Semiannual Report
Statement of Assets and Liabilities
|
January 31, 2014 (Unaudited)
|
|
|
|
Assets
|
|
|
Investment in securities, at value (including securities loaned of $15,728,067) - See
accompanying schedule:
Unaffiliated issuers (cost $175,123,367)
|
$ 176,482,804
|
|
Fidelity Central Funds (cost $18,442,605)
|
18,442,605
|
|
Total Investments (cost $193,565,972)
|
|
$ 194,925,409
|
Receivable for fund shares sold
|
|
549,570
|
Dividends receivable
|
|
140,282
|
Distributions receivable from Fidelity Central Funds
|
|
2,550
|
Receivable from investment adviser for expense reductions
|
|
14,228
|
Other receivables
|
|
283
|
Total assets
|
|
195,632,322
|
|
|
|
Liabilities
|
|
|
Payable for investments purchased
|
$ 2,034,043
|
|
Payable for fund shares redeemed
|
178,596
|
|
Accrued management fee
|
19,862
|
|
Payable for daily variation margin for derivative instruments
|
2,061
|
|
Other affiliated payables
|
8,041
|
|
Collateral on securities loaned, at value
|
15,947,500
|
|
Total liabilities
|
|
18,190,103
|
|
|
|
Net Assets
|
|
$ 177,442,219
|
Net Assets consist of:
|
|
|
Paid in capital
|
|
$ 176,053,678
|
Undistributed net investment income
|
|
158,617
|
Accumulated undistributed net realized gain (loss) on investments
|
|
(130,133)
|
Net unrealized appreciation (depreciation) on investments
|
|
1,360,057
|
Net Assets
|
|
$ 177,442,219
|
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
|
January 31, 2014 (Unaudited)
|
|
|
|
Investor Class
:
Net Asset Value
, offering price and redemption price per share ($9,700,181 ÷ 806,553 shares)
|
|
$ 12.03
|
|
|
|
Fidelity Advantage Class
:
Net Asset Value
, offering price and redemption price per share ($162,644,801 ÷ 13,509,990
shares)
|
|
$ 12.04
|
|
|
|
Institutional Class
:
Net Asset Value
, offering price and redemption price per share ($5,097,237 ÷ 423,330 shares)
|
|
$ 12.04
|
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Operations
Six months ended January 31, 2014 (Unaudited)
|
|
|
|
Investment Income
|
|
|
Dividends
|
|
$ 2,281,813
|
Interest
|
|
44
|
Income from Fidelity Central Funds
|
|
11,640
|
Total income
|
|
2,293,497
|
|
|
|
Expenses
|
|
|
Management fee
|
$ 112,923
|
|
Transfer agent fees
|
45,683
|
|
Independent trustees' compensation
|
311
|
|
Miscellaneous
|
69
|
|
Total expenses before reductions
|
158,986
|
|
Expense reductions
|
(81,414
)
|
77,572
|
Net investment income (loss)
|
|
2,215,925
|
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
|
|
|
Investment securities:
|
|
|
Unaffiliated issuers
|
336,727
|
|
Futures contracts
|
39,364
|
|
Total net realized gain (loss)
|
|
376,091
|
Change in net unrealized appreciation (depreciation) on:
Investment securities
|
(4,115,593)
|
|
Futures contracts
|
(17,447
)
|
|
Total change in net unrealized appreciation (depreciation)
|
|
(4,133,040
)
|
Net gain (loss)
|
|
(3,756,949
)
|
Net
increase (decrease) in net assets resulting from operations
|
|
$ (1,541,024
)
|
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Changes in Net Assets
|
Six months ended January 31,
2014 (Unaudited)
|
Year ended
July 31,
2013
|
Increase (Decrease) in Net Assets
|
|
|
Operations
|
|
|
Net investment income (loss)
|
$ 2,215,925
|
$ 2,274,841
|
Net realized gain (loss)
|
376,091
|
110,279
|
Change in net unrealized appreciation (depreciation)
|
(4,133,040
)
|
1,632,732
|
Net
increase (decrease) in net assets resulting
from operations
|
(1,541,024
)
|
4,017,852
|
Distributions to shareholders from net investment income
|
(2,663,807)
|
(1,809,105)
|
Distributions to shareholders from net realized gain
|
(538,310
)
|
(176,179
)
|
Total distributions
|
(3,202,117
)
|
(1,985,284
)
|
Share transactions - net increase (decrease)
|
19,368,560
|
112,266,395
|
Redemption fees
|
36,272
|
49,861
|
Total increase (decrease) in net assets
|
14,661,691
|
114,348,824
|
|
|
|
Net Assets
|
|
|
Beginning of period
|
162,780,528
|
48,431,704
|
End of period (including undistributed net investment income of $158,617 and undistributed
net investment income of $606,499, respectively)
|
$ 177,442,219
|
$ 162,780,528
|
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Investor Class
|
Six months ended January 31,
2014
|
Years ended July 31,
|
|
(Unaudited)
|
2013
|
2012
G
|
Selected Per-Share Data
|
|
|
|
Net asset value, beginning of period
|
$ 12.41
|
$ 11.93
|
$ 10.00
|
Income from Investment Operations
|
|
|
|
Net investment income (loss)
D
|
.15
|
.25
|
.20
|
Net realized and unrealized gain (loss)
|
(.30
)
|
.48
|
1.86
|
Total from investment operations
|
(.15
)
|
.73
|
2.06
|
Distributions from net investment income
|
(.19)
|
(.22)
|
(.13)
|
Distributions from net realized gain
|
(.04
)
|
(.04
)
|
-
|
Total distributions
|
(.23
)
|
(.26
)
|
(.13
)
|
Redemption fees added to paid in capital
D
|
-
I
|
.01
|
-
I
|
Net asset value, end of period
|
$ 12.03
|
$ 12.41
|
$ 11.93
|
Total Return
B,C
|
(1.10)%
|
6.30%
|
20.84%
|
Ratios to Average Net Assets
E,H
|
|
|
|
Expenses before reductions
|
.33%
A
|
.33%
|
.33%
A
|
Expenses net of fee waivers, if any
|
.23%
A
|
.25%
|
.26%
A
|
Expenses net of all reductions
|
.23%
A
|
.25%
|
.26%
A
|
Net investment income (loss)
|
2.61%
A
|
2.13%
|
1.98%
A
|
Supplemental Data
|
|
|
|
Net assets, end of period (000 omitted)
|
$ 9,700
|
$ 7,493
|
$ 19,998
|
Portfolio turnover rate
F
|
22%
A
|
44%
|
67%
J
|
A
Annualized
B
Total returns for periods of less than one year are not annualized.
C
Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D
Calculated based on average shares outstanding during the period.
E
Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F
Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G
For the period September 8, 2011 (commencement of operations) to July 31, 2012.
H
Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from expense offset arrangements and do not represent the amount paid by the class
during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions
represent the net expenses paid by the class.
I
Amount represents less than $.01 per share.
J
Amount not annualized.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Fidelity Advantage Class
|
Six months ended January 31,
2014
|
Years ended July 31,
|
|
(Unaudited)
|
2013
|
2012
G
|
Selected Per-Share Data
|
|
|
|
Net asset value, beginning of period
|
$ 12.43
|
$ 11.94
|
$ 10.00
|
Income from Investment Operations
|
|
|
|
Net investment income (loss)
D
|
.16
|
.28
|
.21
|
Net realized and unrealized gain (loss)
|
(.31
)
|
.48
|
1.87
|
Total from investment operations
|
(.15
)
|
.76
|
2.08
|
Distributions from net investment income
|
(.20)
|
(.24)
|
(.14)
|
Distributions from net realized gain
|
(.04
)
|
(.04
)
|
-
|
Total distributions
|
(.24
)
|
(.28
)
|
(.14
)
|
Redemption fees added to paid in capital
D
|
-
I
|
.01
|
-
I
|
Net asset value, end of period
|
$ 12.04
|
$ 12.43
|
$ 11.94
|
Total Return
B,C
|
(1.10)%
|
6.53%
|
20.97%
|
Ratios to Average Net Assets
E,H
|
|
|
|
Expenses before reductions
|
.19%
A
|
.19%
|
.19%
A
|
Expenses net of fee waivers, if any
|
.09%
A
|
.09%
|
.12%
A
|
Expenses net of all reductions
|
.09%
A
|
.09%
|
.12%
A
|
Net investment income (loss)
|
2.75%
A
|
2.28%
|
2.12%
A
|
Supplemental Data
|
|
|
|
Net assets, end of period (000 omitted)
|
$ 162,645
|
$ 155,140
|
$ 28,294
|
Portfolio turnover rate
F
|
22%
A
|
44%
|
67%
J
|
A
Annualized
B
Total returns for periods of less than one year are not annualized.
C
Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D
Calculated based on average shares outstanding during the period.
E
Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F
Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G
For the period September 8, 2011 (commencement of operations) to July 31, 2012.
H
Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from expense offset arrangements and do not represent the amount paid by the class
during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions
represent the net expenses paid by the class.
I
Amount represents less than $.01 per share.
J
Amount not annualized.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Institutional Class
|
Six months ended January 31,
2014
|
Years ended July 31,
|
|
(Unaudited)
|
2013
|
2012
G
|
Selected Per-Share Data
|
|
|
|
Net asset value, beginning of period
|
$ 12.43
|
$ 11.94
|
$ 10.00
|
Income from Investment Operations
|
|
|
|
Net investment income (loss)
D
|
.16
|
.28
|
.20
|
Net realized and unrealized gain (loss)
|
(.31
)
|
.48
|
1.88
|
Total from investment operations
|
(.15
)
|
.76
|
2.08
|
Distributions from net investment income
|
(.20)
|
(.24)
|
(.14)
|
Distributions from net realized gain
|
(.04
)
|
(.04
)
|
-
|
Total distributions
|
(.24
)
|
(.28
)
|
(.14
)
|
Redemption fees added to paid in capital
D
|
-
I
|
.01
|
-
I
|
Net asset value, end of period
|
$ 12.04
|
$ 12.43
|
$ 11.94
|
Total Return
B,C
|
(1.09)%
|
6.57%
|
20.99%
|
Ratios to Average Net Assets
E,H
|
|
|
|
Expenses before reductions
|
.15%
A
|
.15%
|
.15%
A
|
Expenses net of fee waivers, if any
|
.07%
A
|
.07%
|
.08%
A
|
Expenses net of all reductions
|
.07%
A
|
.07%
|
.08%
A
|
Net investment income (loss)
|
2.78%
A
|
2.30%
|
2.16%
A
|
Supplemental Data
|
|
|
|
Net assets, end of period (000 omitted)
|
$ 5,097
|
$ 148
|
$ 139
|
Portfolio turnover rate
F
|
22%
A
|
44%
|
67%
J
|
A
Annualized
B
Total returns for periods of less than one year are not annualized.
C
Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D
Calculated based on average shares outstanding during the period.
E
Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F
Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G
For the period September 8, 2011 (commencement of operations) to July 31, 2012.
H
Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from expense offset arrangements and do not represent the amount paid by the class
during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions
represent the net expenses paid by the class.
I
Amount represents less than $.01 per share.
J
Amount not annualized.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes
to
Financial Statements
For the period ended January 31, 2014 (Unaudited)
1. Organization.
Spartan Real Estate Index Fund (the Fund) is a non-diversified fund of Fidelity Salem Street Trust (the Trust) and is authorized to issue an
unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company organized as a Massachusetts business trust. The Fund offers Investor Class, Fidelity Advantage Class and
Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to
matters that affect that class. The Fund offers conversion privileges between share classes to eligible shareholders.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and
accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as
of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing
Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management,
Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder
report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the
SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP),
which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from
those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation.
Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. In accordance with valuation
policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing
vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or
reliable, investments will be fair valued in good faith by the Fidelity Management & Research Company (FMR) Fair Value Committee (the Committee), in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market
or investment specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and is responsible for
approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as
shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or
official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as
Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted
bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities,
when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the
hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities,
where observable inputs are
Semiannual Report
3. Significant Accounting Policies - continued
Investment Valuation - continued
limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who
make markets in such securities. U.S. government and government agency obligations, are valued by pricing vendors who utilize matrix pricing
which considers yield or price of bonds of comparable quality, coupon, maturity and type or by broker-supplied prices. When independent prices
are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by
third party pricing vendors. Debt securities are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded and are categorized as Level 1 in the hierarchy. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset
value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of
investments by input level, as of January 31, 2014, is included at the end of the Fund's Schedule of Investments.
Investment Transactions and Income.
For financial reporting purposes, the Fund's investment holdings and NAV include trades executed
through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of
business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior
business day. Gains and losses on securities sold are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend
date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is
informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities
received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments
and/or as a realized gain. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax
filings or other correspondence relating to the underlying investment. Interest income and distributions from the Fidelity Central Funds are
accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Class Allocations and Expenses.
Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and
certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the
total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions may also differ by class. For
the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of
recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund.
Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate
methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders.
Each year, the Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The
Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are
filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each
class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets
or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to futures transactions, foreign currency transactions and losses deferred due to wash sales.
Semiannual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation
|
$ 9,108,837
|
Gross unrealized depreciation
|
(8,126,999
)
|
Net unrealized appreciation (depreciation) on securities and other investments
|
$ 981,838
|
|
|
Tax cost
|
$ 193,943,571
|
Short-Term Trading (Redemption) Fees.
During the period, shares held by investors in the Fund less than 90 days may have been subject to a
redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are
retained by the Fund and accounted for as an addition to paid in capital.
4. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments.
The Fund's investment objective allows the Fund to enter into various types of derivative contracts, including futures contracts. Derivatives are investments whose value is primarily derived from underlying assets, indices or reference rates and may be transacted on an exchange or over-the-counter (OTC). Derivatives may involve a future commitment to buy or sell a specified asset based on specified terms, to exchange future cash flows at periodic intervals based on a notional principal amount, or for one party to
make one or more payments upon the occurrence of specified events in exchange for periodic payments from the other party.
The Fund used derivatives to increase returns and to manage exposure to certain risks as defined below. The success of any strategy involving
derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not
achieve its objectives.
The Fund's use of derivatives increased or decreased its exposure to the following risk:
Equity Risk
|
Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those
arising from interest rate risk or foreign exchange risk), whether caused by factors specific to an individual investment, its issuer,
or all factors affecting all instruments traded in a market or market segment.
|
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
4. Derivative Instruments - continued
Risk Exposures and the Use of Derivative Instruments - continued
The Fund is also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the
risk that the Fund will be unable to close out the derivative in the open market in a timely manner. Counterparty credit risk is the risk that the
counterparty will not be able to fulfill its obligation to the Fund. Counterparty credit risk related to exchange-traded futures contracts may be
mitigated by the protection provided by the exchange on which they trade.
Investing in derivatives may involve greater risks than investing in the underlying assets directly and, to varying degrees, may involve risk of loss in
excess of any initial investment and collateral received and amounts recognized in the Statement of Assets and Liabilities. In addition, there may
be the risk that the change in value of the derivative contract does not correspond to the change in value of the underlying instrument.
Futures Contracts.
A futures contract is an agreement between two parties to buy or sell a specified underlying instrument for a fixed price at a
specified future date. The Fund used futures contracts to manage its exposure to the stock market.
Upon entering into a futures contract, a fund is required to deposit either cash or securities (initial margin) with a clearing broker in an amount
equal to a certain percentage of the face value of the contract. Futures contracts are marked-to-market daily and subsequent daily payments
(variation margin) are made or received by a fund depending on the daily fluctuations in the value of the futures contracts and are recorded as
unrealized appreciation or (depreciation). This receivable and/or payable, if any, is included in daily variation margin for derivative instruments in
the Statement of Assets and Liabilities. Realized gain or (loss) is recorded upon the expiration or closing of a futures contract.
Any open futures contracts at period end are presented in the Schedule of Investments under the caption "Futures Contracts." The underlying face
amount at value reflects each contract's exposure to the underlying instrument or index at period end and is representative of volume of activity
during the period. Securities deposited to meet initial margin requirements are identified in the Schedule of Investments.
During the period the Fund recognized net realized gain (loss) of $39,364 and a change in net unrealized appreciation (depreciation) of $(17,447)
related to its investment in futures contracts. These amounts are included in the Statement of Operations.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $36,318,141 and $17,665,449, respectively.
Semiannual Report
6. Fees and Other Transactions with Affiliates.
Management Fee and Expense Contract.
Fidelity Management & Research Company (the investment adviser) and its affiliates provide the
Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is based on an
annual rate of .14% of the Fund's average net assets. Under the management contract, the investment adviser pays all other fund-level expenses,
except the compensation of the independent Trustees and certain other expenses such as interest expense, including commitment fees.
In addition, under an expense contract, the investment adviser pays class-level expenses as necessary so that the total expenses do not exceed
certain amounts of each class' average net assets on an annual basis with certain exceptions, as noted in the following table:
Investor Class
|
.33%
|
Fidelity Advantage Class
|
.19%
|
Institutional Class
|
.15%
|
Sub-Adviser.
Geode Capital Management, LLC (Geode), serves as sub-adviser for the Fund. Geode provides discretionary investment advisory
services to the Fund and is paid by the investment adviser for providing these services.
Transfer Agent Fees.
Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the transfer,
dividend disbursing and shareholder servicing agent for each class. FIIOC receives transfer agent fees at an annual rate of .21%, .11% and .035% of
average net assets for Investor Class, Fidelity Advantage Class and Institutional Class, respectively. FIIOC pays for typesetting, printing and mailing
of shareholder reports, except proxy statements.
Under the expense contract, Investor Class, Fidelity Advantage Class and Institutional Class pay a portion of the transfer agent fees at an annual
rate of .19%, .05% and .01% of average net assets, respectively.
For the period, the total transfer agent fees paid by each applicable class were as follows:
|
Amount
|
Investor Class
|
$ 7,480
|
Fidelity Advantage Class
|
38,164
|
Institutional Class
|
39
|
|
$ 45,683
|
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
7. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be
utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay
commitment fees on its pro-rata portion of the line of credit, which amounted to $69 and is reflected in Miscellaneous expenses on the Statement of
Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the
loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the
loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next
business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply
collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any
cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at
period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing
cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending
certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central
Funds. Total security lending income during the period amounted to $11,302.
9. Expense Reductions.
The investment adviser contractually agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average
net assets as noted in the table below. This reimbursement will remain in place through September 30, 2014. Some expenses, for example interest
expense, including commitment fees, are excluded from this reimbursement.
|
Expense
Limitations
|
Reimbursement
|
Investor Class
|
.23%
|
$ 3,970
|
Fidelity Advantage Class
|
.09%
|
76,615
|
Institutional Class
|
.07%
|
333
|
|
|
$ 80,918
|
Semiannual Report
9. Expense Reductions - continued
In addition, the investment adviser reimbursed a portion of the Fund's operating expenses during the period in the amount of $496.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
|
Six months ended
January 31,
2014
|
Year ended
July 31,
2013
|
From net investment income
|
|
|
Investor Class
|
$ 127,238
|
$ 349,625
|
Fidelity Advantage Class
|
2,534,183
|
1,456,618
|
Institutional Class
|
2,386
|
2,862
|
Total
|
$ 2,663,807
|
$ 1,809,105
|
From net realized gain
|
|
|
Investor Class
|
$ 25,990
|
$ 74,276
|
Fidelity Advantage Class
|
511,832
|
101,484
|
Institutional Class
|
488
|
419
|
Total
|
$ 538,310
|
$ 176,179
|
11. Share Transactions.
Transactions for each class of shares were as follows:
|
Shares
|
Dollars
|
|
Six months ended January
31,
2014
|
Year ended
July 31,
2013
|
Six months ended January
31,
2014
|
Year ended
July 31,
2013
|
Investor Class
|
|
|
|
|
Shares sold
|
674,176
|
2,766,232
|
$ 7,985,736
|
$ 33,734,944
|
Reinvestment of distributions
|
12,560
|
34,332
|
143,423
|
402,625
|
Shares redeemed
|
(483,833
)
|
(3,873,523
)
|
(5,745,105
)
|
(47,284,016
)
|
Net increase (decrease)
|
202,903
|
(1,072,959
)
|
$ 2,384,054
|
$ (13,146,447
)
|
Fidelity Advantage Class
|
|
|
|
|
Shares sold
|
4,118,593
|
12,812,923
|
$ 48,963,401
|
$ 158,898,420
|
Reinvestment of distributions
|
252,421
|
122,146
|
2,885,623
|
1,486,664
|
Shares redeemed
|
(3,345,818
)
|
(2,819,932
)
|
(39,696,388
)
|
(34,975,523
)
|
Net increase (decrease)
|
1,025,196
|
10,115,137
|
$ 12,152,636
|
$ 125,409,561
|
Institutional Class
|
|
|
|
|
Shares sold
|
425,456
|
-
|
$ 4,999,248
|
$ -
|
Reinvestment of distributions
|
251
|
275
|
2,874
|
3,281
|
Shares redeemed
|
(14,271
)
|
-
|
(170,252
)
|
-
|
Net increase (decrease)
|
411,436
|
275
|
$ 4,831,870
|
$ 3,281
|
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in
connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide
general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that
may be made against the Fund. The risk of material loss from such claims is considered remote.
Semiannual Report
Board
Approval
of Investment Advisory Contracts and Management Fees
Spartan Real Estate Index Fund
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with
Fidelity Management & Research Company (FMR) and the sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board,
assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the
renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant
to its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. The Board has established four standing committees, Operations, Audit, Fair Valuation, and Governance and Nominating, each composed
of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order
to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets
regularly throughout the year and, among other matters, considers matters specifically related to the annual consideration of the renewal of the
fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual
consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the
Board's annual consideration of the renewal of Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds
through ad hoc joint committees to discuss certain matters relevant to the Fidelity funds.
At its September 2013 meeting, the Board, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts.
In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to
be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity
from its relationship with the fund; (iv) the extent to which economies of scale exist and would be realized as the fund grows; and (v) whether fee
levels reflect these economies of scale, if any, for the benefit of fund shareholders.
In considering whether to renew the Advisory Contracts for the fund, the Board reached a determination, with the assistance of fund counsel and
Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best
interests of the fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's
decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the
information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts,
was aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds
offered by Fidelity's competitors, and that the fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the
fund in its prospectus and other public disclosures, have chosen to invest in this fund, which is part of the Fidelity family of funds.
Semiannual Report
Nature, Extent, and Quality of Services Provided.
The Board considered Fidelity's staffing as it relates to the fund, including the backgrounds
of investment personnel of FMR and the sub-advisers (together, the Investment Advisers), and also considered the fund's investment objective,
strategies, and related investment philosophy. The Independent Trustees also had discussions with senior management of Fidelity's investment
operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure
provides appropriate incentives to act in the best interests of the fund.
Resources Dedicated to Investment Management and Support Services
. The Board reviewed the general qualifications and capabilities of Fidelity's
and Geode Capital Management, LLC's investment staff, including its size, education, experience, and resources, as well as Fidelity's approach to
recruiting, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to
non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive
resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of
issuers, counterparties and guarantors. Further, the Board believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that
permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading and risk management capabilities and resources, which are an integral part of the investment management process.
Shareholder and Administrative Services
. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering
transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the supervision of third party
service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's
compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the
Investment Advisers.
Semiannual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to
enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and
market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the
expanded availability of Fidelity Investor Centers.
Investment in a Large Fund Family
. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of
investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund
investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of
actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research
and to the support of the senior management team that oversees asset management; (ii) persisting in efforts to enhance Fidelity's global research
capabilities; (iii) launching new funds and making other enhancements to meet client needs for global and income-oriented solutions; (iv)
continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for
Fidelity funds of funds, specifically for the Freedom Fund product lines; (v) rationalizing product lines and gaining increased efficiencies through
the combination of several funds with other funds; (vi) strengthening Fidelity's index fund offerings by reducing investment minimums and
adopting or lowering existing expense caps for certain funds and classes; (vii) enhancing Global Asset Allocation product offerings by launching
new funds and strategies, including "open architecture" target date funds that utilize affiliated and unaffiliated sub-advisers; (viii) modifying the
eligibility criteria for Institutional Class shares of Advisor funds to increase their marketability to a portion of the defined contribution plan market;
(ix) creating a new low-cost retirement share class for certain Advisor funds to appeal to large retirement plans; (x) transitioning the management
of certain Fidelity commodity funds to Geode Capital Management LLC, a registered commodity pool operator, while retaining administrative
responsibilities for the funds; and (xi) taking steps toward establishing a new Fidelity adviser to manage sector-based funds and products.
Investment Performance
. The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of
compliance with its investment restrictions and its performance history.
The Board took into account discussions with the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance,
the Board periodically considers annualized return information for the fund for different time periods, measured against the securities market
index the fund seeks to track. In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and the Investment Advisers' explanations for
such underperformance.
Semiannual Report
In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund
performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated
based on gross performance (before fees and expenses but after transaction costs) compared to a fund's benchmark index, over appropriate time
periods, taking into account relevant factors including the following: general market conditions; the characteristics of the fund's benchmark index;
the extent to which statistical sampling is employed; and fund cash flows and other factors. Depending on the circumstances, the Independent
Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.
The Independent Trustees recognize that shareholders evaluate performance on a net basis (after fees and expenses) over their own holding
periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board
also included net cumulative calendar year total return information for the fund and its benchmark index for the most recent one-year period.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should
benefit the fund's shareholders.
Competitiveness of Management Fee and Total Expense Ratio.
The Board considered the fund's management fee and total expense ratio
compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective
categories that have comparable investment mandates. Combining Lipper investment objective categories aids the Board's management fee and
total expense ratio comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which
various Fidelity funds are compared.
Management Fee
. The Board considered two proprietary management fee comparisons for the 12-month (or shorter) periods shown in the chart
below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total
Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the
total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. "TMG
%" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a
hypothetical TMG % of 50% would mean that half of the funds in the Total Mapped Group had higher, and half had lower, management fees than the
fund. The fund's actual TMG %s are in the chart below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a
subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the
first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least
15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all
funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee rate
ranked, is also included in the chart and considered by the Board. Because the vast majority of competitor funds' management fees do not cover
non-management expenses, for a more meaningful comparison of management fees, the fund is compared on the basis of a hypothetical "net
management fee," which is derived by subtracting payments made by FMR for "fund-level" non-management expenses (including pricing and
bookkeeping fees and fees paid to non-affiliated custodians) from the fund's management fee. In this regard, the Board considered that net management fees can vary from year to year because of differences in "fund-level" non-management expenses, and that "fund-level" non-management
expenses may exceed the fund's management fee and result in a negative net management fee. The Board noted, however, that FMR does not pay
transfer agent fees or other "class-level" expenses under the fund's management contract.
Semiannual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Spartan Real Estate Index Fund
Semiannual Report
The Board noted that the fund's hypothetical net management fee rate ranked below the median of its Total Mapped Group and below the median
of its ASPG for 2012. Although the fund's hypothetical net management fee was negative, the Board noted that it is truly a hypothetical number
derived for purposes of providing a more meaningful competitive comparison and is not intended to suggest that Fidelity pays the fund to manage
the fund's assets.
Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the
other factors considered.
Total Expense Ratio
. In its review of each class's total expense ratio, the Board considered the fund's hypothetical net management fee as well as
the fund's gross management fee. The Board also considered other "fund-level" expenses, such as pricing and bookkeeping fees and custodial, legal,
and audit fees. The Board also considered other "class-level" expenses, such as transfer agent fees. The Board also noted the effects of any waivers
and reimbursements on fees and expenses. As part of its review, the Board also considered the current and historical total expense ratios of each
class of the fund compared to competitive fund median expenses. Each class of the fund is compared to those funds and classes in the Total
Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that the total expense ratio of each of Fidelity Advantage Class and Institutional Class ranked below its competitive median for
2012 and the total expense ratio of Investor Class ranked above its competitive median for 2012. The Board considered that, in general, various
factors can affect total expense ratios.
The Board considered that current contractual arrangements for the fund oblige FMR to pay all "class-level" expenses of each class of the fund to
the extent necessary to limit total expenses, with certain exceptions, as follows: Fidelity Advantage Class: 0.19%; Institutional Class: 0.15%; and
Investor Class: 0.33%. These contractual arrangements may not be increased without the approval of the Board. The Board further considered that
FMR contractually agreed to reimburse Fidelity Advantage Class, Institutional Class, and Investor Class of the fund to the extent that total expenses (excluding interest, taxes, certain securities lending costs, brokerage commissions, extraordinary expenses, and acquired fund fees and
expenses, if any), as a percentage of their respective average net assets, exceed 0.09%, 0.07%, and 0.23% through September 30, 2014.
The Board noted that the total expense ratio of Investor Class ranked above its competitive median for 2012. The Board also considered that,
effective January 1, 2013, FMR voluntarily agreed to reimburse Investor Class to the extent that total expenses (excluding interest, taxes, certain
securities lending costs, brokerage commissions, extraordinary expenses, and acquired fund fees and expenses, if any) exceed 0.07%. The Board
considered that, if the 0.07% voluntary expense reimbursement had been in effect for 2012, the class's total expense ratio would have ranked below
the median.
Semiannual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fees Charged to Other Fidelity Clients
. The Board also considered Fidelity fee structures and other information with respect to clients of Fidelity,
such as other mutual funds advised or subadvised by Fidelity, pension plan clients, and other institutional clients. The Board noted the findings of
the 2013 ad hoc joint committee (created with the board of other Fidelity funds), which reviewed and compared Fidelity's institutional investment
advisory business with its business of providing services to the Fidelity funds, including the differences in services provided, fees charged, and costs
incurred, as well as competition in their respective marketplaces.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that the total expense ratio of each class
of the fund was reasonable, although Investor Class was above the median of the universe presented for comparison, in light of the services that the
fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability.
The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the
business of developing, marketing, distributing, managing, administering and servicing the fund and servicing the fund's shareholders. The Board
also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, Fidelity presents to the Board Fidelity's profitability for the fund. Fidelity calculates the profitability for each fund, as well as
aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which
originate with the books and records of Fidelity on which Fidelity's audited financial statements are based. The Audit Committee of the Board
reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been
engaged annually by the Board as part of the Board's assessment of Fidelity's profitability analysis. PwC's engagement includes the review and
assessment of the methodologies used by Fidelity in determining the revenues and expenses attributable to Fidelity's mutual fund business, and
completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies.
After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and fall-out benefits related to the mutual fund business as well as cases where Fidelity's
affiliates may benefit from or be related to the fund's business.
Semiannual Report
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and was
satisfied that the profitability was not excessive in the circumstances.
Economies of Scale.
The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds,
whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for
realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through
increased services to the fund, through waivers or reimbursements, or through fee or expense reductions. The Board also noted that in 2009, it and
the board of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether Fidelity attains economies
of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such
economies of scale, and whether there is potential for realization of any further economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that economies of scale, if any, are being appropriately shared between fund shareholders and Fidelity.
Additional Information Requested by the Board.
In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory
Contracts, the Board requested and received additional information on certain topics, including: (i) Fidelity's fund profitability methodology,
profitability trends for certain funds, and the impact of certain factors on fund profitability results; (ii) portfolio manager changes that have
occurred during the past year and the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she
manages; (iii) Fidelity's compensation structure for portfolio managers, research analysts, and other key personnel, including its effects on
fund profitability, the rationale for the compensation structure, and the extent to which current market conditions have affected retention and
recruitment; (iv) the arrangements with and compensation paid to certain fund sub-advisers on behalf of the Fidelity funds; (v) Fidelity's fee
structures, including the group fee structure and definition of group assets, and the rationale for recommending different fees among different
categories of funds and classes; (vi) Fidelity's voluntary waiver of its fees to maintain minimum yields for certain money market funds and
classes as well as contractual waivers in place for certain funds; (vii) the methodology with respect to competitive fund data and peer group
classifications; (viii) Fidelity's transfer agent fee, expense, and service structures for different funds and classes, and the impact of the
increased use of omnibus accounts; and (ix) explanations regarding the relative total expense ratios of certain funds and classes, total expense
competitive trends and methodologies for total expense competitive comparisons, and actions that might be taken by Fidelity to reduce total
expense ratios for certain funds and classes or to achieve further economies of scale.
Semiannual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, the Board ultimately concluded
that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Geode Capital Management, LLC
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
State Street Bank and Trust Company
Boston, MA
The Fidelity Telephone
Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®)
1-800-544-5555
Automated line for quickest service
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
245 Summer St., Boston, MA 02210
www.fidelity.com
URX-USAN-0314
1.929334.102
Spartan
®
Real Estate Index
Fund -
Institutional Class
Semiannual Report
January 31, 2014
(Fidelity Cover Art)
Contents
Shareholder Expense Example
|
(Click
Here)
|
An example of shareholder expenses.
|
Investment Changes
|
(Click
Here)
|
A summary of major shifts in the fund's investments over the past
six months.
|
Investments
|
(Click
Here)
|
A complete list of the fund's investments with their market values.
|
Financial Statements
|
(Click
Here)
|
Statements of assets and liabilities, operations, and changes in net
assets, as well as financial highlights.
|
Notes
|
(Click
Here)
|
Notes to the financial statements.
|
Board Approval of Investment Advisory
Contracts and Management Fees
|
(Click
Here)
|
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit
the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-835-5092 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2014 FMR LLC. All rights
reserved.
This report and the financial statements contained herein are submitted for the general information
of the shareholders of the fund. This report is not authorized for distribution to prospective investors
in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third
quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at
http://www.sec.gov
.
A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference
Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room
may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view
the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at
http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (August 1, 2013 to January 31,
2014).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use
the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account
value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class
of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small
balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included
in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.
In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses
incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate
the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical
expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You
may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with
the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged
once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the
underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds.
These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been higher.
Semiannual Report
Shareholder Expense Example - continued
|
Annualized
Expense Ratio
B
|
Beginning
Account Value
August 1, 2013
|
Ending
Account Value
January 31, 2014
|
Expenses Paid
During Period
*
August 1, 2013 to January 31,
2014
|
Investor Class
|
.23%
|
|
|
|
Actual
|
|
$ 1,000.00
|
$ 989.00
|
$ 1.15
|
Hypothetical
A
|
|
$ 1,000.00
|
$ 1,024.05
|
$ 1.17
|
Fidelity Advantage Class
|
.09%
|
|
|
|
Actual
|
|
$ 1,000.00
|
$ 989.00
|
$ .45
|
Hypothetical
A
|
|
$ 1,000.00
|
$ 1,024.75
|
$ .46
|
Institutional Class
|
.07%
|
|
|
|
Actual
|
|
$ 1,000.00
|
$ 989.10
|
$ .35
|
Hypothetical
A
|
|
$ 1,000.00
|
$ 1,024.85
|
$ .36
|
A
5% return per year before expenses
B
Annualized expense ratio reflects expenses net of applicable fee waivers.
*
Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by
184/365 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Top Ten Stocks as of January 31, 2014
|
|
% of fund's
net assets
|
% of fund's net assets
6 months ago
|
Simon Property Group, Inc.
|
10.7
|
10.9
|
Public Storage
|
5.0
|
5.0
|
Prologis, Inc.
|
4.3
|
4.2
|
Equity Residential (SBI)
|
4.1
|
4.0
|
Ventas, Inc.
|
4.1
|
4.3
|
HCP, Inc.
|
4.0
|
4.4
|
Health Care REIT, Inc.
|
3.7
|
4.0
|
Boston Properties, Inc.
|
3.7
|
3.6
|
Vornado Realty Trust
|
3.6
|
3.2
|
AvalonBay Communities, Inc.
|
3.3
|
3.6
|
|
46.5
|
|
Top Five REIT Sectors as of January 31, 2014
|
|
% of fund's
net assets
|
% of fund's net assets
6 months ago
|
REITs - Apartments
|
17.3
|
17.5
|
REITs - Malls
|
16.5
|
16.8
|
REITs - Industrial Buildings
|
14.6
|
14.1
|
REITs - Office Buildings
|
14.2
|
13.4
|
REITs - Health Care Facilities
|
13.6
|
14.7
|
Asset Allocation (% of fund's net assets)
|
As of January 31, 2014
|
As of July 31, 2013
|
|
Stocks and
Equity Futures 100.0%
|
|
|
Stocks, Investment Companies and
Equity Futures 100.0%
|
|
|
Short-Term
Investments and
Net Other Assets
(Liabilities) 0.0%
†
|
|
|
Short-Term
Investments and
Net Other Assets
(Liabilities) 0.0%
†
|
|
†
Amount represents less than 0.1%
|
Semiannual Report
Investments January 31, 2014 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.4%
|
|
Shares
|
|
Value
|
REAL ESTATE INVESTMENT TRUSTS - 98.7%
|
REITs - Apartments - 17.3%
|
American Campus Communities, Inc.
|
41,323
|
|
$ 1,436,387
|
American Homes 4 Rent Class A
|
18,288
|
|
305,044
|
Apartment Investment & Management Co. Class A
|
57,544
|
|
1,609,506
|
Associated Estates Realty Corp.
|
22,677
|
|
362,152
|
AvalonBay Communities, Inc.
|
47,974
|
|
5,924,789
|
BRE Properties, Inc.
|
30,440
|
|
1,799,004
|
Camden Property Trust (SBI)
|
33,642
|
|
2,079,748
|
Education Realty Trust, Inc.
|
45,280
|
|
408,878
|
Equity Residential (SBI)
|
132,184
|
|
7,320,350
|
Essex Property Trust, Inc. (d)
|
15,000
|
|
2,375,550
|
Home Properties, Inc.
|
22,435
|
|
1,250,751
|
Mid-America Apartment Communities, Inc.
|
29,489
|
|
1,903,220
|
Pennsylvania Real Estate Investment Trust (SBI)
|
26,896
|
|
501,610
|
Post Properties, Inc.
|
21,373
|
|
1,003,035
|
UDR, Inc.
|
98,882
|
|
2,406,788
|
TOTAL REITS - APARTMENTS
|
|
30,686,812
|
REITs - Factory Outlets - 0.7%
|
Tanger Factory Outlet Centers, Inc.
|
37,259
|
|
1,243,705
|
REITs - Health Care Facilities - 13.6%
|
HCP, Inc.
|
179,937
|
|
7,044,534
|
Health Care REIT, Inc.
|
113,841
|
|
6,593,671
|
Healthcare Realty Trust, Inc.
|
37,809
|
|
866,582
|
LTC Properties, Inc.
|
13,705
|
|
520,105
|
Senior Housing Properties Trust (SBI)
|
74,207
|
|
1,671,142
|
Universal Health Realty Income Trust (SBI)
|
5,009
|
|
212,382
|
Ventas, Inc.
|
115,975
|
|
7,235,680
|
TOTAL REITS - HEALTH CARE FACILITIES
|
|
24,144,096
|
REITs - Hotels - 6.7%
|
Ashford Hospitality Prime, Inc.
|
8,279
|
|
136,604
|
Ashford Hospitality Trust, Inc.
|
27,642
|
|
259,835
|
DiamondRock Hospitality Co.
|
77,087
|
|
892,667
|
FelCor Lodging Trust, Inc.
|
43,566
|
|
355,499
|
Hersha Hospitality Trust
|
75,929
|
|
412,294
|
Hospitality Properties Trust (SBI)
|
58,497
|
|
1,503,373
|
Host Hotels & Resorts, Inc.
|
298,251
|
|
5,484,836
|
LaSalle Hotel Properties (SBI) (d)
|
40,999
|
|
1,261,129
|
Common Stocks - continued
|
|
Shares
|
|
Value
|
REAL ESTATE INVESTMENT TRUSTS - CONTINUED
|
REITs - Hotels - continued
|
Pebblebrook Hotel Trust
|
24,271
|
|
$ 731,285
|
Sunstone Hotel Investors, Inc.
|
72,118
|
|
925,274
|
TOTAL REITS - HOTELS
|
|
11,962,796
|
REITs - Industrial Buildings - 14.6%
|
DCT Industrial Trust, Inc.
|
125,040
|
|
900,288
|
Duke Realty LP
|
128,480
|
|
2,018,421
|
DuPont Fabros Technology, Inc.
|
25,493
|
|
662,563
|
EastGroup Properties, Inc.
|
12,077
|
|
716,649
|
Extra Space Storage, Inc.
|
43,366
|
|
1,980,092
|
First Industrial Realty Trust, Inc. (d)
|
39,467
|
|
677,254
|
First Potomac Realty Trust
|
23,150
|
|
302,339
|
Liberty Property Trust (SBI) (d)
|
57,810
|
|
2,104,284
|
Prologis, Inc.
|
196,679
|
|
7,623,278
|
Public Storage
|
57,000
|
|
8,982,630
|
TOTAL REITS - INDUSTRIAL BUILDINGS
|
|
25,967,798
|
REITs - Malls - 16.5%
|
CBL & Associates Properties, Inc.
|
67,005
|
|
1,138,415
|
General Growth Properties, Inc.
|
212,008
|
|
4,269,841
|
Rouse Properties, Inc.
|
13,404
|
|
233,766
|
Simon Property Group, Inc.
|
122,381
|
|
18,949,474
|
Taubman Centers, Inc.
|
25,063
|
|
1,629,596
|
The Macerich Co.
|
55,424
|
|
3,136,998
|
TOTAL REITS - MALLS
|
|
29,358,090
|
REITs - Management/Investment - 3.2%
|
CubeSmart (d)
|
51,025
|
|
840,892
|
Digital Realty Trust, Inc. (d)
|
50,651
|
|
2,582,694
|
Equity Lifestyle Properties, Inc.
|
31,218
|
|
1,227,180
|
Franklin Street Properties Corp.
|
34,374
|
|
412,144
|
Washington REIT (SBI)
|
26,233
|
|
611,229
|
TOTAL REITS - MANAGEMENT/INVESTMENT
|
|
5,674,139
|
REITs - Mobile Home Parks - 0.4%
|
Sun Communities, Inc.
|
13,255
|
|
619,671
|
Common Stocks - continued
|
|
Shares
|
|
Value
|
REAL ESTATE INVESTMENT TRUSTS - CONTINUED
|
REITs - Office Buildings - 14.2%
|
Alexandria Real Estate Equities, Inc.
|
28,247
|
|
$ 1,980,962
|
BioMed Realty Trust, Inc.
|
75,762
|
|
1,478,117
|
Boston Properties, Inc.
|
60,290
|
|
6,516,746
|
Brandywine Realty Trust (SBI)
|
61,798
|
|
880,622
|
CommonWealth REIT
|
43,887
|
|
1,078,742
|
Corporate Office Properties Trust (SBI)
|
34,460
|
|
856,331
|
Cousins Properties, Inc.
|
69,561
|
|
747,781
|
Douglas Emmett, Inc.
|
51,175
|
|
1,301,380
|
Highwoods Properties, Inc. (SBI)
|
35,458
|
|
1,316,910
|
Kilroy Realty Corp.
|
32,364
|
|
1,708,819
|
Mack-Cali Realty Corp.
|
34,713
|
|
702,244
|
Parkway Properties, Inc.
|
26,784
|
|
475,148
|
Piedmont Office Realty Trust, Inc. Class A (d)
|
65,615
|
|
1,093,802
|
PS Business Parks, Inc.
|
7,882
|
|
619,289
|
SL Green Realty Corp. (d)
|
37,409
|
|
3,507,842
|
Sovran Self Storage, Inc.
|
12,625
|
|
857,364
|
TOTAL REITS - OFFICE BUILDINGS
|
|
25,122,099
|
REITs - Shopping Centers - 11.5%
|
Acadia Realty Trust (SBI)
|
21,907
|
|
557,533
|
Cedar Shopping Centers, Inc.
|
26,551
|
|
167,537
|
DDR Corp.
|
114,755
|
|
1,798,211
|
Equity One, Inc.
|
24,956
|
|
565,503
|
Federal Realty Investment Trust (SBI) (d)
|
25,650
|
|
2,795,850
|
Glimcher Realty Trust
|
57,206
|
|
489,683
|
Inland Real Estate Corp.
|
33,024
|
|
348,073
|
Kimco Realty Corp.
|
161,567
|
|
3,378,366
|
Kite Realty Group Trust
|
51,526
|
|
332,343
|
Ramco-Gershenson Properties Trust (SBI)
|
26,249
|
|
419,197
|
Regency Centers Corp.
|
36,410
|
|
1,752,777
|
Saul Centers, Inc.
|
5,012
|
|
233,559
|
Vornado Realty Trust
|
68,601
|
|
6,299,630
|
Weingarten Realty Investors (SBI) (d)
|
44,242
|
|
1,282,576
|
TOTAL REITS - SHOPPING CENTERS
|
|
20,420,838
|
TOTAL REAL ESTATE INVESTMENT TRUSTS
|
|
175,200,044
|
Common Stocks - continued
|
|
Shares
|
|
Value
|
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.7%
|
Real Estate Operating Companies - 0.7%
|
Forest City Enterprises, Inc. Class A (a)
|
62,275
|
|
$ 1,132,782
|
TOTAL COMMON STOCKS
(Cost $174,973,410)
|
176,332,826
|
U.S. Treasury Obligations - 0.1%
|
|
Principal Amount
|
|
|
U.S. Treasury Bills, yield at date of purchase 0.07% to 0.08% 5/29/14 to 6/26/14 (e)
(Cost $149,957)
|
|
$ 150,000
|
|
149,978
|
Money Market Funds - 10.4%
|
|
Shares
|
|
|
Fidelity Cash Central Fund, 0.10% (b)
|
2,495,105
|
|
2,495,105
|
Fidelity Securities Lending Cash Central Fund, 0.09% (b)(c)
|
15,947,500
|
|
15,947,500
|
TOTAL MONEY MARKET FUNDS
(Cost $18,442,605)
|
18,442,605
|
TOTAL INVESTMENT PORTFOLIO - 109.9%
(Cost $193,565,972)
|
194,925,409
|
NET OTHER ASSETS (LIABILITIES) - (9.9)%
|
(17,483,190
)
|
NET ASSETS - 100%
|
$ 177,442,219
|
Futures Contracts
|
|
Expiration Date
|
|
Underlying Face Amount
at Value
|
|
Unrealized Appreciation/
(Depreciation)
|
Purchased
|
Equity Index Contracts
|
12 CME E-mini S&P 500 Index Contracts (United States)
|
March 2014
|
|
$ 1,065,960
|
|
$ 620
|
|
The face value of futures purchased as a percentage of net assets is 0.6%
|
Legend
|
(a) Non-income producing
|
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the
annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon
request. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.
|
(c) Investment made with cash collateral received from securities on loan.
|
(d) Security or a portion of the security is on loan at period end.
|
(e) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At period end, the value of securities pledged amounted
to $140,979.
|
Affiliated Central Funds
|
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
|
Fund
|
Income earned
|
Fidelity Cash Central Fund
|
$ 338
|
Fidelity Securities Lending Cash Central Fund
|
11,302
|
Total
|
$ 11,640
|
Other Information
|
The following is a summary of the inputs used, as of January 31, 2014, involving the Fund's assets and liabilities carried at fair value. The inputs or
methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation
inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Financial
Statements.
|
Valuation Inputs at Reporting Date:
|
Description
|
Total
|
Level 1
|
Level 2
|
Level 3
|
Investments in Securities:
|
|
|
|
|
Common Stocks
|
$ 176,332,826
|
$ 176,332,826
|
$ -
|
$ -
|
U.S. Treasury Obligations
|
149,978
|
-
|
149,978
|
-
|
Money Market Funds
|
18,442,605
|
18,442,605
|
-
|
-
|
Total Investments in Securities:
|
$ 194,925,409
|
$ 194,775,431
|
$ 149,978
|
$ -
|
Derivative Instruments:
|
|
|
|
|
Assets
|
|
|
|
|
Futures Contracts
|
$ 620
|
$ 620
|
$ -
|
$ -
|
Value of Derivative Instruments
|
The following table is a summary of the Fund's value of derivative instruments by primary risk exposure as of January 31, 2014. For additional information on
derivative instruments, please refer to the Derivative Instruments section in the accompanying Notes to Financial Statements.
|
Primary Risk Exposure /
Derivative Type
|
Value
|
|
Asset
|
Liability
|
Equity Risk
|
|
|
Futures Contracts (a)
|
$ 620
|
$ -
|
Total Value of Derivatives
|
$ 620
|
$ -
|
(a) Reflects gross cumulative appreciation (depreciation) on futures contracts as presented in the Schedule of Investments. Only the period end receivable or
payable for daily variation margin and net unrealized appreciation (depreciation) are presented in the Statement of Assets and Liabilities.
|
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities
|
January 31, 2014 (Unaudited)
|
|
|
|
Assets
|
|
|
Investment in securities, at value (including securities loaned of $15,728,067) - See
accompanying schedule:
Unaffiliated issuers (cost $175,123,367)
|
$ 176,482,804
|
|
Fidelity Central Funds (cost $18,442,605)
|
18,442,605
|
|
Total Investments (cost $193,565,972)
|
|
$ 194,925,409
|
Receivable for fund shares sold
|
|
549,570
|
Dividends receivable
|
|
140,282
|
Distributions receivable from Fidelity Central Funds
|
|
2,550
|
Receivable from investment adviser for expense reductions
|
|
14,228
|
Other receivables
|
|
283
|
Total assets
|
|
195,632,322
|
|
|
|
Liabilities
|
|
|
Payable for investments purchased
|
$ 2,034,043
|
|
Payable for fund shares redeemed
|
178,596
|
|
Accrued management fee
|
19,862
|
|
Payable for daily variation margin for derivative instruments
|
2,061
|
|
Other affiliated payables
|
8,041
|
|
Collateral on securities loaned, at value
|
15,947,500
|
|
Total liabilities
|
|
18,190,103
|
|
|
|
Net Assets
|
|
$ 177,442,219
|
Net Assets consist of:
|
|
|
Paid in capital
|
|
$ 176,053,678
|
Undistributed net investment income
|
|
158,617
|
Accumulated undistributed net realized gain (loss) on investments
|
|
(130,133)
|
Net unrealized appreciation (depreciation) on investments
|
|
1,360,057
|
Net Assets
|
|
$ 177,442,219
|
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
|
January 31, 2014 (Unaudited)
|
|
|
|
Investor Class
:
Net Asset Value
, offering price and redemption price per share ($9,700,181 ÷ 806,553 shares)
|
|
$ 12.03
|
|
|
|
Fidelity Advantage Class
:
Net Asset Value
, offering price and redemption price per share ($162,644,801 ÷ 13,509,990
shares)
|
|
$ 12.04
|
|
|
|
Institutional Class
:
Net Asset Value
, offering price and redemption price per share ($5,097,237 ÷ 423,330 shares)
|
|
$ 12.04
|
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Operations
Six months ended January 31, 2014 (Unaudited)
|
|
|
|
Investment Income
|
|
|
Dividends
|
|
$ 2,281,813
|
Interest
|
|
44
|
Income from Fidelity Central Funds
|
|
11,640
|
Total income
|
|
2,293,497
|
|
|
|
Expenses
|
|
|
Management fee
|
$ 112,923
|
|
Transfer agent fees
|
45,683
|
|
Independent trustees' compensation
|
311
|
|
Miscellaneous
|
69
|
|
Total expenses before reductions
|
158,986
|
|
Expense reductions
|
(81,414
)
|
77,572
|
Net investment income (loss)
|
|
2,215,925
|
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
|
|
|
Investment securities:
|
|
|
Unaffiliated issuers
|
336,727
|
|
Futures contracts
|
39,364
|
|
Total net realized gain (loss)
|
|
376,091
|
Change in net unrealized appreciation (depreciation) on:
Investment securities
|
(4,115,593)
|
|
Futures contracts
|
(17,447
)
|
|
Total change in net unrealized appreciation (depreciation)
|
|
(4,133,040
)
|
Net gain (loss)
|
|
(3,756,949
)
|
Net
increase (decrease) in net assets resulting from operations
|
|
$ (1,541,024
)
|
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Changes in Net Assets
|
Six months ended January 31,
2014 (Unaudited)
|
Year ended
July 31,
2013
|
Increase (Decrease) in Net Assets
|
|
|
Operations
|
|
|
Net investment income (loss)
|
$ 2,215,925
|
$ 2,274,841
|
Net realized gain (loss)
|
376,091
|
110,279
|
Change in net unrealized appreciation (depreciation)
|
(4,133,040
)
|
1,632,732
|
Net
increase (decrease) in net assets resulting
from operations
|
(1,541,024
)
|
4,017,852
|
Distributions to shareholders from net investment income
|
(2,663,807)
|
(1,809,105)
|
Distributions to shareholders from net realized gain
|
(538,310
)
|
(176,179
)
|
Total distributions
|
(3,202,117
)
|
(1,985,284
)
|
Share transactions - net increase (decrease)
|
19,368,560
|
112,266,395
|
Redemption fees
|
36,272
|
49,861
|
Total increase (decrease) in net assets
|
14,661,691
|
114,348,824
|
|
|
|
Net Assets
|
|
|
Beginning of period
|
162,780,528
|
48,431,704
|
End of period (including undistributed net investment income of $158,617 and undistributed
net investment income of $606,499, respectively)
|
$ 177,442,219
|
$ 162,780,528
|
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Investor Class
|
Six months ended January 31,
2014
|
Years ended July 31,
|
|
(Unaudited)
|
2013
|
2012
G
|
Selected Per-Share Data
|
|
|
|
Net asset value, beginning of period
|
$ 12.41
|
$ 11.93
|
$ 10.00
|
Income from Investment Operations
|
|
|
|
Net investment income (loss)
D
|
.15
|
.25
|
.20
|
Net realized and unrealized gain (loss)
|
(.30
)
|
.48
|
1.86
|
Total from investment operations
|
(.15
)
|
.73
|
2.06
|
Distributions from net investment income
|
(.19)
|
(.22)
|
(.13)
|
Distributions from net realized gain
|
(.04
)
|
(.04
)
|
-
|
Total distributions
|
(.23
)
|
(.26
)
|
(.13
)
|
Redemption fees added to paid in capital
D
|
-
I
|
.01
|
-
I
|
Net asset value, end of period
|
$ 12.03
|
$ 12.41
|
$ 11.93
|
Total Return
B,C
|
(1.10)%
|
6.30%
|
20.84%
|
Ratios to Average Net Assets
E,H
|
|
|
|
Expenses before reductions
|
.33%
A
|
.33%
|
.33%
A
|
Expenses net of fee waivers, if any
|
.23%
A
|
.25%
|
.26%
A
|
Expenses net of all reductions
|
.23%
A
|
.25%
|
.26%
A
|
Net investment income (loss)
|
2.61%
A
|
2.13%
|
1.98%
A
|
Supplemental Data
|
|
|
|
Net assets, end of period (000 omitted)
|
$ 9,700
|
$ 7,493
|
$ 19,998
|
Portfolio turnover rate
F
|
22%
A
|
44%
|
67%
J
|
A
Annualized
B
Total returns for periods of less than one year are not annualized.
C
Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D
Calculated based on average shares outstanding during the period.
E
Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F
Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G
For the period September 8, 2011 (commencement of operations) to July 31, 2012.
H
Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from expense offset arrangements and do not represent the amount paid by the class
during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions
represent the net expenses paid by the class.
I
Amount represents less than $.01 per share.
J
Amount not annualized.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Fidelity Advantage Class
|
Six months ended January 31,
2014
|
Years ended July 31,
|
|
(Unaudited)
|
2013
|
2012
G
|
Selected Per-Share Data
|
|
|
|
Net asset value, beginning of period
|
$ 12.43
|
$ 11.94
|
$ 10.00
|
Income from Investment Operations
|
|
|
|
Net investment income (loss)
D
|
.16
|
.28
|
.21
|
Net realized and unrealized gain (loss)
|
(.31
)
|
.48
|
1.87
|
Total from investment operations
|
(.15
)
|
.76
|
2.08
|
Distributions from net investment income
|
(.20)
|
(.24)
|
(.14)
|
Distributions from net realized gain
|
(.04
)
|
(.04
)
|
-
|
Total distributions
|
(.24
)
|
(.28
)
|
(.14
)
|
Redemption fees added to paid in capital
D
|
-
I
|
.01
|
-
I
|
Net asset value, end of period
|
$ 12.04
|
$ 12.43
|
$ 11.94
|
Total Return
B,C
|
(1.10)%
|
6.53%
|
20.97%
|
Ratios to Average Net Assets
E,H
|
|
|
|
Expenses before reductions
|
.19%
A
|
.19%
|
.19%
A
|
Expenses net of fee waivers, if any
|
.09%
A
|
.09%
|
.12%
A
|
Expenses net of all reductions
|
.09%
A
|
.09%
|
.12%
A
|
Net investment income (loss)
|
2.75%
A
|
2.28%
|
2.12%
A
|
Supplemental Data
|
|
|
|
Net assets, end of period (000 omitted)
|
$ 162,645
|
$ 155,140
|
$ 28,294
|
Portfolio turnover rate
F
|
22%
A
|
44%
|
67%
J
|
A
Annualized
B
Total returns for periods of less than one year are not annualized.
C
Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D
Calculated based on average shares outstanding during the period.
E
Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F
Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G
For the period September 8, 2011 (commencement of operations) to July 31, 2012.
H
Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from expense offset arrangements and do not represent the amount paid by the class
during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions
represent the net expenses paid by the class.
I
Amount represents less than $.01 per share.
J
Amount not annualized.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Institutional Class
|
Six months ended January 31,
2014
|
Years ended July 31,
|
|
(Unaudited)
|
2013
|
2012
G
|
Selected Per-Share Data
|
|
|
|
Net asset value, beginning of period
|
$ 12.43
|
$ 11.94
|
$ 10.00
|
Income from Investment Operations
|
|
|
|
Net investment income (loss)
D
|
.16
|
.28
|
.20
|
Net realized and unrealized gain (loss)
|
(.31
)
|
.48
|
1.88
|
Total from investment operations
|
(.15
)
|
.76
|
2.08
|
Distributions from net investment income
|
(.20)
|
(.24)
|
(.14)
|
Distributions from net realized gain
|
(.04
)
|
(.04
)
|
-
|
Total distributions
|
(.24
)
|
(.28
)
|
(.14
)
|
Redemption fees added to paid in capital
D
|
-
I
|
.01
|
-
I
|
Net asset value, end of period
|
$ 12.04
|
$ 12.43
|
$ 11.94
|
Total Return
B,C
|
(1.09)%
|
6.57%
|
20.99%
|
Ratios to Average Net Assets
E,H
|
|
|
|
Expenses before reductions
|
.15%
A
|
.15%
|
.15%
A
|
Expenses net of fee waivers, if any
|
.07%
A
|
.07%
|
.08%
A
|
Expenses net of all reductions
|
.07%
A
|
.07%
|
.08%
A
|
Net investment income (loss)
|
2.78%
A
|
2.30%
|
2.16%
A
|
Supplemental Data
|
|
|
|
Net assets, end of period (000 omitted)
|
$ 5,097
|
$ 148
|
$ 139
|
Portfolio turnover rate
F
|
22%
A
|
44%
|
67%
J
|
A
Annualized
B
Total returns for periods of less than one year are not annualized.
C
Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D
Calculated based on average shares outstanding during the period.
E
Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F
Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G
For the period September 8, 2011 (commencement of operations) to July 31, 2012.
H
Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from expense offset arrangements and do not represent the amount paid by the class
during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions
represent the net expenses paid by the class.
I
Amount represents less than $.01 per share.
J
Amount not annualized.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes
to
Financial Statements
For the period ended January 31, 2014 (Unaudited)
1. Organization.
Spartan Real Estate Index Fund (the Fund) is a non-diversified fund of Fidelity Salem Street Trust (the Trust) and is authorized to issue an
unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company organized as a Massachusetts business trust. The Fund offers Investor Class, Fidelity Advantage Class and
Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to
matters that affect that class. The Fund offers conversion privileges between share classes to eligible shareholders.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and
accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as
of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing
Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management,
Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder
report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the
SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP),
which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from
those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation.
Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. In accordance with valuation
policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing
vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or
reliable, investments will be fair valued in good faith by the Fidelity Management & Research Company (FMR) Fair Value Committee (the Committee), in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market
or investment specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and is responsible for
approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as
shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or
official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as
Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted
bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities,
when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the
hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities,
where observable inputs are
Semiannual Report
3. Significant Accounting Policies - continued
Investment Valuation - continued
limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who
make markets in such securities. U.S. government and government agency obligations, are valued by pricing vendors who utilize matrix pricing
which considers yield or price of bonds of comparable quality, coupon, maturity and type or by broker-supplied prices. When independent prices
are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by
third party pricing vendors. Debt securities are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded and are categorized as Level 1 in the hierarchy. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset
value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of
investments by input level, as of January 31, 2014, is included at the end of the Fund's Schedule of Investments.
Investment Transactions and Income.
For financial reporting purposes, the Fund's investment holdings and NAV include trades executed
through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of
business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior
business day. Gains and losses on securities sold are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend
date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is
informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities
received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments
and/or as a realized gain. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax
filings or other correspondence relating to the underlying investment. Interest income and distributions from the Fidelity Central Funds are
accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Class Allocations and Expenses.
Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and
certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the
total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions may also differ by class. For
the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of
recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund.
Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate
methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders.
Each year, the Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The
Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are
filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each
class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets
or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to futures transactions, foreign currency transactions and losses deferred due to wash sales.
Semiannual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation
|
$ 9,108,837
|
Gross unrealized depreciation
|
(8,126,999
)
|
Net unrealized appreciation (depreciation) on securities and other investments
|
$ 981,838
|
|
|
Tax cost
|
$ 193,943,571
|
Short-Term Trading (Redemption) Fees.
During the period, shares held by investors in the Fund less than 90 days may have been subject to a
redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are
retained by the Fund and accounted for as an addition to paid in capital.
4. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments.
The Fund's investment objective allows the Fund to enter into various types of derivative contracts, including futures contracts. Derivatives are investments whose value is primarily derived from underlying assets, indices or reference rates and may be transacted on an exchange or over-the-counter (OTC). Derivatives may involve a future commitment to buy or sell a specified asset based on specified terms, to exchange future cash flows at periodic intervals based on a notional principal amount, or for one party to
make one or more payments upon the occurrence of specified events in exchange for periodic payments from the other party.
The Fund used derivatives to increase returns and to manage exposure to certain risks as defined below. The success of any strategy involving
derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not
achieve its objectives.
The Fund's use of derivatives increased or decreased its exposure to the following risk:
Equity Risk
|
Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those
arising from interest rate risk or foreign exchange risk), whether caused by factors specific to an individual investment, its issuer,
or all factors affecting all instruments traded in a market or market segment.
|
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
4. Derivative Instruments - continued
Risk Exposures and the Use of Derivative Instruments - continued
The Fund is also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the
risk that the Fund will be unable to close out the derivative in the open market in a timely manner. Counterparty credit risk is the risk that the
counterparty will not be able to fulfill its obligation to the Fund. Counterparty credit risk related to exchange-traded futures contracts may be
mitigated by the protection provided by the exchange on which they trade.
Investing in derivatives may involve greater risks than investing in the underlying assets directly and, to varying degrees, may involve risk of loss in
excess of any initial investment and collateral received and amounts recognized in the Statement of Assets and Liabilities. In addition, there may
be the risk that the change in value of the derivative contract does not correspond to the change in value of the underlying instrument.
Futures Contracts.
A futures contract is an agreement between two parties to buy or sell a specified underlying instrument for a fixed price at a
specified future date. The Fund used futures contracts to manage its exposure to the stock market.
Upon entering into a futures contract, a fund is required to deposit either cash or securities (initial margin) with a clearing broker in an amount
equal to a certain percentage of the face value of the contract. Futures contracts are marked-to-market daily and subsequent daily payments
(variation margin) are made or received by a fund depending on the daily fluctuations in the value of the futures contracts and are recorded as
unrealized appreciation or (depreciation). This receivable and/or payable, if any, is included in daily variation margin for derivative instruments in
the Statement of Assets and Liabilities. Realized gain or (loss) is recorded upon the expiration or closing of a futures contract.
Any open futures contracts at period end are presented in the Schedule of Investments under the caption "Futures Contracts." The underlying face
amount at value reflects each contract's exposure to the underlying instrument or index at period end and is representative of volume of activity
during the period. Securities deposited to meet initial margin requirements are identified in the Schedule of Investments.
During the period the Fund recognized net realized gain (loss) of $39,364 and a change in net unrealized appreciation (depreciation) of $(17,447)
related to its investment in futures contracts. These amounts are included in the Statement of Operations.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $36,318,141 and $17,665,449, respectively.
Semiannual Report
6. Fees and Other Transactions with Affiliates.
Management Fee and Expense Contract.
Fidelity Management & Research Company (the investment adviser) and its affiliates provide the
Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is based on an
annual rate of .14% of the Fund's average net assets. Under the management contract, the investment adviser pays all other fund-level expenses,
except the compensation of the independent Trustees and certain other expenses such as interest expense, including commitment fees.
In addition, under an expense contract, the investment adviser pays class-level expenses as necessary so that the total expenses do not exceed
certain amounts of each class' average net assets on an annual basis with certain exceptions, as noted in the following table:
Investor Class
|
.33%
|
Fidelity Advantage Class
|
.19%
|
Institutional Class
|
.15%
|
Sub-Adviser.
Geode Capital Management, LLC (Geode), serves as sub-adviser for the Fund. Geode provides discretionary investment advisory
services to the Fund and is paid by the investment adviser for providing these services.
Transfer Agent Fees.
Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the transfer,
dividend disbursing and shareholder servicing agent for each class. FIIOC receives transfer agent fees at an annual rate of .21%, .11% and .035% of
average net assets for Investor Class, Fidelity Advantage Class and Institutional Class, respectively. FIIOC pays for typesetting, printing and mailing
of shareholder reports, except proxy statements.
Under the expense contract, Investor Class, Fidelity Advantage Class and Institutional Class pay a portion of the transfer agent fees at an annual
rate of .19%, .05% and .01% of average net assets, respectively.
For the period, the total transfer agent fees paid by each applicable class were as follows:
|
Amount
|
Investor Class
|
$ 7,480
|
Fidelity Advantage Class
|
38,164
|
Institutional Class
|
39
|
|
$ 45,683
|
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
7. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be
utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay
commitment fees on its pro-rata portion of the line of credit, which amounted to $69 and is reflected in Miscellaneous expenses on the Statement of
Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the
loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the
loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next
business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply
collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any
cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at
period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing
cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending
certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central
Funds. Total security lending income during the period amounted to $11,302.
9. Expense Reductions.
The investment adviser contractually agreed to reimburse each class to the extent annual operating expenses exceeded certain levels of average
net assets as noted in the table below. This reimbursement will remain in place through September 30, 2014. Some expenses, for example interest
expense, including commitment fees, are excluded from this reimbursement.
|
Expense
Limitations
|
Reimbursement
|
Investor Class
|
.23%
|
$ 3,970
|
Fidelity Advantage Class
|
.09%
|
76,615
|
Institutional Class
|
.07%
|
333
|
|
|
$ 80,918
|
Semiannual Report
9. Expense Reductions - continued
In addition, the investment adviser reimbursed a portion of the Fund's operating expenses during the period in the amount of $496.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
|
Six months ended
January 31,
2014
|
Year ended
July 31,
2013
|
From net investment income
|
|
|
Investor Class
|
$ 127,238
|
$ 349,625
|
Fidelity Advantage Class
|
2,534,183
|
1,456,618
|
Institutional Class
|
2,386
|
2,862
|
Total
|
$ 2,663,807
|
$ 1,809,105
|
From net realized gain
|
|
|
Investor Class
|
$ 25,990
|
$ 74,276
|
Fidelity Advantage Class
|
511,832
|
101,484
|
Institutional Class
|
488
|
419
|
Total
|
$ 538,310
|
$ 176,179
|
11. Share Transactions.
Transactions for each class of shares were as follows:
|
Shares
|
Dollars
|
|
Six months ended January
31,
2014
|
Year ended
July 31,
2013
|
Six months ended January
31,
2014
|
Year ended
July 31,
2013
|
Investor Class
|
|
|
|
|
Shares sold
|
674,176
|
2,766,232
|
$ 7,985,736
|
$ 33,734,944
|
Reinvestment of distributions
|
12,560
|
34,332
|
143,423
|
402,625
|
Shares redeemed
|
(483,833
)
|
(3,873,523
)
|
(5,745,105
)
|
(47,284,016
)
|
Net increase (decrease)
|
202,903
|
(1,072,959
)
|
$ 2,384,054
|
$ (13,146,447
)
|
Fidelity Advantage Class
|
|
|
|
|
Shares sold
|
4,118,593
|
12,812,923
|
$ 48,963,401
|
$ 158,898,420
|
Reinvestment of distributions
|
252,421
|
122,146
|
2,885,623
|
1,486,664
|
Shares redeemed
|
(3,345,818
)
|
(2,819,932
)
|
(39,696,388
)
|
(34,975,523
)
|
Net increase (decrease)
|
1,025,196
|
10,115,137
|
$ 12,152,636
|
$ 125,409,561
|
Institutional Class
|
|
|
|
|
Shares sold
|
425,456
|
-
|
$ 4,999,248
|
$ -
|
Reinvestment of distributions
|
251
|
275
|
2,874
|
3,281
|
Shares redeemed
|
(14,271
)
|
-
|
(170,252
)
|
-
|
Net increase (decrease)
|
411,436
|
275
|
$ 4,831,870
|
$ 3,281
|
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in
connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide
general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that
may be made against the Fund. The risk of material loss from such claims is considered remote.
Semiannual Report
Board
Approval
of Investment Advisory Contracts and Management Fees
Spartan Real Estate Index Fund
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with
Fidelity Management & Research Company (FMR) and the sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board,
assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the
renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant
to its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. The Board has established four standing committees, Operations, Audit, Fair Valuation, and Governance and Nominating, each composed
of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order
to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets
regularly throughout the year and, among other matters, considers matters specifically related to the annual consideration of the renewal of the
fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual
consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the
Board's annual consideration of the renewal of Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds
through ad hoc joint committees to discuss certain matters relevant to the Fidelity funds.
At its September 2013 meeting, the Board, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts.
In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to
be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity
from its relationship with the fund; (iv) the extent to which economies of scale exist and would be realized as the fund grows; and (v) whether fee
levels reflect these economies of scale, if any, for the benefit of fund shareholders.
In considering whether to renew the Advisory Contracts for the fund, the Board reached a determination, with the assistance of fund counsel and
Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best
interests of the fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's
decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the
information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts,
was aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds
offered by Fidelity's competitors, and that the fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the
fund in its prospectus and other public disclosures, have chosen to invest in this fund, which is part of the Fidelity family of funds.
Semiannual Report
Nature, Extent, and Quality of Services Provided.
The Board considered Fidelity's staffing as it relates to the fund, including the backgrounds
of investment personnel of FMR and the sub-advisers (together, the Investment Advisers), and also considered the fund's investment objective,
strategies, and related investment philosophy. The Independent Trustees also had discussions with senior management of Fidelity's investment
operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure
provides appropriate incentives to act in the best interests of the fund.
Resources Dedicated to Investment Management and Support Services
. The Board reviewed the general qualifications and capabilities of Fidelity's
and Geode Capital Management, LLC's investment staff, including its size, education, experience, and resources, as well as Fidelity's approach to
recruiting, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to
non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive
resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of
issuers, counterparties and guarantors. Further, the Board believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that
permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading and risk management capabilities and resources, which are an integral part of the investment management process.
Shareholder and Administrative Services
. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering
transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the supervision of third party
service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's
compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the
Investment Advisers.
Semiannual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to
enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and
market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the
expanded availability of Fidelity Investor Centers.
Investment in a Large Fund Family
. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of
investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund
investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of
actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research
and to the support of the senior management team that oversees asset management; (ii) persisting in efforts to enhance Fidelity's global research
capabilities; (iii) launching new funds and making other enhancements to meet client needs for global and income-oriented solutions; (iv)
continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for
Fidelity funds of funds, specifically for the Freedom Fund product lines; (v) rationalizing product lines and gaining increased efficiencies through
the combination of several funds with other funds; (vi) strengthening Fidelity's index fund offerings by reducing investment minimums and
adopting or lowering existing expense caps for certain funds and classes; (vii) enhancing Global Asset Allocation product offerings by launching
new funds and strategies, including "open architecture" target date funds that utilize affiliated and unaffiliated sub-advisers; (viii) modifying the
eligibility criteria for Institutional Class shares of Advisor funds to increase their marketability to a portion of the defined contribution plan market;
(ix) creating a new low-cost retirement share class for certain Advisor funds to appeal to large retirement plans; (x) transitioning the management
of certain Fidelity commodity funds to Geode Capital Management LLC, a registered commodity pool operator, while retaining administrative
responsibilities for the funds; and (xi) taking steps toward establishing a new Fidelity adviser to manage sector-based funds and products.
Investment Performance
. The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of
compliance with its investment restrictions and its performance history.
The Board took into account discussions with the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance,
the Board periodically considers annualized return information for the fund for different time periods, measured against the securities market
index the fund seeks to track. In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and the Investment Advisers' explanations for
such underperformance.
Semiannual Report
In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund
performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated
based on gross performance (before fees and expenses but after transaction costs) compared to a fund's benchmark index, over appropriate time
periods, taking into account relevant factors including the following: general market conditions; the characteristics of the fund's benchmark index;
the extent to which statistical sampling is employed; and fund cash flows and other factors. Depending on the circumstances, the Independent
Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.
The Independent Trustees recognize that shareholders evaluate performance on a net basis (after fees and expenses) over their own holding
periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board
also included net cumulative calendar year total return information for the fund and its benchmark index for the most recent one-year period.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should
benefit the fund's shareholders.
Competitiveness of Management Fee and Total Expense Ratio.
The Board considered the fund's management fee and total expense ratio
compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective
categories that have comparable investment mandates. Combining Lipper investment objective categories aids the Board's management fee and
total expense ratio comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which
various Fidelity funds are compared.
Management Fee
. The Board considered two proprietary management fee comparisons for the 12-month (or shorter) periods shown in the chart
below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total
Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the
total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. "TMG
%" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a
hypothetical TMG % of 50% would mean that half of the funds in the Total Mapped Group had higher, and half had lower, management fees than the
fund. The fund's actual TMG %s are in the chart below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a
subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the
first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least
15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all
funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee rate
ranked, is also included in the chart and considered by the Board. Because the vast majority of competitor funds' management fees do not cover
non-management expenses, for a more meaningful comparison of management fees, the fund is compared on the basis of a hypothetical "net
management fee," which is derived by subtracting payments made by FMR for "fund-level" non-management expenses (including pricing and
bookkeeping fees and fees paid to non-affiliated custodians) from the fund's management fee. In this regard, the Board considered that net management fees can vary from year to year because of differences in "fund-level" non-management expenses, and that "fund-level" non-management
expenses may exceed the fund's management fee and result in a negative net management fee. The Board noted, however, that FMR does not pay
transfer agent fees or other "class-level" expenses under the fund's management contract.
Semiannual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Spartan Real Estate Index Fund
Semiannual Report
The Board noted that the fund's hypothetical net management fee rate ranked below the median of its Total Mapped Group and below the median
of its ASPG for 2012. Although the fund's hypothetical net management fee was negative, the Board noted that it is truly a hypothetical number
derived for purposes of providing a more meaningful competitive comparison and is not intended to suggest that Fidelity pays the fund to manage
the fund's assets.
Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the
other factors considered.
Total Expense Ratio
. In its review of each class's total expense ratio, the Board considered the fund's hypothetical net management fee as well as
the fund's gross management fee. The Board also considered other "fund-level" expenses, such as pricing and bookkeeping fees and custodial, legal,
and audit fees. The Board also considered other "class-level" expenses, such as transfer agent fees. The Board also noted the effects of any waivers
and reimbursements on fees and expenses. As part of its review, the Board also considered the current and historical total expense ratios of each
class of the fund compared to competitive fund median expenses. Each class of the fund is compared to those funds and classes in the Total
Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that the total expense ratio of each of Fidelity Advantage Class and Institutional Class ranked below its competitive median for
2012 and the total expense ratio of Investor Class ranked above its competitive median for 2012. The Board considered that, in general, various
factors can affect total expense ratios.
The Board considered that current contractual arrangements for the fund oblige FMR to pay all "class-level" expenses of each class of the fund to
the extent necessary to limit total expenses, with certain exceptions, as follows: Fidelity Advantage Class: 0.19%; Institutional Class: 0.15%; and
Investor Class: 0.33%. These contractual arrangements may not be increased without the approval of the Board. The Board further considered that
FMR contractually agreed to reimburse Fidelity Advantage Class, Institutional Class, and Investor Class of the fund to the extent that total expenses (excluding interest, taxes, certain securities lending costs, brokerage commissions, extraordinary expenses, and acquired fund fees and
expenses, if any), as a percentage of their respective average net assets, exceed 0.09%, 0.07%, and 0.23% through September 30, 2014.
The Board noted that the total expense ratio of Investor Class ranked above its competitive median for 2012. The Board also considered that,
effective January 1, 2013, FMR voluntarily agreed to reimburse Investor Class to the extent that total expenses (excluding interest, taxes, certain
securities lending costs, brokerage commissions, extraordinary expenses, and acquired fund fees and expenses, if any) exceed 0.07%. The Board
considered that, if the 0.07% voluntary expense reimbursement had been in effect for 2012, the class's total expense ratio would have ranked below
the median.
Semiannual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Fees Charged to Other Fidelity Clients
. The Board also considered Fidelity fee structures and other information with respect to clients of Fidelity,
such as other mutual funds advised or subadvised by Fidelity, pension plan clients, and other institutional clients. The Board noted the findings of
the 2013 ad hoc joint committee (created with the board of other Fidelity funds), which reviewed and compared Fidelity's institutional investment
advisory business with its business of providing services to the Fidelity funds, including the differences in services provided, fees charged, and costs
incurred, as well as competition in their respective marketplaces.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that the total expense ratio of each class
of the fund was reasonable, although Investor Class was above the median of the universe presented for comparison, in light of the services that the
fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability.
The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the
business of developing, marketing, distributing, managing, administering and servicing the fund and servicing the fund's shareholders. The Board
also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, Fidelity presents to the Board Fidelity's profitability for the fund. Fidelity calculates the profitability for each fund, as well as
aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which
originate with the books and records of Fidelity on which Fidelity's audited financial statements are based. The Audit Committee of the Board
reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been
engaged annually by the Board as part of the Board's assessment of Fidelity's profitability analysis. PwC's engagement includes the review and
assessment of the methodologies used by Fidelity in determining the revenues and expenses attributable to Fidelity's mutual fund business, and
completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies.
After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and fall-out benefits related to the mutual fund business as well as cases where Fidelity's
affiliates may benefit from or be related to the fund's business.
Semiannual Report
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and was
satisfied that the profitability was not excessive in the circumstances.
Economies of Scale.
The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds,
whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for
realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through
increased services to the fund, through waivers or reimbursements, or through fee or expense reductions. The Board also noted that in 2009, it and
the board of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether Fidelity attains economies
of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such
economies of scale, and whether there is potential for realization of any further economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that economies of scale, if any, are being appropriately shared between fund shareholders and Fidelity.
Additional Information Requested by the Board.
In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory
Contracts, the Board requested and received additional information on certain topics, including: (i) Fidelity's fund profitability methodology,
profitability trends for certain funds, and the impact of certain factors on fund profitability results; (ii) portfolio manager changes that have
occurred during the past year and the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she
manages; (iii) Fidelity's compensation structure for portfolio managers, research analysts, and other key personnel, including its effects on
fund profitability, the rationale for the compensation structure, and the extent to which current market conditions have affected retention and
recruitment; (iv) the arrangements with and compensation paid to certain fund sub-advisers on behalf of the Fidelity funds; (v) Fidelity's fee
structures, including the group fee structure and definition of group assets, and the rationale for recommending different fees among different
categories of funds and classes; (vi) Fidelity's voluntary waiver of its fees to maintain minimum yields for certain money market funds and
classes as well as contractual waivers in place for certain funds; (vii) the methodology with respect to competitive fund data and peer group
classifications; (viii) Fidelity's transfer agent fee, expense, and service structures for different funds and classes, and the impact of the
increased use of omnibus accounts; and (ix) explanations regarding the relative total expense ratios of certain funds and classes, total expense
competitive trends and methodologies for total expense competitive comparisons, and actions that might be taken by Fidelity to reduce total
expense ratios for certain funds and classes or to achieve further economies of scale.
Semiannual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, the Board ultimately concluded
that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Geode Capital Management, LLC
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
State Street Bank and Trust Company
Boston, MA
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
245 Summer St., Boston, MA 02210
www.fidelity.com
URX-I-USAN-0314
1.929345.102