For futures transactions, the selection of a
futures commission merchant is generally based on the overall quality of
execution and other services provided by the futures commission merchant.
The
Acquisition of Brokerage and Research Products and Services
Brokers
(who are not affiliates of FMR) that execute transactions for the fund may
receive higher compensation from the fund than other brokers might have charged
the fund, in recognition of the value of the brokerage or research products and
services they provide to Geode.
Research
Products and Services. These products and services may include, when permissible
under applicable law: economic, industry, company, municipal, sovereign (U.S.
and non-U.S.), legal, or political research reports; market color; company
meeting facilitation; compilation of securities prices, earnings, dividends and
similar data; quotation services, data, information and other services;
analytical computer software and services; and investment recommendations. In
addition to receiving brokerage and research products and services via written
reports and computer-delivered services, such reports may also be provided by
telephone and in person meetings with securities analysts, corporate and
industry spokespersons, economists, academicians and government representatives
and others with relevant professional expertise. Geode may request that a broker
provide a specific proprietary or third-party product or service. Some of these
products and services supplement Geode's own research activities in providing
investment advice to the fund.
Execution
Services. In addition, products and services may include, when permissible under
applicable law, those that assist in the execution, clearing, and settlement of
securities transactions, as well as other incidental functions (including, but
not limited to, communication services related to trade execution, order routing
and algorithmic trading, post-trade matching, exchange of messages among brokers
or dealers, custodians and institutions, and the use of electronic confirmation
and affirmation of institutional trades).
Mixed-Use
Products and Services. Geode may use commission dollars to obtain certain
products or services that are not used exclusively in Geode's investment
decision-making process (mixed-use products or services). In those
circumstances, Geode will make a good faith judgment to evaluate the various
benefits and uses to which they intend to put the mixed-use product or service,
and will pay for that portion of the mixed-use product or service that does not
qualify as brokerage and research products and services with their own resources
(referred to as "hard dollars").
Benefit
to Geode. Geode's expenses would likely be increased if it attempted to generate
these additional products and services through its own efforts, or if it paid
for these products or services itself. Certain of the brokerage and research
products and services Geode receives are furnished by brokers on their own
initiative, either in connection with a particular transaction or as part of
their overall services. Some of these products or services may not have an
explicit cost associated with such product or service.
Geode's
Decision-Making Process. Before causing the fund to pay a particular level of
compensation, Geode will make a good faith determination that the compensation
is reasonable in relation to the value of the brokerage and/or research products
and services provided to Geode, viewed in terms of the particular transaction
for the fund or Geode's overall responsibilities to the fund or other investment
companies and investment accounts. While Geode may take into account the
brokerage and/or research products and services provided by a broker in
determining whether compensation paid is reasonable, neither Geode nor the fund
incurs an obligation to any broker, dealer, or third party to pay for any
product or service (or portion thereof) by generating a specific amount of
compensation or otherwise. Typically, these products and services assist Geode
in terms of its overall investment responsibilities to the fund and other
investment companies and investment accounts; however, each product or service
received may not benefit the fund. Certain funds or investment accounts may use
brokerage commissions to acquire brokerage and research products and services
that may also benefit other funds or accounts managed by Geode.
Affiliated
Transactions
Geode
may place trades with certain brokers, including NFS, through its Fidelity
Capital Markets (FCM) division, and Luminex Trading & Analytics LLC
(Luminex), with whom FMR is under common control, provided it determines that
these affiliates' trade execution abilities and costs are comparable to those of
non-affiliated, qualified brokerage firms.
The
Trustees of the fund have approved procedures whereby a fund is permitted to
purchase securities that are offered in underwritings in which an affiliate of
the adviser or certain other affiliates participate. In addition, for
underwritings where such an affiliate participates as a principal underwriter,
certain restrictions may apply that could, among other things, limit the amount
of securities that the fund could purchase in the underwritings.
Trade
Allocation
Although
the Trustees and officers of the fund are substantially the same as those of
certain other Fidelity® funds, investment decisions for the fund are made
independently from those of other Fidelity® funds or investment accounts
(including proprietary accounts).The same security is often held in the
portfolio of more than one of these funds or investment accounts. Simultaneous
transactions are inevitable when several funds and investment accounts are
managed by the same investment adviser, particularly when the same security is
suitable for the investment objective of more than one fund or investment
account.
When
two or more funds or investment accounts are simultaneously engaged in the
purchase or sale of the same security or instrument, the prices and amounts are
allocated in accordance with procedures believed to be appropriate and equitable
to each fund or investment account. In some cases this could have a detrimental
effect on the price or value of the security or instrument as far as the fund is
concerned. In other cases, however, the ability of the fund to participate in
volume transactions will produce better executions and prices for the
fund.
Orders
for funds and investment accounts are not typically combined or "blocked".
However, Geode may, when feasible and when consistent with the fair and
equitable treatment of all funds and investment accounts and best execution,
block orders of various funds and investment accounts for order entry and
execution.
Geode
has established allocation policies for its various funds and investment
accounts to ensure allocations are appropriate given its clients' differing
investment objectives and other considerations. When the supply/demand is
insufficient to satisfy all outstanding trade orders, generally the amount
executed is distributed among participating funds and investment accounts based
on account asset size (for purchases and short sales), and security position
size (for sales and covers), or otherwise according to the allocation policies.
These policies also apply to initial public and secondary offerings. Generally,
allocations are determined by traders, independent of portfolio managers, in
accordance with these policies. Allocations are determined and documented on
trade date.
Geode's
trade allocation policies identify circumstances under which it is appropriate
to deviate from the general allocation criteria and describe the alternative
procedures. For example, if a standard allocation would result in a fund or
investment account receiving a very small allocation (e.g., because of its small
asset size), the fund or investment account may receive an increased allocation
to achieve a more meaningful allocation, or it may receive no allocation.
Generally, any exceptions to Geode's policies (i.e., special allocations) must
be approved by senior investment or trading personnel, reviewed by the
compliance department, and documented.
Commissions
Paid
A
fund may pay compensation including both commissions and spreads in connection
with the placement of portfolio transactions. The amount of brokerage
commissions paid by a fund may change from year to year because of, among other
things, changing asset levels, shareholder activity, and/or portfolio
turnover.
For
Fidelity® SAI Small-Mid Cap 500 Index Fund, the following table shows the fund's
portfolio turnover rate for the fiscal period(s) ended July 31, 2023 and
2022. Variations in turnover rate may be due to a fluctuating volume of
shareholder purchase and redemption orders and/or market conditions.
Turnover Rates |
2023 |
2022 |
Fidelity® SAI Small-Mid Cap 500 Index
Fund |
76% |
93% |
|
|
|
The
following table shows the total amount of brokerage commissions paid by the
following fund(s), comprising commissions paid on securities and/or futures
transactions, as applicable, for the fiscal year(s) ended July 31, 2023, 2022,
and 2021. The total amount of brokerage commissions paid is stated as a dollar
amount and a percentage of the fund's average net assets.
Fund |
Fiscal Year
Ended |
|
Dollar
Amount |
Percentage
of
Average
Net Assets |
Fidelity®
SAI Small-Mid Cap 500 Index Fund |
2023 |
$ |
64,903 |
0.01% |
|
2022 |
$ |
75,790 |
0.01% |
|
2021 |
$ |
99,230 |
0.00% |
During
the fiscal year ended July 31, 2023, Fidelity® SAI Small-Mid Cap 500 Index Fund
paid no brokerage commissions to firms for providing research or brokerage
services.
During
the twelve-month period ended June 30, 2023, Fidelity® SAI Small-Mid Cap 500
Index Fund did not allocate brokerage commissions to firms for providing
research or brokerage services.
The
NAV is the value of a single share. NAV is computed by adding the value of a
fund's investments, cash, and other assets, subtracting its liabilities, and
dividing the result by the number of shares outstanding.
The
Board of Trustees has designated the fund's investment adviser as the valuation
designee responsible for the fair valuation function and performing fair value
determinations as needed. The adviser has established a Fair Value Committee
(the Committee) to carry out the day-to-day fair valuation responsibilities and
has adopted policies and procedures to govern the fair valuation process and the
activities of the Committee.
Shares
of open-end investment companies (including any underlying Central funds) held
by a fund are valued at their respective NAVs. If an underlying fund's NAV is
unavailable, shares of that underlying fund will be fair valued in good faith by
the Committee in accordance with applicable fair value pricing policies.
Generally,
other portfolio securities and assets held by a fund, as well as portfolio
securities and assets held by an underlying Central fund, are valued as
follows:
Most
equity securities are valued at the official closing price or the last reported
sale price or, if no sale has occurred, at the last quoted bid price on the
primary market or exchange on which they are traded.
Debt
securities and other assets for which market quotations are readily available
may be valued at market values in the principal market in which they normally
are traded, as furnished by recognized dealers in such securities or assets. Or,
debt securities and convertible securities may be valued on the basis of
information furnished by a pricing service that uses a valuation matrix which
incorporates both dealer-supplied valuations and electronic data processing
techniques.
Short-term
securities with remaining maturities of sixty days or less for which market
quotations and information furnished by a pricing service are not readily
available may be valued at amortized cost, which approximates current
value.
Futures
contracts are valued at the settlement or closing price. Options are valued at
their market quotations, if available. Swaps are valued daily using quotations
received from independent pricing services or recognized dealers.
Prices
described above are obtained from pricing services that have been approved by
the Committee. A number of pricing services are available and a fund may use
more than one of these services. A fund may also discontinue the use of any
pricing service at any time. A fund's adviser through the Committee engages in
oversight activities with respect to the fund's pricing services, which
includes, among other things, testing the prices provided by pricing services
prior to calculation of a fund's NAV, conducting periodic due diligence
meetings, and periodically reviewing the methodologies and inputs used by these
services.
Foreign
securities and instruments are valued in their local currency following the
methodologies described above. Foreign securities, instruments and currencies
are translated to U.S. dollars, based on foreign currency exchange rate
quotations supplied by a pricing service as of the close of the New York Stock
Exchange (NYSE), which uses a proprietary model to determine the exchange rate.
Forward foreign currency exchange contracts are valued at an interpolated rate
based on days to maturity between the closest preceding and subsequent
settlement period reported by the third party pricing service.
Other
portfolio securities and assets for which market quotations, official closing
prices, or information furnished by a pricing service are not readily available
or, in the opinion of the Committee, are deemed unreliable will be fair valued
in good faith by the Committee in accordance with applicable fair value pricing
policies. For example, if, in the opinion of the Committee, a security's value
has been materially affected by events occurring before a fund's pricing time
but after the close of the exchange or market on which the security is
principally traded, that security will be fair valued in good faith by the
Committee in accordance with applicable fair value pricing policies. In fair
valuing a security, the Committee may consider factors including, but not
limited to, price movements in futures contracts and ADRs, market and trading
trends, the bid/ask quotes of brokers, and off-exchange institutional trading.
The frequency that portfolio securities or assets are fair valued cannot be
predicted and may be significant.
In
determining the fair value of a private placement security for which market
quotations are not available, the Committee generally applies one or more
valuation methods including the market approach, income approach and cost
approach. The market approach considers factors including the price of recent
investments in the same or a similar security or financial metrics of comparable
securities. The income approach considers factors including expected future cash
flows, security specific risks and corresponding discount rates. The cost
approach considers factors including the value of the security's underlying
assets and liabilities.
The
fund's adviser reports to the Board information regarding the fair valuation
process and related material matters.
BUYING AND SELLING INFORMATION
Shares
are offered exclusively to certain clients of the Adviser or its
affiliates.
Investors
participating in a discretionary investment program are charged an annual
advisory fee based on a percentage of the average market value of assets in
their account. The stated fee is then reduced by a credit reflecting the amount
of fees, if any, received by Fidelity Management & Research Company LLC or
its affiliates from mutual funds for investment management or certain other
services.
The
fund may make redemption payments in whole or in part in readily marketable
securities or other property pursuant to procedures approved by the Trustees if
Fidelity Management & Research Company LLC determines it is in the best
interests of the fund. Such securities or other property will be valued for this
purpose as they are valued in computing the NAV of a fund or class, as
applicable. Shareholders that receive securities or other property will realize,
upon receipt, a gain or loss for tax purposes, and will incur additional costs
and be exposed to market risk prior to and upon the sale of such securities or
other property.
The
fund, in its discretion, may determine to issue its shares in kind in exchange
for securities held by the purchaser having a value, determined in accordance
with the fund's policies for valuation of portfolio securities, equal to the
purchase price of the fund shares issued. The fund will accept for in-kind
purchases only securities or other instruments that are appropriate under its
investment objective and policies. In addition, the fund generally will not
accept securities of any issuer unless they are liquid, have a readily
ascertainable market value, and are not subject to restrictions on resale. All
dividends, distributions, and subscription or other rights associated with the
securities become the property of the fund, along with the securities. Shares
purchased in exchange for securities in kind generally cannot be redeemed for
fifteen days following the exchange to allow time for the transfer to
settle.
Dividends.
A portion of the fund's income may qualify for the dividends-received deduction
available to corporate shareholders. A portion of the fund's dividends, when
distributed to individual shareholders, may qualify for taxation at long-term
capital gains rates (provided certain holding period requirements are met).
Distributions by the fund to tax-advantaged retirement plan accounts are not
taxable currently (but you may be taxed later, upon withdrawal of your
investment from such account).
Capital
Gain Distributions. Unless your shares of the fund are held in a tax-advantaged
retirement plan, the fund's long-term capital gain distributions are federally
taxable to shareholders generally as capital gains.
Returns
of Capital. If the fund's distributions exceed its taxable income and capital
gains realized during a taxable year, all or a portion of the distributions made
in the same taxable year may be recharacterized as a return of capital to
shareholders. A return of capital distribution will generally not be taxable,
but will reduce each shareholder's cost basis in the fund and result in a higher
reported capital gain or lower reported capital loss when those shares on which
the distribution was received are sold in taxable accounts.
Foreign
Tax Credit or Deduction. Foreign governments may impose withholding taxes on
dividends and interest earned by the fund with respect to foreign securities
held directly by the fund. Foreign governments may also impose taxes on other
payments or gains with respect to foreign securities held directly by the fund.
Because the fund does not currently anticipate that securities of foreign
issuers or underlying regulated investment companies will constitute more than
50% of its total assets at the end of its fiscal year, or fiscal quarter,
respectively, shareholders should not expect to be eligible to claim a foreign
tax credit or deduction on their federal income tax returns with respect to
foreign taxes withheld.
Tax
Status of the Fund. The fund intends to qualify each year as a "regulated
investment company" under Subchapter M of the Internal Revenue Code so that it
will not be liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company, and avoid
being subject to federal income or excise taxes at the fund level, the fund
intends to distribute substantially all of its net investment income and net
realized capital gains within each calendar year as well as on a fiscal year
basis (if the fiscal year is other than the calendar year), and intends to
comply with other tax rules applicable to regulated investment companies.
Other
Tax Information. The information above is only a summary of some of the tax
consequences generally affecting the fund and its shareholders, and no attempt
has been made to discuss individual tax consequences. It is up to you or your
tax preparer to determine whether the sale of shares of the fund resulted in a
capital gain or loss or other tax consequence to you. In addition to federal
income taxes, shareholders may be subject to state and local taxes on fund
distributions, and shares may be subject to state and local personal property
taxes. Investors should consult their tax advisers to determine whether the fund
is suitable to their particular tax situation.
The
Trustees, Members of the Advisory Board (if any), and officers of the trust and
fund, as applicable, are listed below. The Board of Trustees governs the fund
and is responsible for protecting the interests of shareholders. The Trustees
are experienced executives who meet periodically throughout the year to oversee
the fund's activities, review contractual arrangements with companies that
provide services to the fund, oversee management of the risks associated with
such activities and contractual arrangements, and review the fund's performance.
Except for Jonathan Chiel, each of the Trustees oversees 313 funds. Mr. Chiel
oversees 191 funds.
The
Trustees hold office without limit in time except that (a) any Trustee may
resign; (b) any Trustee may be removed by written instrument, signed by at least
two-thirds of the number of Trustees prior to such removal; (c) any Trustee who
requests to be retired or who has become incapacitated by illness or injury may
be retired by written instrument signed by a majority of the other Trustees; and
(d) any Trustee may be removed at any special meeting of shareholders by a
two-thirds vote of the outstanding voting securities of the trust. Each Trustee
who is not an interested person (as defined in the 1940 Act) of the trust and
the fund is referred to herein as an Independent Trustee. Each Independent
Trustee shall retire not later than the last day of the calendar year in which
his or her 75th birthday occurs. The Independent Trustees may waive this
mandatory retirement age policy with respect to individual Trustees. Officers
and Advisory Board Members hold office without limit in time, except that any
officer or Advisory Board Member may resign or may be removed by a vote of a
majority of the Trustees at any regular meeting or any special meeting of the
Trustees. Except as indicated, each individual has held the office shown or
other offices in the same company for the past five years.
Experience,
Skills, Attributes, and Qualifications of the Trustees. The Governance and
Nominating Committee has adopted a statement of policy that describes the
experience, qualifications, attributes, and skills that are necessary and
desirable for potential Independent Trustee candidates (Statement of Policy).
The Board believes that each Trustee satisfied at the time he or she was
initially elected or appointed a Trustee, and continues to satisfy, the
standards contemplated by the Statement of Policy. The Governance and Nominating
Committee also engages professional search firms to help identify potential
Independent Trustee candidates who have the experience, qualifications,
attributes, and skills consistent with the Statement of Policy. From time to
time, additional criteria based on the composition and skills of the current
Independent Trustees, as well as experience or skills that may be appropriate in
light of future changes to board composition, business conditions, and
regulatory or other developments, have also been considered by the professional
search firms and the Governance and Nominating Committee. In addition, the Board
takes into account the Trustees' commitment and participation in Board and
committee meetings, as well as their leadership of standing and ad hoc
committees throughout their tenure.
In
determining that a particular Trustee was and continues to be qualified to serve
as a Trustee, the Board has considered a variety of criteria, none of which, in
isolation, was controlling. The Board believes that, collectively, the Trustees
have balanced and diverse experience, qualifications, attributes, and skills,
which allow the Board to operate effectively in governing the fund and
protecting the interests of shareholders. Information about the specific
experience, skills, attributes, and qualifications of each Trustee, which in
each case led to the Board's conclusion that the Trustee should serve (or
continue to serve) as a trustee of the fund, is provided below.
Board
Structure and Oversight Function. Abigail P. Johnson is an interested person and
currently serves as Chairman. The Trustees have determined that an interested
Chairman is appropriate and benefits shareholders because an interested Chairman
has a personal and professional stake in the quality and continuity of services
provided to the fund. Independent Trustees exercise their informed business
judgment to appoint an individual of their choosing to serve as Chairman,
regardless of whether the Trustee happens to be independent or a member of
management. The Independent Trustees have determined that they can act
independently and effectively without having an Independent Trustee serve as
Chairman and that a key structural component for assuring that they are in a
position to do so is for the Independent Trustees to constitute a substantial
majority for the Board. The Independent Trustees also regularly meet in
executive session. Michael E. Kenneally serves as Chairman of the Independent
Trustees and as such (i) acts as a liaison between the Independent Trustees and
management with respect to matters important to the Independent Trustees and
(ii) with management prepares agendas for Board meetings.
Fidelity®
funds are overseen by different Boards of Trustees. The fund's Board oversees
Fidelity's investment-grade bond, money market, asset allocation and certain
equity funds, and other Boards oversee Fidelity's alternative investment, high
income and other equity funds. The asset allocation funds may invest in
Fidelity® funds that are overseen by such other Boards. The use of separate
Boards, each with its own committee structure, allows the Trustees of each group
of Fidelity® funds to focus on the unique issues of the funds they oversee,
including common research, investment, and operational issues. On occasion, the
separate Boards establish joint committees to address issues of overlapping
consequences for the Fidelity® funds overseen by each Board.
The
Trustees operate using a system of committees to facilitate the timely and
efficient consideration of all matters of importance to the Trustees, the fund,
and fund shareholders and to facilitate compliance with legal and regulatory
requirements and oversight of the fund's activities and associated risks. The
Board, acting through its committees, has charged FMR and its affiliates with
(i) identifying events or circumstances the occurrence of which could have
demonstrably adverse effects on the fund's business and/or reputation; (ii)
implementing processes and controls to lessen the possibility that such events
or circumstances occur or to mitigate the effects of such events or
circumstances if they do occur; and (iii) creating and maintaining a system
designed to evaluate continuously business and market conditions in order to
facilitate the identification and implementation processes described in (i) and
(ii) above. Because the day-to-day operations and activities of the fund are
carried out by or through FMR, its affiliates, and other service providers, the
fund's exposure to risks is mitigated but not eliminated by the processes
overseen by the Trustees. While each of the Board's committees has
responsibility for overseeing different aspects of the fund's activities,
oversight is exercised primarily through the Operations and Audit Committees. In
addition, an ad hoc Board committee of Independent Trustees has worked with FMR
to enhance the Board's oversight of investment and financial risks, legal and
regulatory risks, technology risks, and operational risks, including the
development of additional risk reporting to the Board. Appropriate personnel,
including but not limited to the fund's Chief Compliance Officer (CCO), FMR's
internal auditor, the independent accountants, the fund's Treasurer and
portfolio management personnel, make periodic reports to the Board's committees,
as appropriate, including an annual review of Fidelity's risk management program
for the Fidelity® funds. The responsibilities of each standing committee,
including their oversight responsibilities, are described further under
"Standing Committees of the Trustees."
Interested
Trustees*:
Correspondence
intended for a Trustee who is an interested person may be sent to Fidelity
Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name,
Year of Birth; Principal Occupations and Other Relevant Experience+
Jonathan
Chiel (1957)
Year of Election or
Appointment: 2016
Trustee
Mr. Chiel also serves as
Trustee of other Fidelity® funds. Mr. Chiel is Executive Vice President and
General Counsel for FMR LLC (diversified financial services company,
2012-present). Previously, Mr. Chiel served as general counsel (2004-2012) and
senior vice president and deputy general counsel (2000-2004) for John Hancock
Financial Services; a partner with Choate, Hall & Stewart (1996-2000) (law
firm); and an Assistant United States Attorney for the United States Attorney's
Office of the District of Massachusetts (1986-95), including Chief of the
Criminal Division (1993-1995). Mr. Chiel is a director on the boards of the
Boston Bar Foundation and the Maimonides School.
Abigail
P. Johnson (1961)
Year of Election or
Appointment: 2009
Trustee
Chairman of the Board of
Trustees
Ms. Johnson also serves
as Trustee of other Fidelity® funds. Ms. Johnson serves as Chairman
(2016-present), Chief Executive Officer (2014-present), and Director
(2007-present) of FMR LLC (diversified financial services company), President of
Fidelity Financial Services (2012-present) and President of Personal, Workplace
and Institutional Services (2005-present). Ms. Johnson is Chairman and Director
of Fidelity Management & Research Company LLC (investment adviser firm,
2011-present). Previously, Ms. Johnson served as Chairman and Director of FMR
Co., Inc. (investment adviser firm, 2011-2019), Vice Chairman (2007-2016) and
President (2013-2016) of FMR LLC, President and a Director of Fidelity
Management & Research Company (2001-2005), a Trustee of other investment
companies advised by Fidelity Management & Research Company, Fidelity
Investments Money Management, Inc. (investment adviser firm), and FMR Co., Inc.
(2001-2005), Senior Vice President of the Fidelity® funds (2001-2005), and
managed a number of Fidelity® funds. Ms. Abigail P. Johnson and Mr. Arthur E.
Johnson are not related.
Jennifer
Toolin McAuliffe (1959)
Year of Election or
Appointment: 2016
Trustee
Ms. McAuliffe also
serves as Trustee of other Fidelity® funds and as Trustee of Fidelity Charitable
(2020-present). Previously, Ms. McAuliffe served as Co-Head of Fixed Income of
Fidelity Investments Limited (now known as FIL Limited (FIL)) (diversified
financial services company), Director of Research for FIL's credit and
quantitative teams in London, Hong Kong and Tokyo and Director of Research for
taxable and municipal bonds at Fidelity Investments Money Management, Inc. Ms.
McAuliffe previously served as a member of the Advisory Board of certain
Fidelity® funds (2016). Ms. McAuliffe was previously a lawyer at Ropes &
Gray LLP and an international banker at Chemical Bank NA (now JPMorgan Chase
& Co.). Ms. McAuliffe also currently serves as director or trustee of
several not-for-profit entities.
*
Determined to be an "Interested Trustee" by virtue of, among other things, his
or her affiliation with the trust or various entities under common control with
FMR.
+
The information includes the Trustee's principal occupation during the last five
years and other information relating to the experience, attributes, and skills
relevant to the Trustee's qualifications to serve as a Trustee, which led to the
conclusion that the Trustee should serve as a Trustee for the fund.
Independent
Trustees:
Correspondence
intended for an Independent Trustee may be sent to Fidelity Investments, P.O.
Box 55235, Boston, Massachusetts 02205-5235.
Name,
Year of Birth; Principal Occupations and Other Relevant Experience+
Elizabeth
S. Acton (1951)
Year of Election or
Appointment: 2013
Trustee
Ms. Acton also serves as
Trustee of other Fidelity® funds. Prior to her retirement, Ms. Acton served as
Executive Vice President, Finance (2011-2012), Executive Vice President, Chief
Financial Officer (2002-2011) and Treasurer (2004-2005) of Comerica Incorporated
(financial services). Prior to joining Comerica, Ms. Acton held a variety of
positions at Ford Motor Company (1983-2002), including Vice President and
Treasurer (2000-2002) and Executive Vice President and Chief Financial Officer
of Ford Motor Credit Company (1998-2000). Ms. Acton currently serves as a member
of the Board and Audit and Finance Committees of Beazer Homes USA, Inc.
(homebuilding, 2012-present). Ms. Acton previously served as a member of the
Advisory Board of certain Fidelity® funds (2013-2016).
Ann
E. Dunwoody (1953)
Year of Election or
Appointment: 2018
Trustee
General Dunwoody also
serves as Trustee of other Fidelity® funds. General Dunwoody (United States
Army, Retired) was the first woman in U.S. military history to achieve the rank
of four-star general and prior to her retirement in 2012 held a variety of
positions within the U.S. Army, including Commanding General, U.S. Army Material
Command (2008-2012). General Dunwoody currently serves as a member of the Board,
Chair of Nomination Committee and a member of the Corporate Governance Committee
of Kforce Inc. (professional staffing services, 2016-present) and a member of
the Board of Automattic Inc. (software engineering, 2018-present). Previously,
General Dunwoody served as President of First to Four LLC (leadership and
mentoring services, 2012-2022), a member of the Advisory Board and Nominating
and Corporate Governance Committee of L3 Technologies, Inc. (communication,
electronic, sensor and aerospace systems, 2013-2019) and a member of the Board
and Audit and Sustainability and Corporate Responsibility Committees of Republic
Services, Inc. (waste collection, disposal and recycling, 2013-2016). General
Dunwoody also serves on several boards for non-profit organizations, including
as a member of the Board, Chair of the Nomination and Governance Committee and a
member of the Audit Committee of the Noble Reach Foundation (formerly Logistics
Management Institute) (consulting non-profit, 2012-present) and a member of the
Board of ThanksUSA (military family education non-profit, 2014-present).
Previously, General Dunwoody served as a member of the Board of Florida
Institute of Technology (2015-2022) and a member of the Council of Trustees for
the Association of the United States Army (advocacy non-profit, 2013-2021).
General Dunwoody previously served as a member of the Advisory Board of certain
Fidelity® funds (2018).
John
Engler (1948)
Year of Election or
Appointment: 2014
Trustee
Mr. Engler also serves
as Trustee of other Fidelity® funds. Previously, Mr. Engler served as Governor
of Michigan (1991-2003), President of the Business Roundtable (2011-2017) and
interim President of Michigan State University (2018-2019). Previously, Mr.
Engler served as a member of the Board of Stride, Inc. (formerly K12 Inc.)
(technology-based education company, 2012-2022), a member of the Board of
Universal Forest Products (manufacturer and distributor of wood and
wood-alternative products, 2003-2019) and Trustee of The Munder Funds
(2003-2014). Mr. Engler previously served as a member of the Advisory Board of
certain Fidelity® funds (2014-2016).
Robert
F. Gartland (1951)
Year of Election or
Appointment: 2010
Trustee
Mr. Gartland also serves
as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Gartland held
a variety of positions at Morgan Stanley (financial services, 1979-2007),
including Managing Director (1987-2007) and Chase Manhattan Bank (1975-1978).
Mr. Gartland previously served as Chairman and an investor in Gartland &
Mellina Group Corp. (consulting, 2009-2019), as a member of the Board of
National Securities Clearing Corporation (1993-1996) and as Chairman of TradeWeb
(2003-2004).
Arthur
E. Johnson (1947)
Year of Election or
Appointment: 2008
Trustee
Mr. Johnson also serves
as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Johnson served
as Senior Vice President of Corporate Strategic Development of Lockheed Martin
Corporation (defense contractor, 1999-2009). Mr. Johnson currently serves as a
member of the Board of Booz Allen Hamilton (management consulting,
2011-present). Mr. Johnson previously served as a member of the Board of Eaton
Corporation plc (diversified power management, 2009-2019) and a member of the
Board of AGL Resources, Inc. (holding company, 2002-2016). Mr. Johnson
previously served as Chairman (2018-2021) and Vice Chairman (2015-2018) of the
Independent Trustees of certain Fidelity® funds. Mr. Arthur E. Johnson is not
related to Ms. Abigail P. Johnson.
Michael
E. Kenneally (1954)
Year of Election or
Appointment: 2009
Trustee
Chairman of the
Independent Trustees
Mr. Kenneally also
serves as Trustee of other Fidelity® funds and was Vice Chairman (2018-2021) of
the Independent Trustees of certain Fidelity® funds. Prior to retirement in
2005, he was Chairman and Global Chief Executive Officer of Credit Suisse Asset
Management, the worldwide fund management and institutional investment business
of Credit Suisse Group. Previously, Mr. Kenneally was an Executive Vice
President and the Chief Investment Officer for Bank of America. In this role, he
was responsible for the investment management, strategy and products delivered
to the bank's institutional, high-net-worth and retail clients. Earlier, Mr.
Kenneally directed the organization's equity and quantitative research groups.
He began his career as a research analyst and then spent more than a dozen years
as a portfolio manager for endowments, pension plans and mutual funds. He earned
the Chartered Financial Analyst (CFA) designation in 1991.
Mark
A. Murray (1954)
Year of Election or
Appointment: 2016
Trustee
Mr. Murray also serves
as Trustee of other Fidelity® funds. Previously, Mr. Murray served as Co-Chief
Executive Officer (2013-2016), President (2006-2013) and Vice Chairman
(2013-2020) of Meijer, Inc. Mr. Murray serves as a member of the Board
(2009-present) and Public Policy and Responsibility Committee (2009-present) and
Chair of the Nuclear Review Committee (2019-present) of DTE Energy Company
(diversified energy company). Mr. Murray previously served as a member of the
Board of Spectrum Health (not-for-profit health system, 2015-2019) and as a
member of the Board and Audit Committee and Chairman of the Nominating and
Corporate Governance Committee of Universal Forest Products, Inc. (manufacturer
and distributor of wood and wood-alternative products, 2004-2016). Mr. Murray
also serves as a member of the Board of many community and professional
organizations. Mr. Murray previously served as a member of the Advisory Board of
certain Fidelity® funds (2016).
+
The information includes the Trustee's principal occupation during the last five
years and other information relating to the experience, attributes, and skills
relevant to the Trustee's qualifications to serve as a Trustee, which led to the
conclusion that the Trustee should serve as a Trustee for the fund.
Advisory
Board Members and Officers:
Correspondence
intended for a Member of the Advisory Board (if any) may be sent to Fidelity
Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence
intended for an officer may be sent to Fidelity Investments, 245 Summer Street,
Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name,
Year of Birth; Principal Occupation
Laura
M. Bishop (1961)
Year of Election or
Appointment: 2022
Member of the Advisory
Board
Ms. Bishop also serves
as a Member of the Advisory Board of other funds. Prior to her retirement, Ms.
Bishop held a variety of positions at United Services Automobile Association
(2001-2020), including Executive Vice President and Chief Financial Officer
(2014-2020) and Senior Vice President and Deputy Chief Financial Officer
(2012-2014). Ms. Bishop currently serves as a member of the Audit Committee and
Compensation and Personnel Committee (2021-present) of the Board of Directors of
Korn Ferry (global organizational consulting).
Robert
W. Helm (1957)
Year of Election or
Appointment: 2021
Member of the Advisory
Board
Mr. Helm also serves as
a Member of the Advisory Board of other Fidelity® funds. Mr. Helm was formerly
Deputy Chairman (2003-2020), partner (1991-2020) and an associate (1984-1991) of
Dechert LLP (formerly Dechert Price & Rhoads). Mr. Helm currently serves on
boards and committees of several not-for-profit organizations, including as a
Trustee and member of the Executive Committee of the Baltimore Council on
Foreign Affairs, a member of the Board of Directors of the St. Vincent de Paul
Society of Baltimore and a member of the Life Guard Society of Mt. Vernon.
Carol
J. Zierhoffer (1960)
Year of Election or
Appointment: 2023
Member of the Advisory
Board
Ms. Zierhoffer also
serves as a Member of the Advisory Board of other funds. Prior to her
retirement, Ms. Zierhoffer held a variety of positions at Bechtel Corporation
(engineering company, 2013-2019), including Principal Vice President and Chief
Information Officer (2013-2016) and Senior Vice President and Chief Information
Officer (2016-2019). Ms. Zierhoffer currently serves as a member of the Board of
Directors, Audit Committee and Compensation Committee of Allscripts Healthcare
Solutions, Inc. (healthcare technology, 2020-present) and as a member of the
Board of Directors, Audit and Finance Committee and Nominating and Governance
Committee of Atlas Air Worldwide Holdings, Inc. (aviation operating services,
2021-present). Previously, Ms. Zierhoffer served as a member of the Board of
Directors and Audit Committee and as the founding Chair of the Information
Technology Committee of MedAssets, Inc. (healthcare technology, 2013-2016).
Heather
Bonner (1977)
Year of Election or
Appointment: 2023
Assistant
Treasurer
Ms. Bonner also serves
as an officer of other funds. Ms. Bonner serves as Senior Vice President
(2022-present), and is an employee of Fidelity Investments. Ms. Bonner serves as
Assistant Treasurer of Fidelity CRET Trustee LLC (2022-present). Prior to
joining Fidelity, Ms. Bonner served as Managing Director at AQR Capital
Management (2013-2022) and was the Treasurer and Principal Financial Officer of
the AQR Funds (2013-2022).
Craig
S. Brown (1977)
Year of Election or
Appointment: 2019
Assistant
Treasurer
Mr. Brown also serves as
an officer of other funds. Mr. Brown serves as Assistant Treasurer of FIMM, LLC
(2021-present) and is an employee of Fidelity Investments (2013-present).
Previously, Mr. Brown served as Assistant Treasurer of certain Fidelity® funds
(2019-2022).
John
J. Burke III (1964)
Year of Election or
Appointment: 2018
Chief Financial
Officer
Mr. Burke also serves as
Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment
Operations for Fidelity Fund and Investment Operations (2018-present) and is an
employee of Fidelity Investments (1998-present). Previously Mr. Burke served as
head of Asset Management Investment Operations (2012-2018).
Margaret
Carey (1973)
Year of Election or
Appointment: 2023
Secretary and Chief
Legal Officer (CLO)
Ms. Carey also serves as
an officer of other funds and as CLO of certain other Fidelity entities. She is
a Senior Vice President and Deputy General Counsel of FMR LLC (diversified
financial services company, 2019-present), and is an employee of Fidelity
Investments.
David
J. Carter (1973)
Year of Election or
Appointment: 2020
Assistant
Secretary
Mr. Carter also serves
as Assistant Secretary of other funds. Mr. Carter serves as Senior Vice
President, Deputy General Counsel (2022-present) and is an employee of Fidelity
Investments (2005-present).
Jonathan
Davis (1968)
Year of Election or
Appointment: 2010
Assistant
Treasurer
Mr. Davis also serves as
an officer of other funds. Mr. Davis serves as Vice President Assistant
Treasurer and is an employee of Fidelity Investments. Mr. Davis serves as
Assistant Treasurer of certain Fidelity entities.
Laura
M. Del Prato (1964)
Year of Election or
Appointment: 2018
President and
Treasurer
Ms. Del Prato also
serves as an officer of other funds. Ms. Del Prato serves as Assistant Treasurer
of FIMM, LLC (2021-present) and is an employee of Fidelity Investments
(2017-present). Previously, Ms. Del Prato served as President and Treasurer of
The North Carolina Capital Management Trust: Cash Portfolio and Term Portfolio
(2018-2020). Prior to joining Fidelity Investments, Ms. Del Prato served as a
Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior
to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services
(accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Robin
Foley (1964)
Year of Election or
Appointment: 2023
Vice President
Ms. Foley also serves as
Vice President of other funds. Ms. Foley serves as Head of Fidelity's Fixed
Income division (2023-present) and is an employee of Fidelity Investments.
Previously, Ms. Foley served as Chief Investment Officer of Bonds (2017-2023).
Christopher
M. Gouveia (1973)
Year of Election or
Appointment: 2023
Chief Compliance
Officer
Mr. Gouveia also serves
as Chief Compliance Officer of other funds. Mr. Gouveia serves as Senior Vice
President of Asset Management Compliance for Fidelity Investments and is an
employee of Fidelity Investments. Previously, Mr. Gouveia served as Chief
Compliance Officer of the North Carolina Capital Management Trust
(2016-2019).
Colm
A. Hogan (1973)
Year of Election or
Appointment: 2016
Assistant
Treasurer
Mr. Hogan also serves as
an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FIMM, LLC
(2021-present) and FMR Capital, Inc. (2017-present) and is an employee of
Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy
Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of
certain Fidelity® funds (2016-2018).
Chris
Maher (1972)
Year of Election or
Appointment: 2013
Assistant
Treasurer
Mr. Maher also
serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of
FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), and is an
employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as
Assistant Treasurer of certain funds (2013-2020); Vice President of Asset
Management Compliance (2013), Vice President of the Program Management Group of
FMR (investment adviser firm, 2010-2013), and Vice President of Valuation
Oversight (2008-2010).
Brett
Segaloff (1972)
Year of Election or
Appointment: 2021
Anti-Money Laundering
(AML) Officer
Mr. Segaloff also serves
as an AML Officer of other funds and other related entities. He is Director,
Anti-Money Laundering (2007-present) of FMR LLC (diversified financial services
company) and is an employee of Fidelity Investments (1996-present).
Stacie
M. Smith (1974)
Year of Election or
Appointment: 2013
Assistant
Treasurer
Ms. Smith also serves as
an officer of other funds. Ms. Smith serves as Assistant Treasurer of FIMM, LLC
(2021-present) and FMR Capital, Inc. (2017-present), is an employee of Fidelity
Investments (2009-present), and has served in other fund officer roles. Prior to
joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst
& Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as
Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain
Fidelity® funds.
Jim
Wegmann (1979)
Year of Election or
Appointment: 2021
Deputy Treasurer
Mr. Wegmann also serves
as an officer of other funds. Mr. Wegmann serves as Assistant Treasurer of FIMM,
LLC (2021-present) and is an employee of Fidelity Investments (2011-present).
Previously, Mr. Wegmann served as Assistant Treasurer of certain Fidelity® funds
(2019-2021).
Standing
Committees of the Trustees. The Board of Trustees has established various
committees to support the Independent Trustees in acting independently in
pursuing the best interests of the funds and their shareholders. Currently, the
Board of Trustees has four standing committees. The members of each committee
are Independent Trustees.
The
Operations Committee is composed of all of the Independent Trustees, with Mr.
Kenneally currently serving as Chair. The committee normally meets at least six
times a year, or more frequently as called by the Chair, and serves as a forum
for consideration of issues of importance to, or calling for particular
determinations by, the Independent Trustees. The committee considers matters
involving potential conflicts of interest between the funds and FMR and its
affiliates, including matters involving potential claims of one or more funds
(e.g., for reimbursements of expenses or losses) against FMR, and reviews
proposed contracts and the proposed continuation of contracts between the funds
and FMR and its affiliates, and annually reviews and makes recommendations
regarding contracts with third parties unaffiliated with FMR, including
insurance coverage and custody agreements. The committee has oversight of
compliance issues not specifically within the scope of any other committee.
These matters include, but are not limited to, significant non-conformance with
contract requirements and other significant regulatory matters and recommending
to the Board of Trustees the designation of a person to serve as the funds' CCO.
The committee (i) serves as a primary point of contact (generally after the
Independent Trustee who serves as a liaison for the CCO) for the CCO with regard
to Board-related functions; (ii) oversees the annual performance review of the
CCO; (iii) makes recommendations concerning the CCO's compensation; and (iv)
makes recommendations as needed in respect of the removal of the CCO.
The
Audit Committee is composed of all of the Independent Trustees, with Ms. Acton
currently serving as Chair. At least one committee member will be an "audit
committee financial expert" as defined by the SEC. The committee normally meets
four times a year, or more frequently as called by the Chair or a majority of
committee members. The committee meets separately, at least annually, with the
funds' Treasurer, with the funds' Chief Financial Officer, with personnel
responsible for the internal audit function of FMR LLC, with the funds' outside
auditors, and with the funds' CCO. The committee has direct responsibility for
the appointment, compensation, and oversight of the work of the outside auditors
employed by the funds. The committee assists the Trustees in overseeing and
monitoring: (i) the systems of internal accounting and financial controls of the
funds and the funds' service providers (to the extent such controls impact the
funds' financial statements); (ii) the funds' auditors and the annual audits of
the funds' financial statements; (iii) the financial reporting processes of the
funds; (iv) whistleblower reports; and (v) the accounting policies and
disclosures of the funds. The committee considers and acts upon (i) the
provision by any outside auditor of any non-audit services for any fund, and
(ii) the provision by any outside auditor of certain non-audit services to fund
service providers and their affiliates to the extent that such approval (in the
case of this clause (ii)) is required under applicable regulations of the SEC.
It is responsible for approving all audit engagement fees and terms for the
funds and for resolving disagreements between a fund and any outside auditor
regarding any fund's financial reporting. Auditors of the funds report directly
to the committee. The committee will obtain assurance of independence and
objectivity from the outside auditors, including a formal written statement
delineating all relationships between the auditor and the funds and any service
providers consistent with the rules of the Public Company Accounting Oversight
Board. It oversees and receives reports on the funds' service providers'
internal controls and reviews the adequacy and effectiveness of the service
providers' accounting and financial controls, including: (i) any significant
deficiencies or material weaknesses in the design or operation of internal
controls over financial reporting that are reasonably likely to adversely affect
the funds' ability to record, process, summarize, and report financial data;
(ii) any change in the fund's internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the fund's
internal control over financial reporting; and (iii) any fraud, whether material
or not, that involves management or other employees who have a significant role
in the funds' or service providers internal controls over financial reporting.
The committee will also review any correspondence with regulators or
governmental agencies or published reports that raise material issues regarding
the funds' financial statements or accounting policies. These matters may also
be reviewed by the Operations Committee. The committee reviews at least annually
a report from each outside auditor describing any material issues raised by the
most recent internal quality control, peer review, or Public Company Accounting
Oversight Board examination of the auditing firm and any material issues raised
by any inquiry or investigation by governmental or professional authorities of
the auditing firm and in each case any steps taken to deal with such issues. The
committee will oversee and receive reports on the funds' financial reporting
process from the funds' Treasurer and outside auditors and will oversee the
resolution of any disagreements concerning financial reporting among applicable
parties. The committee will discuss with FMR, the funds' Treasurer, outside
auditors and, if appropriate, internal audit personnel of FMR LLC their
qualitative judgments about the appropriateness and acceptability of accounting
principles and financial disclosure practices used or proposed for adoption by
the funds. The committee will review with FMR, the funds' outside auditor,
internal audit personnel of FMR LLC and legal counsel, as appropriate, matters
related to the audits of the funds' financial statements. The committee will
discuss regularly and oversee the review of the internal controls of the funds
and their service providers with respect to accounting, financial matters and
risk management programs related to the funds. The committee will review
periodically the funds' major internal controls exposures and the steps that
have been taken to monitor and control such exposures.
The
Fair Valuation Committee is composed of all of the Independent Trustees, with
Mr. Murray currently serving as Chair. The Committee normally meets quarterly,
or more frequently as called by the Chair. The Fair Valuation Committee oversees
the valuation of securities held by the funds, including the fair valuation of
securities by the funds' valuation designee. The Committee receives and reviews
related reports and information consistent with its oversight obligations.
The
Governance and Nominating Committee is composed of Messrs. Kenneally (Chair) and
Gartland (Vice Chair), and Ms. Acton. The committee meets as called by the
Chair. With respect to fund governance and board administration matters, the
committee periodically reviews procedures of the Board of Trustees and its
committees (including committee charters) and periodically reviews compensation
of Independent Trustees. The committee monitors corporate governance matters and
makes recommendations to the Board of Trustees on the frequency and structure of
the Board of Trustee meetings and on any other aspect of Board procedures. It
acts as the administrative committee under the retirement plan for Independent
Trustees who retired prior to December 30, 1996 and under the fee deferral plan
for Independent Trustees. It monitors the performance of legal counsel employed
by both the funds and the Independent Trustees. The committee will engage and
oversee any counsel utilized by the Independent Trustees as may be necessary or
appropriate under applicable regulations or otherwise. The committee also
approves Board administrative matters applicable to Independent Trustees, such
as expense reimbursement policies and compensation for attendance at meetings,
conferences and other events. The committee oversees compliance with the
provisions of the code of ethics and any supplemental policies regarding
personal securities transactions applicable to the Independent Trustees. The
committee reviews the functioning of each Board committee and makes
recommendations for any changes, including the creation or elimination of
standing or ad hoc Board committees. The committee monitors regulatory and other
developments to determine whether to recommend modifications to the committee's
responsibilities or other Trustee policies and procedures in light of rule
changes, reports concerning "recommended practices" in corporate governance and
other developments in mutual fund governance. The committee meets with
Independent Trustees at least once a year to discuss matters relating to fund
governance. The committee recommends that the Board establish such special or ad
hoc Board committees as may be desirable or necessary from time to time in order
to address ethical, legal, or other matters that may arise. The committee also
oversees the annual self-evaluation of the Board of Trustees and establishes
procedures to allow it to exercise this oversight function. In conducting this
oversight, the committee shall address all matters that it considers relevant to
the performance of the Board of Trustees and shall report the results of its
evaluation to the Board of Trustees, including any recommended amendments to the
principles of governance, and any recommended changes to the funds' or the Board
of Trustees' policies, procedures, and structures. The committee reviews
periodically the size and composition of the Board of Trustees as a whole and
recommends, if necessary, measures to be taken so that the Board of Trustees
reflects the appropriate balance of knowledge, experience, skills, expertise,
and diversity required for the Board as a whole and contains at least the
minimum number of Independent Trustees required by law. The committee makes
nominations for the election or appointment of Independent Trustees and
non-management Members of any Advisory Board, and for membership on committees.
The committee has the authority to retain and terminate any third-party
advisers, including authority to approve fees and other retention terms. Such
advisers may include search firms to identify Independent Trustee candidates and
board compensation consultants. The committee may conduct or authorize
investigations into or studies of matters within the committee's scope of
responsibilities, and may retain, at the funds' expense, such independent
counsel or other advisers as it deems necessary. The committee will consider
nominees to the Board of Trustees recommended by shareholders based upon the
criteria applied to candidates presented to the committee by a search firm or
other source. Recommendations, along with appropriate background material
concerning the candidate that demonstrates his or her ability to serve as an
Independent Trustee of the funds, should be submitted to the Chair of the
committee at the address maintained for communications with Independent
Trustees. If the committee retains a search firm, the Chair will generally
forward all such submissions to the search firm for evaluation. With respect to
the criteria for selecting Independent Trustees, it is expected that all
candidates will possess the following minimum qualifications: (i) unquestioned
personal integrity; (ii) not an interested person of the funds within the
meaning of the 1940 Act; (iii) does not have a material relationship (e.g.,
commercial, banking, consulting, legal, or accounting) with the adviser, any
sub-adviser or their affiliates that could create an appearance of lack of
independence in respect of the funds; (iv) has the disposition to act
independently in respect of FMR and its affiliates and others in order to
protect the interests of the funds and all shareholders; (v) ability to attend
regularly scheduled Board meetings during the year; (vi) demonstrates sound
business judgment gained through broad experience in significant positions where
the candidate has dealt with management, technical, financial, or regulatory
issues; (vii) sufficient financial or accounting knowledge to add value in the
complex financial environment of the funds; (viii) experience on corporate or
other institutional oversight bodies having similar responsibilities, but which
board memberships or other relationships could not result in business or
regulatory conflicts with the funds; and (ix) capacity for the hard work and
attention to detail that is required to be an effective Independent Trustee in
light of the funds' complex regulatory, operational, and marketing setting. The
Governance and Nominating Committee may determine that a candidate who does not
have the type of previous experience or knowledge referred to above should
nevertheless be considered as a nominee if the Governance and Nominating
Committee finds that the candidate has additional qualifications such that his
or her qualifications, taken as a whole, demonstrate the same level of fitness
to serve as an Independent Trustee.
During
the fiscal year ended July 31, 2023, each committee held the number of meetings
shown in the table below:
COMMITTEE |
NUMBER OF MEETINGS HELD |
Operations Committee |
8 |
Audit Committee |
4 |
Fair Valuation Committee |
3 |
Governance and Nominating Committee |
11 |
The
following table sets forth information describing the dollar range of equity
securities beneficially owned by each Trustee in the fund and in all funds in
the aggregate within the same fund family overseen by the Trustee for the
calendar year ended December 31, 2022.
Interested Trustees
DOLLAR RANGE OF
FUND SHARES |
Jonathan Chiel |
Abigail P Johnson |
Jennifer Toolin McAuliffe |
|
Fidelity® SAI Small-Mid Cap 500 Index
Fund |
none |
none |
none |
|
AGGREGATE DOLLAR RANGE OF
FUND SHARES IN ALL FUNDS
OVERSEEN WITHIN FUND FAMILY |
over $100,000 |
over $100,000 |
over $100,000 |
|
Independent Trustees
DOLLAR RANGE OF
FUND SHARES |
Elizabeth S Acton |
Ann E Dunwoody |
John Engler |
Robert F Gartland |
Fidelity® SAI Small-Mid Cap 500 Index
Fund |
none |
none |
none |
none |
AGGREGATE DOLLAR RANGE OF
FUND SHARES IN ALL FUNDS
OVERSEEN WITHIN FUND FAMILY |
over $100,000 |
over $100,000 |
over $100,000 |
over $100,000 |
DOLLAR RANGE OF
FUND SHARES |
Arthur E Johnson |
Michael E Kenneally |
Mark A Murray |
|
Fidelity® SAI Small-Mid Cap 500 Index
Fund |
none |
none |
none |
|
AGGREGATE DOLLAR RANGE OF
FUND SHARES IN ALL FUNDS
OVERSEEN WITHIN FUND FAMILY |
over $100,000 |
over $100,000 |
over $100,000 |
|
The
following table sets forth information describing the compensation of each
Trustee and Member of the Advisory Board (if any) for his or her services for
the fiscal year ended July 31, 2023, or calendar year ended December 31, 2022,
as applicable.
Compensation Table(A)
AGGREGATE
COMPENSATION
FROM A FUND |
|
Elizabeth S Acton
|
|
Laura M Bishop(B) |
|
Ann E Dunwoody
|
|
John Engler
|
Fidelity® SAI Small-Mid Cap 500 Index
Fund |
$ |
257 |
$ |
223 |
$ |
229 |
$ |
230 |
TOTAL COMPENSATION
FROM THE FUND COMPLEX(C) |
$ |
563,000 |
$ |
184,000 |
$ |
502,500 |
$ |
496,000 |
AGGREGATE
COMPENSATION
FROM A FUND |
|
Robert F Gartland
|
|
Robert W Helm |
|
Arthur E Johnson
|
|
Michael E Kenneally
|
Fidelity® SAI Small-Mid Cap 500 Index
Fund |
$ |
257 |
$ |
238 |
$ |
221 |
$ |
279 |
TOTAL COMPENSATION
FROM THE FUND COMPLEX(C) |
$ |
565,000 |
$ |
502,500 |
$ |
492,500 |
$ |
612,500 |
AGGREGATE
COMPENSATION
FROM A FUND |
|
Mark A Murray
|
|
Carol J Zierhoffer(D) |
|
|
|
|
Fidelity® SAI Small-Mid Cap 500 Index
Fund |
$ |
228 |
$ |
139 |
|
|
|
|
TOTAL COMPENSATION
FROM THE FUND COMPLEX(C) |
$ |
497,500 |
$ |
0 |
|
|
|
|
(A) Jonathan
Chiel, Abigail P. Johnson, and Jennifer Toolin McAuliffe are interested
persons and are compensated by Fidelity.
|
|
(B) Ms. Bishop
serves as a Member of the Advisory Board of Fidelity Salem Street Trust
effective September 1, 2022.
|
|
(C) Reflects
compensation received for the calendar year ended December 31, 2022 for
295 funds of 31 trusts (including Fidelity Central Investment Portfolios
II LLC). Compensation figures include cash and may include amounts elected
to be deferred. Certain individuals elected voluntarily to defer a portion
of their compensation as follows: Elizabeth S. Acton, $120,000; Laura M.
Bishop, $73,674; Ann E. Dunwoody, $274,597; John Engler, $274,597; Robert
F. Gartland, $180,000; Robert W. Helm, $274,597; and Mark A. Murray,
$274,597.
|
|
(D) Ms. Zierhoffer
serves as a Member of the Advisory Board of Fidelity Salem Street Trust
effective March 1, 2023.
|
|
As
of July 31, 2023, the Trustees, Members of the Advisory Board (if any), and
officers of the fund owned, in the aggregate, less than 1% of each class's total
outstanding shares, with respect to the fund.
As
of July 31, 2023, the following owned of record and/or beneficially 5% or more
of the outstanding shares:
Fund
or Class Name |
Owner
Name |
City |
State |
Ownership
% |
Fidelity® SAI Small-Mid Cap 500 Index
Fund |
STRATEGIC ADVISERS® FIDELITY® U.S. TOTAL
STOCK FUND |
BOSTON |
MA |
70.87% |
Fidelity® SAI Small-Mid Cap 500 Index
Fund |
STRATEGIC ADVISERS® SMALL-MID CAP
FUND |
BOSTON |
MA |
29.06% |
As
of July 31, 2023, the following owned of record and/or beneficially 25% or more
of the outstanding shares:
Fund
Name |
Owner
Name |
City |
State |
Ownership
% |
Fidelity® SAI Small-Mid Cap 500 Index
Fund |
STRATEGIC ADVISERS® FIDELITY® U.S. TOTAL
STOCK FUND |
BOSTON |
MA |
70.87% |
Fidelity® SAI Small-Mid Cap 500 Index
Fund |
STRATEGIC ADVISERS® SMALL-MID CAP
FUND |
BOSTON |
MA |
29.06% |
A
shareholder owning of record or beneficially more than 25% of a fund's
outstanding shares may be considered a controlling person. That shareholder's
vote could have a more significant effect on matters presented at a
shareholders' meeting than votes of other shareholders.
CONTROL OF INVESTMENT
ADVISERS
FMR
LLC, as successor by merger to FMR Corp., is the ultimate parent company of FMR.
The voting common shares of FMR LLC are divided into two series. Series B is
held predominantly by members of the Johnson family, including Abigail P.
Johnson, directly or through trusts, and is entitled to 49% of the vote on any
matter acted upon by the voting common shares. Series A is held predominantly by
non-Johnson family member employees of FMR LLC and its affiliates and is
entitled to 51% of the vote on any such matter. The Johnson family group and all
other Series B shareholders have entered into a shareholders' voting agreement
under which all Series B shares will be voted in accordance with the majority
vote of Series B shares. Under the 1940 Act, control of a company is presumed
where one individual or group of individuals owns more than 25% of the voting
securities of that company. Therefore, through their ownership of voting common
shares and the execution of the shareholders' voting agreement, members of the
Johnson family may be deemed, under the 1940 Act, to form a controlling group
with respect to FMR LLC.
At
present, the primary business activities of FMR LLC and its subsidiaries are:
(i) the provision of investment advisory, management, shareholder, investment
information and assistance and certain fiduciary services for individual and
institutional investors; (ii) the provision of securities brokerage services;
(iii) the management and development of real estate; and (iv) the investment in
and operation of a number of emerging businesses.
Geode,
a registered investment adviser, is a subsidiary of Geode Capital Holdings LLC.
Geode was founded in January 2001 to develop and manage quantitative investment
strategies and to provide advisory and sub-advisory services.
FMR,
Geode Capital Management, LLC, Fidelity Distributors Company LLC (FDC), and the
fund have adopted codes of ethics under Rule 17j-1 of the 1940 Act that set
forth employees' fiduciary responsibilities regarding the fund, establish
procedures for personal investing, and restrict certain transactions. Employees
subject to the codes of ethics, including Fidelity and Geode investment
personnel, may invest in securities for their own investment accounts, including
securities that may be purchased or held by the fund.
The
fund has entered into a management contract with FMR, pursuant to which FMR
furnishes investment advisory and other services.
Management
and Sub-Advisory Services. FMR provides the fund with all necessary office
facilities and personnel for servicing the fund's investments, compensates all
officers of the fund and all Trustees who are interested persons of the trust or
of FMR, and compensates all personnel of the fund or FMR performing services
relating to research, statistical and investment activities.
In
addition, FMR or its affiliates, subject to the supervision of the Board of
Trustees, provide the management and administrative services necessary for the
operation of the fund. These services include providing facilities for
maintaining the fund's organization; supervising relations with custodians,
transfer and pricing agents, accountants, underwriters and other persons dealing
with the fund; preparing all general shareholder communications and conducting
shareholder relations; maintaining the fund's records and the registration of
the fund's shares under federal securities laws and making necessary filings
under state securities laws; developing management and shareholder services for
the fund; and furnishing reports, evaluations and analyses on a variety of
subjects to the Trustees.
Geode
serves as sub-adviser of the fund. Under its management contract with the fund,
FMR acts as investment adviser. Under the sub-advisory agreement, and subject to
the supervision of the Board of Trustees, Geode directs the investments of the
fund in accordance with its investment objective, policies, and
limitations.
Management-Related
Expenses. In addition to the management fee payable to FMR and the fees payable
to the transfer agent and pricing and bookkeeping agent, and the costs
associated with securities lending, as applicable, the fund pays all of its
expenses that are not assumed by those parties. The fund pays for the
typesetting, printing, and mailing of its proxy materials to shareholders, legal
expenses, and the fees of the custodian, auditor, and Independent Trustees. The
fund's management contract further provides that the fund will pay for
typesetting, printing, and mailing prospectuses, statements of additional
information, notices, and reports to shareholders. Other expenses paid by the
fund include interest, taxes, brokerage commissions, fees and expenses
associated with the fund's securities lending program, if applicable, the fund's
proportionate share of insurance premiums and Investment Company Institute dues,
and the costs of registering shares under federal securities laws and making
necessary filings under state securities laws. The fund is also liable for such
non-recurring expenses as may arise, including costs of any litigation to which
the fund may be a party, and any obligation it may have to indemnify its
officers and Trustees with respect to litigation.
Management
Fee.
For
the services of FMR under the management contract, the fund pays FMR a monthly
management fee at the annual rate of 0.11% of the fund's average net assets
throughout the month.
The
following table shows the amount of management fees paid by the fund for the
fiscal year(s) ended July 31, 2023, 2022, and 2021 to its current manager and
prior affiliated manager(s), if any.
Fund(s) |
Fiscal
Years
Ended |
|
Management
Fees
Paid to
Investment Adviser |
Fidelity®
SAI Small-Mid Cap 500 Index Fund |
2023 |
$ |
1,080,968 |
|
2022 |
$ |
758,081 |
|
2021 |
$ |
2,257,875 |
FMR
may, from time to time, voluntarily reimburse all or a portion of a fund's or,
in the case of a multiple class fund, a class's operating expenses. FMR retains
the ability to be repaid for these expense reimbursements in the amount that
expenses fall below the limit prior to the end of the fiscal year.
Expense
reimbursements will increase returns, and repayment of the reimbursement will
decrease returns.
Sub-Adviser
- Geode. The fund and FMR have entered
into sub-advisory agreement(s) with Geode. Pursuant to the
sub-advisory agreement(s), FMR has granted Geode investment management
authority as well as the authority to buy and sell securities.
Under
the terms of the sub-advisory agreement, for providing investment management
services to the fund, FMR, and not the fund, pays Geode fees at an annual rate
of 0.0340% of the average daily net assets of the fund, subject to a minimum
annual payment of $25,000.
In
addition, effective January 1, 2024, Geode has contractually agreed to waive a
portion of its sub-advisory fee.
The
following table shows the amount of sub-advisory fees paid by Fidelity
Management & Research Company LLC, on behalf of the fund, to Geode
for the fiscal year(s) ended July 31, 2023, 2022, and 2021.
Fund |
Fiscal
Years
Ended |
|
Sub-Advisory
Fees
Paid
by FMR
to
Geode |
Fidelity®
SAI Small-Mid Cap 500 Index Fund |
2023(A) |
$ |
334,616 |
|
2022(B) |
$ |
241,082 |
|
2021 |
$ |
769,716 |
(A) On October 1, 2022, FMR reduced the
sub-advisory fee rate paid to Geode from 0.0350% to 0.0340%.
|
(B) On August 1, 2021, FMR reduced the
sub-advisory fee rate paid to Geode from 0.0375% to 0.0350%.
|
Fidelity®
SAI Small-Mid Cap 500 Index Fund is managed by Geode, a sub-adviser to the fund.
Louis Bottari is a Senior Portfolio Manager of the fund and receives
compensation for those services. Peter Matthew is a Senior Portfolio Manager of
the fund and receives compensation for those services. Payal Gupta is a
Portfolio Manager of the fund and receives compensation for those services.
Robert Regan is a Portfolio Manager of the fund and receives compensation for
those services. Navid Sohrabi is a Portfolio Manager of the fund and receives
compensation for those services. As of July 31, 2023, portfolio manager
compensation generally consists of a fixed base salary, a bonus that is based on
both objective and subjective criteria, and, in certain cases, participation in
a profit-based compensation plan. A portion of each portfolio manager's
compensation may be deferred based on criteria established by Geode.
Each
portfolio manager's base salary is determined annually by level of
responsibility and tenure at Geode. The primary component for determining each
portfolio manager's bonus is the pre-tax investment performance of the portfolio
manager's fund(s) and account(s) relative to a custom peer group, if applicable,
and relative to a benchmark index assigned to each fund or account. Performance
is measured over multiple measurement periods that eventually encompass periods
of up to five years. A portion of each portfolio manager's bonus is linked to
Fidelity® SAI Small-Mid Cap 500 Index Fund's relative pre-tax investment
performance measured against the Russell SMID 500™ Index. A subjective component
of each portfolio manager's bonus is based on the portfolio manager's overall
contribution to the management of Geode, including recruiting, monitoring, and
mentoring within the investment management teams, as well as time spent
assisting in firm promotion. Each portfolio manager may also be compensated
under a profit-based compensation plan, which is primarily based on the profits
of Geode.
A
portfolio manager's compensation plan can give rise to potential conflicts of
interest. A manager's base pay tends to increase with additional and more
complex responsibilities that include increased assets under management and a
portion of the bonus relates to firm promotion efforts, which together
indirectly link compensation to sales. Managing and providing research to
multiple accounts (including proprietary accounts) can give rise to potential
conflicts of interest if the accounts have different objectives, benchmarks,
time horizons, and fees as a portfolio manager must allocate time and investment
ideas across multiple accounts. Securities selected for accounts other than the
fund may outperform the securities selected for the fund.
In
addition to managing the fund's investment portfolio, each portfolio manager
also manages other investment portfolios and accounts on behalf of Geode or its
affiliates.
The
following table provides information relating to other accounts managed by Louis
Bottari as of July 31, 2023:
|
Registered Investment Companies* |
|
Other Pooled
Investment
Vehicles |
|
Other
Accounts |
Number
of Accounts Managed |
81 |
|
91 |
|
8 |
Number
of Accounts Managed with Performance-Based Advisory Fees |
none |
|
none |
|
none |
Assets
Managed (in millions) |
$947,728 |
|
$116,959 |
|
$4,028 |
Assets
Managed with Performance-Based Advisory Fees (in millions) |
none |
|
none |
|
none |
*
Includes Fidelity® SAI Small-Mid Cap 500 Index Fund ($1,611 (in millions) assets
managed). The amount of assets managed of the fund reflects trades and other
assets as of the close of the business day prior to the fund's fiscal
year-end.
As
of July 31, 2023, the dollar range of shares of Fidelity® SAI Small-Mid Cap 500
Index Fund beneficially owned by Mr. Bottari was none.
The
following table provides information relating to other accounts managed by Payal
Gupta as of July 31, 2023:
|
Registered Investment Companies* |
|
Other Pooled
Investment
Vehicles |
|
Other
Accounts |
Number
of Accounts Managed |
81 |
|
91 |
|
8 |
Number
of Accounts Managed with Performance-Based Advisory Fees |
none |
|
none |
|
none |
Assets
Managed (in millions) |
$947,728 |
|
$116,959 |
|
$4,028 |
Assets
Managed with Performance-Based Advisory Fees (in millions) |
none |
|
none |
|
none |
*
Includes Fidelity® SAI Small-Mid Cap 500 Index Fund ($1,611 (in millions) assets
managed). The amount of assets managed of the fund reflects trades and other
assets as of the close of the business day prior to the fund's fiscal
year-end.
As
of July 31, 2023, the dollar range of shares of Fidelity® SAI Small-Mid Cap 500
Index Fund beneficially owned by Ms. Gupta was none.
The
following table provides information relating to other accounts managed by Peter
Matthew as of July 31, 2023:
|
Registered Investment Companies* |
|
Other Pooled
Investment
Vehicles |
|
Other
Accounts |
Number
of Accounts Managed |
81 |
|
91 |
|
9 |
Number
of Accounts Managed with Performance-Based Advisory Fees |
none |
|
none |
|
none |
Assets
Managed (in millions) |
$947,728 |
|
$116,959 |
|
$4,247 |
Assets
Managed with Performance-Based Advisory Fees (in millions) |
none |
|
none |
|
none |
*
Includes Fidelity® SAI Small-Mid Cap 500 Index Fund ($1,611 (in millions) assets
managed). The amount of assets managed of the fund reflects trades and other
assets as of the close of the business day prior to the fund's fiscal
year-end.
As
of July 31, 2023, the dollar range of shares of Fidelity® SAI Small-Mid Cap 500
Index Fund beneficially owned by Mr. Matthew was none.
The
following table provides information relating to other accounts managed by Bob
Regan as of July 31, 2023:
|
Registered Investment Companies* |
|
Other Pooled
Investment
Vehicles |
|
Other
Accounts |
Number
of Accounts Managed |
81 |
|
91 |
|
9 |
Number
of Accounts Managed with Performance-Based Advisory Fees |
none |
|
none |
|
none |
Assets
Managed (in millions) |
$947,728 |
|
$116,959 |
|
$4,247 |
Assets
Managed with Performance-Based Advisory Fees (in millions) |
none |
|
none |
|
none |
*
Includes Fidelity® SAI Small-Mid Cap 500 Index Fund ($1,611 (in millions) assets
managed). The amount of assets managed of the fund reflects trades and other
assets as of the close of the business day prior to the fund's fiscal
year-end.
As
of July 31, 2023, the dollar range of shares of Fidelity® SAI Small-Mid Cap 500
Index Fund beneficially owned by Mr. Regan was none.
The
following table provides information relating to other accounts managed by Navid
Sohrabi as of July 31, 2023:
|
Registered Investment Companies* |
|
Other Pooled
Investment
Vehicles |
|
Other
Accounts |
Number
of Accounts Managed |
81 |
|
91 |
|
8 |
Number
of Accounts Managed with Performance-Based Advisory Fees |
none |
|
none |
|
none |
Assets
Managed (in millions) |
$947,728 |
|
$116,959 |
|
$4,028 |
Assets
Managed with Performance-Based Advisory Fees (in millions) |
none |
|
none |
|
none |
*
Includes Fidelity® SAI Small-Mid Cap 500 Index Fund ($1,611 (in millions)
assets managed). The amount of assets managed of the fund reflects trades and
other assets as of the close of the business day prior to the fund's fiscal
year-end.
As
of July 31, 2023, the dollar range of shares of Fidelity® SAI Small-Mid Cap 500
Index Fund beneficially owned by Mr. Sohrabi was none.
Geode
Proxy Voting Policies
As
an investment adviser, Geode holds voting authority for securities in many
of the client accounts that it manages. Geode takes seriously its
responsibility to monitor events affecting securities in those client
accounts and to exercise its voting authority with respect to those
securities in the best interests of its clients (as well as shareholders
of mutual funds for which it serves as adviser or sub-adviser). The
purposes of these proxy voting policies are to (1) establish a framework
for Geode's analysis and decision-making with respect to proxy voting and
(2) set forth operational procedures for Geode's exercise of proxy voting
authority.
Overview
Geode
anticipates that, based on its current business model, it will manage the
vast majority of assets under its management using passive investment
management techniques, such as indexing. Geode also manages funds and
separate accounts using active investment management techniques, primarily
employing quantitative investment strategies.
Geode
will engage established commercial proxy advisory firms for comprehensive
analysis, research and voting recommendations, particularly for matters
that may be controversial or require additional analysis under these
Policies.
Geode
may determine to follow or reject any recommendation based on the research
and analysis provided by proxy advisory firms or on any independent
research and analysis obtained or generated by Geode. However, Geode has
retained a third-party proxy voting service (the "Agent") to affect votes
based on the customized policies established by Geode and maintain records
of all of Geode's proxy votes. In limited instances where the Policies do
not address the specific matter, the Agent will refer the ballot back to
Geode. For ballots related to proxy contests, mergers, acquisitions and
other organizational transactions, Geode may determine it is appropriate
to conduct a company specific evaluation. In cases of proxies not voted by
the Agent, the ultimate voting decision and responsibility rests with
Geode Proxy. Geode's Operations Committee oversees the exercise of voting
authority under these proxy voting policies.
Due
to its focused business model and the number of investments that Geode
will make for its clients (particularly pursuant to its indexing
strategy), Geode does not anticipate that actual or potential conflicts of
interest are likely to occur in the ordinary course of its business.
However, Geode believes it is essential to avoid having conflicts of
interest affect its objective of voting in the best interests of its
clients. Therefore, in the event that members of the Operations Committee,
the Agent or any other person involved in the analysis or voting of
proxies has knowledge of, or has reason to believe there may exist, any
potential relationship, business or otherwise, between the portfolio
company subject to the proxy vote and Geode (or any affiliate of Geode) or
their respective directors, officers, employees or agents, such person
shall notify the other members of the Operations Committee. Geode will
analyze and address such potential conflict of interest, consulting with
outside counsel, as appropriate. In the case of an actual conflict of
interest, on the advice of counsel, Geode expects that the independent
directors of Geode will consider the matter and may (1) determine that
there is no conflict of interest (or that reasonable measures have been
taken to remedy or avoid any conflict of interest) that would prevent
Geode from voting the applicable proxy, (2) abstain, (3) cause authority
to be delegated to the Agent or a similar special fiduciary to vote the
applicable proxy or (4) recommend other methodology for mitigating the
conflict of interest, if deemed appropriate (e.g., echo voting).
Geode
has established the specific proxy voting policies that are summarized
below to maximize the value of investments in its clients' accounts, which
it believes will be furthered through (1) accountability of a company's
management and directors to its shareholders, (2) alignment of the
interests of management with those of shareholders (including through
compensation, benefit and equity ownership programs), and (3) increased
disclosure of a company's business and operations. Geode reserves the
right to override any of its proxy voting policies with respect to a
particular shareholder vote when such an override is, in Geode's best
judgment, consistent with the overall principle of voting proxies in the
best long-term economic interests of Geode's clients.
Policies
All
proxy votes shall be considered and made in a manner consistent with the
best interests of Geode's clients (as well as shareholders of mutual fund
clients) without regard to any other relationship, business or otherwise,
between the portfolio company subject to the proxy vote and Geode or its
affiliates. As a general matter, (1) proxies will be voted FOR incumbent
members of a board of directors and FOR routine management proposals,
except as otherwise addressed under these policies; (2) shareholder and
non-routine management proposals addressed by these policies will be voted
as provided in these policies; and (3) shareholder and non-routine
management proposals not addressed by these policies will be evaluated by
Geode ESG Stewardship based on fundamental analysis and/or research and
recommendations provided by the Agent and other third-party proxy advisory
firms.
When
voting the securities of non-US issuers, Geode will evaluate proposals in
accordance with these policies but will also take local market standards
and best practices into consideration. Geode may also limit or modify its
voting at certain non-US meetings (e.g., if shares are required to be
blocked or reregistered in connection with voting).
Geode's
specific policies are as follows:
I.
Election of Directors
Geode
will generally vote FOR incumbent members of a board of directors
except:
•
Attendance. The incumbent board member failed to attend at least 75% of
meetings in the previous year and does not provide a reasonable
explanation.
•
Independent Directors. Nominee is not independent and full board comprises
less than a majority of independents. Nominee is not independent and sits
on the audit, compensation or nominating committee.
•
Director Responsiveness. The board failed to act on shareholder proposals
that received approval by Geode and a majority of the votes cast in the
previous year. The board failed to act on takeover offers where Geode and
a majority of shareholders tendered their shares. At the previous board
election, directors opposed by Geode received more than 50 percent
withhold/against votes of the shares cast, and the company failed to
address the issue(s) that caused the high withhold/against vote.
•
Golden Parachutes. Incumbent members of the compensation committee adopted
or renewed an excessive golden parachute within the past year.
•
Gender Diversity. If there are no women on the Board unless the Board has
made a firm commitment to return to a gender-diverse status when there was
a woman on the Board at the preceding annual meeting.
•
Overboarding. The Director is a CEO and sits on the Board of more than two
public companies besides his or her own; or a non-CEO Director who sits on
more than five public company boards.
•
Unequal Voting Rights. If the Company maintains a common stock structure
with unequal voting rights. Exceptions to the policy may include, but
aren't limited to: Newly-public companies with a reasonable sunset
provision, where the unequal voting rights are considered de minimis; or
the company provides sufficient safeguards for minority shareholders.
•
In Other Circumstances when a member of the board has acted in a manner
inconsistent with the interests of shareholders of a company whose
securities are held in client accounts.
II.
Majority Election. Unless a company has a policy achieving a similar
result, Geode will generally vote in favor of a proposal calling for
directors to be elected by a majority of votes cast in a board election
provided that the plurality vote applies when there are more nominees than
board seats.
III.
Say on Pay (non-binding).
•
Advisory Vote on Executive Compensation. Geode will generally vote AGAINST
advisory vote when: (1) there is a significant misalignment between
executive pay and company performance; (2) the company maintains
significant problematic pay practices; or (3) the board exhibits a
significant level of poor communication and responsiveness to
shareholders.
•
Frequency Vote. Geode will generally vote FOR having an advisory vote on
executive compensation every year.
•
Advisory Vote on Golden Parachute. Geode will vote AGAINST excessive
change-in-control severance payments.
IV.
Vote AGAINST Anti-Takeover Proposals, including:
•
Addition of Special Interest Directors to the board.
•
Authorization of "Blank Check" Preferred Stock. Geode will vote FOR
proposals to require shareholder approval for the distribution of
preferred stock except for acquisitions and raising capital in the
ordinary course of business.
•
Classification of Boards, Geode will vote FOR proposals to de-classify
boards.
•
Fair Price Amendments, other than those that consider only a two-year
price history and are not accompanied by other anti-takeover measures.
•
Golden Parachutes, that Geode deems to be excessive in the event of
change-in-control.
•
Poison Pills. Adoption or extension of a Poison Pill without shareholder
approval will result in our voting AGAINST the election of incumbents or a
management slate in the concurrent or next following vote on the election
of directors, provided the matter will be considered if (a) the board has
adopted a Poison Pill with a sunset provision; (b) the Pill is linked to a
business strategy that will result in greater value for the shareholders;
(c) the term is less than three years; (d) the Pill includes a qualifying
offer clause; Or (e) shareholder approval is required to reinstate the
expired Pill. Geode will vote FOR shareholder proposals requiring or
recommending that shareholders be given an opportunity to vote on the
adoption of poison pills.
•
Reduction or Limitation of Shareholder Rights (e.g., action by written
consent, ability to call meetings, or remove directors).
•
Reincorporation in another state (when accompanied by Anti-Takeover
Provisions, including increased statutory anti-takeover provisions). Geode
will vote FOR reincorporation in another state when not accompanied by
such anti-takeover provisions.
•
Requirements that the Board Consider Non-Financial Effects of merger and
acquisition proposals.
•
Requirements regarding Size, Selection and Removal of the Board that are
likely to have an anti-takeover effect (although changes with legitimate
business purposes will be evaluated).
•
Supermajority Voting Requirements (i.e., typically 2/3 or greater) for
boards and shareholders. Geode will vote FOR proposals to eliminate
supermajority voting requirements.
•
Transfer of Authority from Shareholders to Directors.
V.
Vote FOR proposed amendments to a company's certificate of incorporation
or by-laws that enable the company to Opt Out of the Control Shares
Acquisition Statutes.
VI.
Vote AGAINST the introduction of new classes of Stock with Differential
Voting Rights.
VII.
Vote AGAINST introduction and FOR elimination of Cumulative Voting Rights,
except in certain instances where it is determined not to enhance
shareholders' interests.
VIII.
Vote FOR elimination of Preemptive Rights.
IX.
Vote FOR Anti-Greenmail proposals so long as they are not part of
anti-takeover provisions (in which case the vote will be AGAINST).
X.
Vote FOR charter and by-law amendments expanding the Indemnification of
Directors to the maximum extent permitted under Delaware law (regardless
of the state of incorporation) and vote AGAINST charter and by-law
amendments completely Eliminating Directors' Liability for Breaches of
Care.
XI.
Vote FOR proposals to adopt Confidential Voting and Independent Vote
Tabulation practices.
XII.
Vote FOR Open-Market Stock Repurchase Programs, unless there is clear
evidence of past abuse of the authority; the plan contains no safeguards
against selective buybacks, or the authority can be used as an
anti-takeover mechanism.
XIII.
Vote FOR management proposals to implement a Reverse Stock Split when the
number of authorized shares will be proportionately reduced or the Reverse
Stock Split is necessary to avoid de-listing.
XIV.
Vote FOR management proposals to Reduce the Par Value of common stock
unless the proposal may facilitate an anti-takeover device or other
negative corporate governance action.
XV.
Vote FOR the Issuance of Large Blocks of Stock if such proposals have a
legitimate business purpose and do not result in dilution of greater than
20%. However, a company's specific circumstances and market practices may
be considered in determining whether the proposal is consistent with
shareholders' interests.
XVI.
Vote AGAINST Excessive Increases in Common Stock. Vote AGAINST increases
in authorized common stock that would result in authorized capital in
excess of three times the company's shares outstanding and reserved for
legitimate purposes. For non-U.S. securities with conditional capital
requests, vote AGAINST issuances of shares with preemptive rights in
excess of 100% of the company's current shares outstanding. Special
requests will be evaluated, taking company-specific circumstances into
account.
XVII.
Vote AGAINST the adoption of or amendment to authorize additional shares
under a Stock Option Plan if:
•
The stock option plan includes evergreen provisions, which provides for an
automatic allotment of equity compensation every year.
•
The dilution effect of the shares authorized under the plan (including by
virtue of any "evergreen" or replenishment provision), plus the shares
reserved for issuance pursuant to all other option or restricted stock
plans, is greater than 10%. However, dilution may be increased to 15% for
small capitalization companies, and 20% for micro capitalization
companies, respectively. If the plan fails this test, the dilution effect
may be evaluated relative to any unusual factor involving the company.
•
The offering price of options is less than 100% of fair market value on
the date of grant, except that the offering price may be as low as 85% of
fair market value if the discount is expressly granted in lieu of salary
or cash bonus, except that a modest number of shares (limited to 5% for a
large capitalization company and 10% for a small and micro capitalization
companies) may be available for grant to employees and directors under the
plan if the grant is made by a compensation committee composed entirely of
independent directors (the "De Minimis Exception").
•
The plan is administered by (1) a compensation committee not comprised
entirely of independent directors or (2) a board of directors not
comprised of a majority of independent directors, provided that a plan is
acceptable if it satisfies the De Minimis Exception.
•
The plan's terms allow repricing of underwater options, or the
board/committee has repriced options outstanding under the plan in the
past two years without shareholder approval, unless by the express terms
of the plan or a board resolution such repricing is rarely used (and then
only to maintain option value due to extreme circumstances beyond
management's control) and is within the limits of the De Minimis
Exception.
•
Liberal Definition of Change in Control: the plan provides that the
vesting of equity awards may accelerate even though an actual change in
control may not occur.
XVIII.
Vote AGAINST the election of incumbent members of the compensation
committee or a management slate in the concurrent or next following vote
on the election of directors if, within the last year and without
shareholder approval, the company's board of directors or compensation
committee has repriced outstanding options.
XIX.
Evaluate proposals to Reprice Outstanding Stock Options, taking into
account such factors as: (1) whether the repricing proposal excludes
senior management and directors; (2) whether the options proposed to be
repriced exceeded the dilution thresholds described in these current proxy
voting policies when initially granted; (3) whether the repricing proposal
is value neutral to shareholders based upon an acceptable options pricing
model; (4) the company's relative performance compared to other companies
within the relevant industry or industries; (5) economic and other
conditions affecting the relevant industry or industries in which the
company competes; and (6) other facts or circumstances relevant to
determining whether a repricing proposal is consistent with the interests
of shareholders.
XX.
Vote AGAINST adoption of or amendments to authorize additional shares for
Restricted Stock Awards ("RSA") if:
•
The dilution effect of the shares authorized under the plan, plus the
shares reserved for issuance pursuant to all other option or restricted
stock plans, is greater than 10%. However, dilution may be increased to
15% for small capitalization companies, and 20% for micro capitalization
companies, respectively. If the plan fails this test, the dilution effect
may be evaluated relative to any unusual factor involving the company.
XXI.
Vote AGAINST Omnibus Stock Plans if one or more component violates any of
the criteria applicable to Stock Option Plans or RSAs under these proxy
voting policies, unless such component is de minimis. In the case of an
omnibus stock plan, the dilution limits applicable to Stock Option Plans
or RSAs under these proxy voting policies will be measured against the
total number of shares under all components of such plan.
XXII.
Vote AGAINST Employee Stock Purchase Plans if the plan violates any of the
relevant criteria applicable to Stock Option Plans or RSAs under these
proxy voting policies, except that (1) the minimum stock purchase price
may be equal to or greater than 85% of the stock's fair market value if
the plan constitutes a reasonable effort to encourage broad based
participation in the company's equity, and (2) in the case of non-U.S.
company stock purchase plans, the minimum stock purchase price may be
equal to the prevailing "best practices," as articulated by the Agent,
provided that the minimum stock purchase price must be at least 75% of the
stock's fair market value.
XXIII.
Vote AGAINST Stock Awards (other than stock options and RSAs) unless it is
determined they are identified as being granted to officers/directors in
lieu of salary or cash bonus, subject to number of shares being
reasonable.
XXIV.
Vote AGAINST equity vesting acceleration programs or amendments to
authorize additional shares under such programs if the program provides
for the acceleration of vesting of equity awards even though an actual
change in control may not occur.
XXV.
Vote FOR Employee Stock Ownership Plans ("ESOPs") of non-leveraged ESOPs,
and in the case of leveraged ESOPs, giving consideration to the company's
state of incorporation, existence of supermajority vote rules in the
charter, number of shares authorized for the ESOP, and number of shares
held by insiders. Geode may also examine where the ESOP shares are
purchased and the dilution effect of the purchase. Geode will vote AGAINST
a leveraged ESOP if all outstanding loans are due immediately upon a
change in control.
XXVI.
Vote AGAINST management or shareholder proposals on other Compensation
Plans or Practices if such plans or practices are Inconsistent with the
Interests of Shareholders. In addition, Geode may vote AGAINST the
election of incumbents or a management slate in the concurrent or next
following vote on the election of directors if Geode believes a board has
approved executive compensation arrangements inconsistent with the
interests of shareholders.
XXVII.
Environmental and Social Proposals. Evaluate each proposal related to
environmental and social issues (including political contributions).
Generally, Geode expects to vote with management's recommendation on
shareholder proposals concerning environmental or social issues, as Geode
believes management and the board are ordinarily in the best position to
address these matters. Geode may support certain shareholder environmental
and social proposals that request additional disclosures from companies
which may provide material information to the investment management
process, or where Geode otherwise believes support will help maximize
shareholder value. Geode may take action against the re-election of board
members if there are serious concerns over ESG practices or the board
failed to act on related shareholder proposals that received approval by
Geode and a majority of the votes cast in the previous year.
XXVIII.
Geode will generally vote FOR proposals seeking to establish or amend
proxy access which allow a shareholder (or shareholder group) holding at
least 3% of the voting power of the company's outstanding shares
continuously for a minimum of 3 years the ability to nominate no more than
25% of the board of directors. Geode will generally vote AGAINST proposals
that do not meet the aforementioned criteria.
XXIX.
Shares of Investment Companies.
•
For institutional accounts, Geode will generally vote in favor of
proposals recommended by the underlying funds' Board of Trustees, unless
voting is not permitted under applicable laws and regulations.
•
For retail managed accounts, Geode will employ echo voting when voting
shares. To avoid certain potential conflicts of interest, if an investment
company has a shareholder meeting, Geode would vote their shares in the
investment company in the same proportion as the votes of the other
shareholders of the investment company. |
To
view a fund's proxy voting record for the most recent 12-month period
ended June 30, if applicable, visit www.fidelity.com/proxyvotingresults or
visit the SEC's web site at www.sec.gov. |
The
fund has entered into a distribution agreement with Fidelity Distributors
Company LLC (FDC), an affiliate of FMR. The principal business address of FDC is
900 Salem Street, Smithfield, Rhode Island 02917. FDC is a broker-dealer
registered under the Securities Exchange Act of 1934 and a member of the
Financial Industry Regulatory Authority, Inc.
The
fund's distribution agreement calls for FDC to use all reasonable efforts,
consistent with its other business, to secure purchasers for shares of the fund,
which are continuously offered.
Promotional
and administrative expenses in connection with the offer and sale of shares are
paid by FMR.
The
Trustees have approved a Distribution and Service Plan with respect to shares of
the fund (the Plan) pursuant to Rule 12b-1 under the 1940 Act (the Rule).
The
Rule provides in substance that a fund may not engage directly or indirectly in
financing any activity that is primarily intended to result in the sale of
shares of the fund except pursuant to a plan approved on behalf of the fund
under the Rule.
The
Plan, as approved by the Trustees, allows shares of the fund and/or FMR to
incur certain expenses that might be considered to constitute indirect payment
by the fund of distribution expenses.
The
Plan adopted for the fund or class, as applicable, is described in the
prospectus.
Under
the Plan, if the payment of management fees by the fund to FMR is deemed to be
indirect financing by the fund of the distribution of its shares, such payment
is authorized by the Plan.
The
Plan specifically recognizes that FMR may use its management fee revenue, as
well as its past profits or its other resources, to pay FDC for expenses
incurred in connection with providing services intended to result in the sale of
shares of the fund and/or shareholder support services. In addition, the Plan
provides that FMR, directly or through FDC, may pay significant amounts to
intermediaries that provide those services.
Currently,
the Board of Trustees has authorized such payments for shares of the fund.
Prior
to approving the Plan, the Trustees carefully considered all pertinent factors
relating to the implementation of the Plan, and determined that there is a
reasonable likelihood that the Plan will benefit the fund or class, as
applicable, and its shareholders.
In
particular, the Trustees noted that the Plan does not authorize payments by
shares of the fund other than those made to FMR under its management contract
with the fund.
To
the extent that the Plan gives FMR and FDC greater flexibility in connection
with the distribution of shares, additional sales of shares or stabilization of
cash flows may result.
Furthermore,
certain shareholder support services may be provided more effectively under the
Plan by local entities with whom shareholders have other relationships.
TRANSFER AND SERVICE AGENT
AGREEMENTS
The
fund has entered into a transfer agent agreement with Fidelity Investments
Institutional Operations Company LLC (FIIOC), an affiliate of FMR, which is
located at 245 Summer Street, Boston, Massachusetts 02210. Under the terms of
the agreement, FIIOC (or an agent, including an affiliate) performs transfer
agency services.
For
providing transfer agency services, FIIOC receives no fees from the fund.
FIIOC
may collect fees charged in connection with providing certain types of services
such as exchanges, closing out fund balances, maintaining fund positions with
low balances, checkwriting, wire transactions, and providing historical account
research, as applicable.
FIIOC
bears the expense of typesetting, printing, and mailing prospectuses, statements
of additional information, and all other reports, notices, and statements to
existing shareholders, with the exception of proxy statements.
Fund
shares may be owned by intermediaries for the benefit of their customers. In
those instances, a fund may not maintain an account for shareholders, and some
or all of the recordkeeping services for these accounts may be performed by
third parties. FIIOC or an affiliate may make payments to intermediaries
(including affiliates of FIIOC) for recordkeeping and other services.
Retirement
plans may also hold fund shares in the name of the plan or its trustee, rather
than the plan participant. In situations where FIIOC or an affiliate does not
provide recordkeeping services, plan recordkeepers, who may have affiliated
financial intermediaries who sell shares of the fund, may, upon direction, be
paid for providing recordkeeping services to plan participants. Payments may
also be made, upon direction, for other plan expenses. FIIOC may also pay an
affiliate for providing services that otherwise would have been performed by
FIIOC.
In
certain situations where FIIOC or an affiliate provides recordkeeping services
to a retirement plan, payments may be made to pay for plan expenses. The amount
of such payments may be based on investments in particular Fidelity® funds, or
may be fixed for a given period of time. Upon direction, payments may be made to
plan sponsors, or at the direction of plan sponsors, third parties, for expenses
incurred in connection with the plan. FIIOC may also pay an affiliate for
providing services that otherwise would have been performed by FIIOC.
The
fund has entered into a service agent agreement with Fidelity Service Company,
Inc. (FSC), an affiliate of FMR (or an agent, including an affiliate). Under the
terms of the agreement, FSC calculates the NAV and dividends for shares,
maintains the fund's portfolio and general accounting records, and administers
the fund's securities lending program.
For
providing pricing and bookkeeping services, FSC receives no fee from the
fund.
FMR
bears the cost of transfer agency services and pricing and bookkeeping
services.
During
the fiscal year, the securities lending agent, or the investment adviser (where
the fund does not use a securities lending agent) monitors loan opportunities
for the fund, negotiates the terms of the loans with borrowers, monitors the
value of securities on loan and the value of the corresponding collateral,
communicates with borrowers and the fund's custodian regarding marking to market
the collateral, selects securities to be loaned and allocates those loan
opportunities among lenders, and arranges for the return of the loaned
securities upon the termination of the loan. Income and fees from securities
lending activities for the fiscal year ended July 31, 2023, are shown in the
following table:
Security Lending Activities |
|
Fund(s) |
|
|
Fidelity®
SAI Small-Mid Cap 500 Index Fund |
Gross income from securities lending
activities |
$ |
3,511,464 |
Fees paid to securities lending agent from a
revenue split |
$ |
0 |
Administrative fees |
$ |
0 |
Rebate (paid to borrower) |
$ |
2,159,171 |
Other fees not included in the revenue split
(lending agent fees to NFS) |
$ |
133,604 |
Aggregate fees/compensation for securities
lending activities |
$ |
2,292,775 |
Net income from securities lending
activities |
$ |
1,218,689 |
|
|
|
A
fund does not pay cash collateral management fees, separate indemnification
fees, or other fees not reflected above.
Trust
Organization.
Fidelity®
SAI Small-Mid Cap 500 Index Fund is a fund of Fidelity Salem Street Trust, an
open-end management investment company created under an initial declaration of
trust dated September 5, 1984.
The
Trustees are permitted to create additional funds in the trust and to create
additional classes of a fund.
The
assets of the trust received for the issue or sale of shares of each fund and
all income, earnings, profits, and proceeds thereof, subject to the rights of
creditors, are allocated to such fund, and constitute the underlying assets of
such fund. The underlying assets of each fund in the trust shall be charged with
the liabilities and expenses attributable to such fund. Any general expenses of
the trust shall be allocated between or among any one or more of the
funds.
Shareholder
Liability. The trust is an entity commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust may, under certain
circumstances, be held personally liable for the obligations of the trust.
The
Declaration of Trust contains an express disclaimer of shareholder liability for
the debts, liabilities, obligations, and expenses of the trust or fund. The
Declaration of Trust provides that the trust shall not have any claim against
shareholders except for the payment of the purchase price of shares and requires
that each agreement, obligation, or instrument entered into or executed by the
trust or the Trustees relating to the trust or to a fund shall include a
provision limiting the obligations created thereby to the trust or to one or
more funds and its or their assets. The Declaration of Trust further provides
that shareholders of a fund shall not have a claim on or right to any assets
belonging to any other fund.
The
Declaration of Trust provides for indemnification out of a fund's property of
any shareholder or former shareholder held personally liable for the obligations
of the fund solely by reason of his or her being or having been a shareholder
and not because of his or her acts or omissions or for some other reason. The
Declaration of Trust also provides that a fund shall, upon request, assume the
defense of any claim made against any shareholder for any act or obligation of
the fund and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which a fund itself would be unable to meet its obligations.
Fidelity Management & Research Company LLC believes that, in view of the
above, the risk of personal liability to shareholders is remote.
Voting
Rights. The fund's capital consists of shares of beneficial interest.
Shareholders are entitled to one vote for each dollar of net asset value they
own. The voting rights of shareholders can be changed only by a shareholder
vote. Shares may be voted in the aggregate, by fund, and by class.
The
shares have no preemptive or conversion rights. Shares are fully paid and
nonassessable, except as set forth under the heading "Shareholder Liability"
above.
The
trust or a fund or a class may be terminated upon the sale of its assets to, or
merger with, another open-end management investment company, series, or class
thereof, or upon liquidation and distribution of its assets. The Trustees may
reorganize, terminate, merge, or sell all or a portion of the assets of a trust
or a fund or a class without prior shareholder approval. In the event of the
dissolution or liquidation of a trust, shareholders of each of its funds are
entitled to receive the underlying assets of such fund available for
distribution. In the event of the dissolution or liquidation of a fund or a
class, shareholders of that fund or that class are entitled to receive the
underlying assets of the fund or class available for distribution.
Custodians.
The
Bank of New York Mellon, 1 Wall Street, New York, New York, is custodian of the
assets of the fund.
The
custodian is responsible for the safekeeping of the fund's assets and the
appointment of any subcustodian banks and clearing agencies.
From
time to time, subject to approval by a fund's Treasurer, a Fidelity® fund may
enter into escrow arrangements with other banks if necessary to participate in
certain investment offerings.
FMR,
its officers and directors, its affiliated companies, Members of the Advisory
Board (if any), and Members of the Board of Trustees may, from time to time,
conduct transactions with various banks, including banks serving as custodians
for certain funds advised by FMR or an affiliate. Transactions that have
occurred to date include mortgages and personal and general business loans. In
the judgment of the fund's adviser, the terms and conditions of those
transactions were not influenced by existing or potential custodial or other
fund relationships.
Independent
Registered Public Accounting Firm.
Deloitte
& Touche LLP, 200 Berkeley Street, Boston, Massachusetts, independent
registered public accounting firm, and its affiliates, audit the financial
statements for the fund and provide other audit, tax, and related
services.
FUND HOLDINGS INFORMATION
The
fund views holdings information as sensitive and limits its dissemination. The
Board authorized FMR to establish and administer guidelines for the
dissemination of fund holdings information, which may be amended at any time
without prior notice. FMR's Disclosure Policy Committee (comprising executive
officers of FMR) evaluates disclosure policy with the goal of serving the fund's
best interests by striking an appropriate balance between providing information
about the fund's portfolio and protecting the fund from potentially harmful
disclosure. The Board reviews the administration and modification of these
guidelines and receives reports from the fund's chief compliance officer
periodically.
The
fund will provide a full list of holdings monthly on www.fidelity.com 30 days
after the month-end (excluding high income security holdings, which generally
will be presented collectively monthly and included in a list of full holdings
60 days after month-end).
The
fund will provide its top ten holdings (excluding cash and futures) on
Fidelity's web site monthly, 15 days after month-end.
Unless
otherwise indicated, this information will be available on the web site until
updated for the next applicable period.
The
fund may also from time to time provide or make available to the Board or third
parties upon request specific fund level performance attribution information and
statistics. Third parties may include fund shareholders or prospective fund
shareholders, members of the press, consultants, and ratings and ranking
organizations. Nonexclusive examples of performance attribution information and
statistics may include (i) the allocation of the fund's portfolio holdings and
other investment positions among various asset classes, sectors, industries, and
countries, (ii) the characteristics of the stock and bond components of the
fund's portfolio holdings and other investment positions, (iii) the attribution
of fund returns by asset class, sector, industry, and country and (iv) the
volatility characteristics of the fund.
FMR's
Disclosure Policy Committee may approve a request for fund level performance
attribution and statistics as long as (i) such disclosure does not enable the
receiving party to recreate the complete or partial portfolio holdings of any
Fidelity® fund prior to such fund's public disclosure of its portfolio holdings
and (ii) Fidelity has made a good faith determination that the requested
information is not material given the particular facts and circumstances.
Fidelity may deny any request for performance attribution information and other
statistical information about a fund made by any person, and may do so for any
reason or for no reason.
Disclosure
of non-public portfolio holdings information for a Fidelity® fund's portfolio
may only be provided pursuant to the guidelines below.
The
Use of Holdings In Connection With Fund Operations. Material non-public holdings
information may be provided as part of the activities associated with managing
Fidelity® funds to: entities which, by explicit agreement or by virtue of their
respective duties to the fund, are required to maintain the confidentiality of
the information disclosed; other parties if legally required; or persons FMR
believes will not misuse the disclosed information. These entities, parties, and
persons include, but are not limited to: the fund's trustees; the fund's
manager, its sub-advisers, if any, and their affiliates whose access persons are
subject to a code of ethics (including portfolio managers of affiliated funds of
funds); contractors who are subject to a confidentiality agreement; the fund's
auditors; the fund's custodians; proxy voting service providers; financial
printers; pricing service vendors; broker-dealers in connection with the
purchase or sale of securities or requests for price quotations or bids on one
or more securities; securities lending agents; counsel to the fund or its
Independent Trustees; regulatory authorities; stock exchanges and other listing
organizations; parties to litigation; third parties in connection with a
bankruptcy proceeding relating to a fund holding; and third parties who have
submitted a standing request to a money market fund for daily holdings
information. Non-public holdings information may also be provided to an issuer
regarding the number or percentage of its shares that are owned by the fund and
in connection with redemptions in kind.
Other
Uses Of Holdings Information. In addition, the fund may provide material
non-public holdings information to (i) third parties that calculate information
derived from holdings for use by FMR, a sub-adviser, or their affiliates, (ii)
ratings and rankings organizations, and (iii) an investment adviser, trustee, or
their agents to whom holdings are disclosed for due diligence purposes or in
anticipation of a merger involving the fund. Each individual request is reviewed
by the Disclosure Policy Committee which must find, in its sole discretion that,
based on the specific facts and circumstances, the disclosure appears unlikely
to be harmful to the fund. Entities receiving this information must have in
place control mechanisms to reasonably ensure or otherwise agree that, (a) the
holdings information will be kept confidential, (b) no employee shall use the
information to effect trading or for their personal benefit, and (c) the nature
and type of information that they, in turn, may disclose to third parties is
limited. FMR relies primarily on the existence of non-disclosure agreements
and/or control mechanisms when determining that disclosure is not likely to be
harmful to the fund.
At
this time, the entities receiving information described in the preceding
paragraph are: Factset Research Systems Inc. (full or partial fund holdings
daily, on the next business day); Standard & Poor's Ratings Services (full
holdings weekly (generally as of the previous Friday), generally 5 business days
thereafter); MSCI Inc. and certain affiliates (full or partial fund holdings
daily, on the next business day); and Bloomberg, L.P. (full holdings daily, on
the next business day).
FMR,
its affiliates, or the fund will not enter into any arrangements with third
parties from which they derive consideration for the disclosure of material
non-public holdings information. If, in the future, such an arrangement is
desired, prior Board approval would be sought and any such arrangements would be
disclosed in the fund's SAI.
There
can be no assurance that the fund's policies and procedures with respect to
disclosure of fund portfolio holdings will prevent the misuse of such
information by individuals and firms that receive such information.
The
fund's financial statements and financial highlights for the fiscal year ended
July 31, 2023, and report of the independent registered public accounting firm,
are included in the fund's
annual report and are
incorporated herein by reference.
Total
annual operating expenses as shown in the prospectus fee table may differ from
the ratios of expenses to average net assets in the financial highlights because
total annual operating expenses as shown in the prospectus fee table include any
acquired fund fees and expenses, whereas the ratios of expenses in the financial
highlights do not, except to the extent any acquired fund fees and expenses
relate to an entity, such as a wholly-owned subsidiary, with which a fund's
financial statements are consolidated. Acquired funds include other investment
companies (such as Central funds or other underlying funds) in which the
fund has invested, if and to the extent it is permitted to do so.
Total
annual operating expenses in the prospectus fee table and the financial
highlights do not include any expenses associated with investments in certain
structured or synthetic products that may rely on the exception from the
definition of "investment company" provided by section 3(c)(1) or 3(c)(7) of the
1940 Act.
Fidelity,
the Fidelity Investments Logo and all other Fidelity trademarks or service marks
used herein are trademarks or service marks of FMR LLC. Any third-party marks
that are used herein are trademarks or service marks of their respective owners.
© 2023 FMR LLC. All rights reserved.