As filed with the Securities
and Exchange Commission on January 3, 2025
Registration No. 33-___________
(Investment Company Act Registration
No. 811-22796)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
N-14
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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Pre-Effective Amendment No. |
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Post-Effective Amendment No. ____ |
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Fidelity
Merrimack Street Trust
(Exact Name of Registrant as Specified in Charter)
Registrant’s Telephone Number (617) 563-7000
245 Summer St., Boston, MA 02210
(Address Of Principal Executive Offices)
Nicole Macarchuk, Secretary and Chief Legal Officer
245 Summer Street
Boston, MA 02210
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable
after the Registration Statement becomes effective under the Securities Act of 1933.
The Registrant has registered an indefinite amount of securities
under the Securities Act of 1933 pursuant to Section 24(f) under the Investment Company Act of 1940; accordingly, no fee is payable herewith
because of reliance upon Section 24(f).
It is proposed that this filing will become effective on February
2, 2025, pursuant to Rule 488.
FIDELITY®
MUNICIPAL BOND INDEX FUND
A
SERIES OF
FIDELITY
SALEM STREET TRUST
245
SUMMER STREET, BOSTON, MASSACHUSETTS 02210
1-800-544-8544
To
the Shareholders of Fidelity® Municipal Bond Index Fund (the Fund):
We
wish to inform you that at a meeting held on September 19, 2024, the Board of Trustees of Fidelity Salem Street Trust (Board) approved
on behalf of the Fund, the conversion of the Fund into an exchange-traded fund (ETF), which will continue to be managed by Fidelity Management
& Research Company LLC (FMR or the Adviser) (such reorganization, the conversion). The Board, including all the Trustees who are not
“interested persons” (as defined in the Investment Company Act of 1940, as amended) of the Fund, determined, with respect
to the conversion, that participation in the conversion is in the best interests of the Fund and the interests of the existing shareholders
of the Fund will not be diluted as a result of the conversion.
The
Fund will be reorganized into a newly created ETF, Fidelity® Systematic Municipal Bond Index ETF (the ETF), which is a
series of Fidelity Merrimack Street Trust. The Fund is currently managed to the Bloomberg Municipal Bond Index; the ETF will be managed
to a new proprietary index, Fidelity Systematic U.S. Municipal Bond IndexSM. This difference is reflected in the Fund’s
and the ETF’s principal investment strategies. Otherwise, the Fund and the ETF have identical investment objectives, principal investment
strategies, and fundamental investment policies.
The
Fund’s current underlying index, the Bloomberg Municipal Bond Index, is a market value-weighted index of investment-grade municipal
bonds with maturities of one year or more.
The
Fidelity Systematic U.S. Municipal Bond IndexSM aims to increase exposure to municipal bonds with higher risk-adjusted performance
and liquidity characteristics relative to traditional market-capitalization weighted U.S. investment grade municipal bond indices. The
index is constructed using Fidelity’s rules-based proprietary index methodology. Fidelity Product Services LLC, an affiliated person
of the Adviser, is the index provider.
As
part of the conversion, the Fund will be liquidated. The conversion is currently scheduled to take place as of the close of business of
the New York Stock Exchange on April 4, 2025.
Fidelity
believes that the conversion will provide multiple benefits for investors of the Fund, including:
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Additional trading flexibility
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Increased portfolio holdings
transparency |
With
the exception of the index the ETF is managed to the ETF will have the same investment objective, principal investment strategies, and
fundamental investment policies as the Fund. However, ETFs are structurally different from mutual funds and have ETF-specific risks.
ETF-specific
risks include the risk that shares of an ETF will trade at market prices that may be above (premium) or below (discount) the ETF’s
net asset value (NAV), or that the ETF’s “authorized participants” will not engage in creation or redemption transactions,
which could cause the ETF’s shares to trade at a discount to NAV and possibly face trading halts and/or delisting.
For
additional information about the differences between mutual funds and ETFs and the related risks, please refer to “What are the
differences between an ETF and a mutual fund?” and “Comparison of Principal Risk Factors” in the accompanying Information
Statement/Prospectus.
The
conversion will be conducted pursuant to an Agreement and Plan of Reorganization and Liquidation, a form of which is included as Exhibit 1
to these materials. The conversion is structured to be a tax-free reorganization under the U.S. Internal Revenue Code of 1986, as amended.
As a result, Fund shareholders generally will not recognize a taxable gain (or loss) for U.S. tax purposes due to the conversion (except
with respect to cash received, as noted below).
In
connection with the conversion, shareholders of the Fund will receive ETF shares equal in value to the aggregate net asset value of shares
of the Fund they own and may receive a cash payment in lieu of fractional shares of the ETF, and the redemption of fractional shares may
be a taxable event. A conversion into an ETF will not dilute the value of your investment.
If
you hold your Fund shares in an account that permits you to purchase securities traded on U.S. stock exchanges, such as ETFs or other
types of stocks, then you will be eligible to receive shares of the ETF in the conversion. No further
action is needed by you.
If
you hold your Fund shares in an account with a financial intermediary that only allows you to hold shares of mutual funds in the account,
you will need to contact your broker or financial intermediary to transfer your shares to an existing or new brokerage account that permits
investment in ETF shares.
If
you do nothing, you will not receive shares of the ETF and your position will be liquidated at the time of the conversion and you will
receive a cash distribution equal in value to the NAV of your Fund shares on April 4, 2025, or such other time and date as the parties
may agree (the Closing Date) less any fees and expenses your intermediary may charge. This event may be taxable. To prevent a taxable
event, please contact your broker or financial intermediary to transfer your shares to an existing
or new brokerage account.
Please
note: If your account number with Fidelity Investments begins with 2aa through 2zz, your account cannot hold shares of an ETF. Please
contact your broker or call 1-800-544-8544.
If
you hold your Fund shares through an IRA or employer sponsored group retirement plan that does not have the ability to hold shares of
ETFs, you will need to redeem your shares prior to the conversion, or your broker or intermediary may transfer your investment in the
Fund to a different investment option prior to the conversion.
If
you are unsure about the ability of your account to accept shares of an ETF, please contact your broker or financial intermediary.
Please
review the accompanying materials closely for additional actions that you must take to receive shares of the ETF as part of the conversion.
If
you do not wish to participate in the conversion, you can exchange your Fund shares for shares of another Fidelity mutual fund that is
not participating in a conversion into an ETF or redeem your Fund shares. Keep in mind that any such action may have tax consequences
and you should consult your tax advisor.
The
last date to redeem your Fund shares or exchange Fund shares for shares of another Fidelity mutual fund prior to the conversion is April 3,
2025.
The
accompanying Information Statement/Prospectus provides more information about the conversion. Please carefully review the additional information
provided in this document. If you have questions, please call 1-800-544-8544. If you invest through another financial institution, such
as a brokerage firm, please contact your financial institution.
By
order of the Board of Trustees,
NICOLE
MACARCHUK, Secretary
February 18,
2025
FIDELITY
®
MUNICIPAL BOND INDEX FUND
A
SERIES OF
FIDELITY
SALEM STREET TRUST
FIDELITY®
SYSTEMATIC MUNICIPAL BOND INDEX ETF
A
SERIES OF
FIDELITY
MERRIMACK STREET TRUST
245
SUMMER STREET, BOSTON, MASSACHUSETTS 02210
1-800-544-8544
1-800-FIDELITY
(ETFs)
INFORMATION
STATEMENT AND PROSPECTUS
FEBRUARY
18, 2025
THIS
INFORMATION STATEMENT/PROSPECTUS IS FOR INFORMATION PURPOSES ONLY, AND NO ACTION IS REQUIRED ON YOUR PART TO ACCOMPLISH THE REORGANIZATION.
NO
SHAREHOLDER VOTE IS REQUIRED TO COMPLETE THE REORGANIZATION. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
This
combined Information Statement and Prospectus (Information Statement) is furnished to shareholders of Fidelity® Municipal
Bond Index Fund (the Acquired Fund), a series of Fidelity Salem Street Trust, in connection with a separate Agreement and Plan of Reorganization
and Liquidation (the Agreement) that has been approved by the Board of Trustees of Fidelity Salem Street Trust.
The
Acquired Fund will be reorganized into a newly created ETF, Fidelity® Systematic Municipal Bond Index ETF (the Acquiring
Fund and together with the Acquired Fund, the funds), a series of Fidelity Merrimack Street Trust, and the Acquired Fund will be liquidated
(such reorganization and liquidation, the Reorganization). The Reorganization is scheduled to take place as of the close of business
of the New York Stock Exchange (the NYSE) on April 4, 2025, or such other time and date as the parties may agree (the Closing Date).
The
Acquiring Fund is a diversified series of Fidelity Merrimack Street Trust, an open-end management investment company registered with the
Securities and Exchange Commission (the SEC). The Acquiring Fund seeks to provide a high current yield exempt from federal income tax.
The Acquiring Fund will normally invest at least 80% of assets in municipal securities whose interest is exempt from federal income tax.
The Acquiring Fund seeks to replicate the performance of the Fidelity Systematic U.S. Municipal Bond Index. The Adviser normally invests
at least 80% of the fund’s assets in securities included in the index. Although the Adviser does not currently intend to invest
the Acquiring Fund’s assets in municipal securities whose interest is subject to federal income tax, the Adviser may invest all
of the Acquiring Fund’s assets in municipal securities whose interest is subject to the federal alternative minimum tax. Shares
of the Acquiring Fund will be listed for trading on The Nasdaq Stock Market®.
The
principal business address of FMR, the Acquired Fund’s and the Acquiring Fund’s investment adviser, is 245 Summer Street,
Boston, Massachusetts 02210, and FMR Investment Management (UK) Limited (FMR UK), at 1 St. Martin’s Le Grand, London, EC1A 4AS,
United Kingdom; Fidelity Management & Research (Hong Kong) Limited (FMR H.K.), at Floor 19, 41 Connaught Road Central, Hong Kong;
and Fidelity Management & Research (Japan) Limited (FMR Japan), at Kamiyacho Prime Place, 1-17, Toranomon-4-Chome, Minato-ku, Tokyo,
Japan are sub-advisers to the Acquired Fund and Acquiring Fund. The principal business address of Fidelity Distributors Corporation (FDC),
the Acquired Fund’s and the Acquiring Fund’s principal underwriter and distribution agent, is 900 Salem Street, Smithfield,
Rhode Island 02917.
THESE
SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, NOR HAS THE SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THIS INFORMATION
STATEMENT AND PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The
Information Statement details important information about the Reorganization. Please read it carefully and keep it for future reference.
The
following documents have been filed with the SEC and are incorporated into this Information Statement by reference, which means they are
part of this Information Statement for legal purposes:
An
investment in the funds is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. You could lose money by investing in the funds. Unlike individual debt securities, which typically pay principal
at maturity, the value of an investment in the funds will fluctuate.
For
a free copy of each fund’s current Prospectus or Statement of Additional Information, or the Acquired Fund’s annual report,
call Fidelity at 1-800-544-8544 (Retail Fund) or 1-800-FIDELITY (Fidelity ETF), visit Fidelity’s web site at www.fidelity.com, or
write to Fidelity Distributors Company LLC at 900 Salem Street, Smithfield, Rhode Island 02917.
Fidelity
Salem Street Trust and Fidelity Merrimack Street Trust are subject to the informational requirements of the Securities and Exchange Act
of 1934, as amended. Accordingly, each must file proxy material, reports and other information with the SEC. You can review and copy such
information from the EDGAR database on the SEC’s web site at http://www.sec.gov. You can also obtain copies of such information,
after paying a duplicating fee, by sending a request by e-mail to publicinfo@sec.gov or by writing the SEC’s Public Reference Room,
Office of Consumer Affairs and Information Services, Washington, DC 20549. You may obtain information on the operation of the SEC’s
Public Reference Room by calling the SEC at 1-202-551-8090.
The
following Summary covers certain information contained elsewhere in this Information Statement. Shareholders should read the entire Information
Statement carefully for more complete information.
What
is involved in the Reorganization?
All
of the assets and liabilities of the Acquired Fund will be transferred to a newly created Acquiring Fund in exchange for shares of the
Acquiring Fund equal to the Acquired Fund’s net asset value (NAV). The Acquired Fund will distribute to its shareholders the portion
of shares of the Acquiring Fund to which the shareholder is entitled (and shareholders may receive cash in lieu of fractional shares).
Shares of the Acquiring Fund will be transferred to each shareholder’s brokerage account. If a shareholder does not have a brokerage
account, Acquired Fund shares may be converted to cash, less any fees and expenses your intermediary may charge (subject to applicable
federal or state laws concerning unclaimed property).
After
shares of the Acquiring Fund are distributed to the Acquired Fund’s shareholders, the Acquired Fund will be completely liquidated
and dissolved. As a result of the Reorganization, you will cease to be a shareholder of the Acquired Fund and will become a shareholder
of the Acquiring Fund.
The
Reorganization is currently scheduled to take place as of the close of business of the NYSE on April 4, 2025.
For
more information, please refer to the section entitled “The Transaction – Agreement and Plan of Reorganization and Liquidation.”
What
are the differences between an ETF and a mutual fund?
ETFs
are structurally different from mutual funds in several important aspects:
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not issue multiple classes of shares. |
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May
offer multiple share classes with different sales charges, expenses, and/or minimum investments. |
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Individual
investors buy or sell shares of an ETF on the secondary market through an exchange. |
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Investors
or their intermediaries buy or sell shares directly from the mutual fund. |
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Buy
and sell orders are processed throughout the day and reflect real time market prices on an exchange. |
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Buy
and sell orders are processed once a day using the day’s ending NAV. |
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As
a result of these structural differences, there are certain benefits associated with an ETF structure, such as secondary market liquidity
and increased transparency. The Acquiring Fund will disclose its full holdings on a daily basis, while the Acquired Fund does not provide
daily holdings transparency. There are, however, certain risks associated with an ETF structure, including the risk that shares of an
ETF will trade at market prices that are above (premium) or below (discount) NAV, or that an ETF’s “authorized participants”
will not engage in creation or redemption transactions which could cause the Acquiring Fund’s shares to trade at a discount to NAV
and possibly face trading halts and/or delisting. For additional information about ETF-specific risks associated with an investment in
the Acquiring Fund, please refer to the section entitled “Comparison of Principal Risk Factors.”
Has
the Board of Trustees approved the Reorganization?
Yes.
The Acquired Fund’s Board of Trustees has carefully reviewed and approved the Agreement and the Reorganization.
What
am I being asked to vote on?
You
are not being asked to vote. Rule 17a-8 under the 1940 Act does not require shareholder approval under these conditions and we are not
asking you for a proxy, and you are requested not to send us one.
What
are the reasons for the Reorganization?
The
Board of Trustees considered the following factors, among others, in determining to approve the Agreement:
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The Reorganization will
permit shareholders of the Acquired Fund to pursue the same investment objective in an ETF structure, which provides multiple benefits
for shareholders, including lower expenses, intraday trading, and full daily holdings transparency. |
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Acquired Fund shareholders
are expected to benefit from an expense reduction. |
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The Reorganization will
qualify as a tax-free reorganization for federal income tax purposes (although cash received as part of the Reorganization may be taxable).
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more information, please refer to the section entitled “The Transaction – Reasons for the Reorganization.”
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How
will you determine the number of shares of the Acquiring Fund that I will receive?
Upon
completion of the Reorganization, each shareholder of the Acquired Fund will receive the number of shares of the Acquiring Fund and, in
some cases, cash equal in value to the aggregate net asset value of the shares of the Acquired Fund the shareholder owned on the Closing
Date.
For
more information, please refer to the section entitled “The Transaction – Agreement and Plan of Reorganization and Liquidation.”
Is
the Reorganization considered a taxable event for federal income tax purposes?
The
Reorganization will be a tax-free reorganization for federal income tax purposes. As part of the Reorganization, some shareholders may
receive cash in redemption of fractional shares, which may be a taxable event for applicable shareholders.
Different
tax considerations apply to you if your investment is liquidated and the cash value of your Acquired Fund shares is returned to you, if
you hold your Acquired Fund shares through an account that cannot hold the Acquiring Fund shares at the time of the Reorganization, or
if your Acquired Fund shares are transferred by your broker or financial intermediary to a different investment option because you did
not hold your Acquired Fund shares through an account that can accept shares of the Acquiring Fund on the Closing Date of the Reorganization.
Shareholders
who hold shares through an account that cannot hold shares of an ETF at the time of the Reorganization will have their investments liquidated
and may receive cash, which may be a taxable event for shareholders. Capital gains from securities sales by the Acquired Fund prior to
the Reorganization may be distributed by the Acquired Fund prior to the Reorganization or by the Acquiring Fund after the Reorganization.
Shareholders
who do not want or cannot hold ETF shares may redeem out of the Acquired Fund or exchange their Acquired Fund shares for shares of another
fund that is not participating in a reorganization into an ETF. A redemption or exchange of fund shares would generally be a taxable event
for shareholders holding shares in taxable accounts.
For
more information, please refer to the section entitled “The Transaction – Federal Income Tax Considerations.”
What
types of shareholder accounts can receive shares of an ETF as part of the Reorganization?
If
you hold your Acquired Fund shares in an account that permits you to purchase securities traded on U.S. stock exchanges, such as ETFs
or other types of stocks, you are eligible to receive shares of the ETF in the Reorganization. No further
action is needed by you.
What
types of shareholder accounts cannot receive shares of an ETF as part of the Reorganization?
The
following account types cannot hold ETFs:
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If you hold your Acquired
Fund shares in an account with a financial intermediary that only allows you to hold shares of mutual funds in the account, you will need
to contact your broker or financial intermediary to transfer your shares to an existing or new brokerage account that permits investment
in ETF shares. |
If
you do nothing, you will not receive shares of the ETF and your position will be liquidated at the time of the Reorganization and you
will receive a cash distribution equal in value to the NAV of your Acquired Fund shares on the Closing
Date less any fees and expenses your intermediary may charge. This event may be taxable. To prevent a taxable event,
please contact your broker or financial intermediary to transfer your shares to an existing or new brokerage account.
Please
note: If your account number with Fidelity Investments begins with 2aa through 2zz, your account cannot hold shares of an ETF. Please
contact your broker or call 1-800-544-8544.
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If you hold your Acquired
Fund shares through an IRA or employer sponsored group retirement plan that does not have the ability to hold shares of ETFs, you will
need to redeem your shares prior to the Reorganization, or your broker or intermediary may transfer your investment in the Acquired Fund
to a different investment option prior to the time of the Reorganization. |
If
you are unsure about the ability of your account to accept shares of an ETF, please contact your broker or financial intermediary.
How
do I transfer my Acquired Fund shares to a brokerage account that will accept ETF shares?
The
broker where you hold your Acquired Fund shares should be able to assist you in transferring your shares to a brokerage account that can
accept shares of an ETF.
We
suggest you provide your broker with a copy of your most recent shareholder statement. Your broker will require your account number, which
can be found on your statement. Your broker will help you complete a form to initiate the transfer. Once you sign that form, your broker
will submit the form to the Acquired Fund’s transfer agent directly, and the shares will be transferred into your brokerage account.
The sooner you initiate the transfer, the better.
If
you don’t have a brokerage account or a relationship with a brokerage firm, you will need to open an account with a brokerage firm.
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What
if I do not want to own shares of an ETF?
If
you do not want to receive shares of the ETF in connection with the Reorganization, you can exchange your Acquired Fund shares for shares
of another Fidelity mutual fund that is not participating in a reorganization into an ETF or redeem your fund shares. Prior to doing so,
however, you should consider the tax consequences associated with either action. Exchange or redemption of your Acquired Fund shares may
be a taxable event if you hold your shares in a taxable account.
The
last date to redeem your Acquired Fund shares or exchange Acquired Fund shares for shares of another Fidelity mutual fund prior to the
Reorganization is April 3, 2025.
Can
I continue to purchase shares of the Acquired Fund before the Reorganization takes place?
Effective
the close of business on February 18, 2025, new positions in the Acquired Fund may no longer be opened. Existing shareholders may
continue to hold their shares and purchase additional shares through the reinvestment of dividend and capital gain distributions until
the Reorganization takes place.
How
do the funds’ investment objectives, strategies, policies, and limitations compare?
The
Acquired Fund has the same investment objective as the Acquiring Fund. Each fund seeks to provide
a high current yield exempt from federal income tax. Each fund’s investment objective is non-fundamental and does not require shareholder
approval to change.
As
set forth in the chart below, the Acquired Fund also has the same principal investment strategies as
the Acquiring Fund, except that the Acquiring Fund will be managed to a new proprietary index:
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The
Adviser normally invests at least 80% of the fund’s assets in municipal securities whose interest is exempt from federal income
tax. This policy is fundamental, that is, subject to change only by shareholder approval. |
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Same
principal strategy. |
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The
municipal securities in which the fund invests are normally investment-grade (those of medium and high quality). Although the Adviser
does not currently intend to invest the fund’s assets in municipal securities whose interest is subject to federal income tax, the
Adviser may invest all of the fund’s assets in municipal securities whose interest is subject to the federal alternative minimum
tax. |
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Same
principal strategy. |
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The
fund seeks to replicate the performance of the Bloomberg Municipal Bond Index. The Adviser normally invests at least 80% of the fund’s
assets in securities included in the index. The index is a market value-weighted index of investment-grade municipal bonds with maturities
of one year or more. |
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The
fund seeks to replicate the performance of the Fidelity Systematic U.S. Municipal Bond IndexSM. The Adviser normally invests
at least 80% of the fund’s assets in securities included in the index. The Fidelity Systematic U.S. Municipal Bond IndexSM
aims to increase exposure to municipal bonds with higher risk-adjusted performance and liquidity characteristics relative to traditional
market-capitalization weighted U.S. investment grade municipal bond indices.
The
Fidelity Systematic U.S. Municipal Bond IndexSM is constructed using Fidelity’s rules-based proprietary index methodology.
The universe of securities includes U.S. dollar-denominated investment-grade tax-exempt debt publicly issued in the domestic market by
U.S. states and territories, and their political subdivisions, that meet specific criteria such as issue size, deal size and maturity.
Mandatory put or mandatory tender securities, as well as original issue zero-coupon bonds, are included in the universe. Floating rate
bonds, derivatives, secondarily insured securities, Rule 144A securities, securities in legal default, securities issued under the
municipal liquidity facility, or a municipal commercial paper program, and limited offering securities are excluded from the universe.
Index constituents are not market capitalization weighted; instead each constituent’s weight is determined by its |
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characteristics
such as credit quality, issue size, and maturity - aiming for higher risk-adjusted performance at the index level. Additionally, exposure
is balanced across maturity buckets to ensure the index’s overall duration is similar to traditional indices.
The
index is rebalanced monthly. Fidelity Product Services LLC (FPS) is the index provider. FPS is an affiliated person of the Adviser. |
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The
Adviser may use statistical sampling techniques to attempt to replicate the returns of the index using a smaller number of securities.
Statistical sampling techniques attempt to match the investment characteristics of the index and the fund by taking into account such
factors as duration, maturity, interest rate sensitivity, security structure, and credit quality. |
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Same
principal strategy. |
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The
fund may not track the index because differences between the index and the fund’s portfolio can cause differences in performance.
In addition, expenses and transaction costs, the size and frequency of cash flows into and out of the fund, and differences between how
and when the fund and the index are valued can cause differences in performance. |
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Same
principal strategy. |
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For
a comparison of the principal risks associated with the funds’ principal investment strategies, please refer to the section entitled
“Comparison of Principal Risk Factors.”
The
funds have the same fundamental and non-fundamental investment policies and limitations.
For
more information about the funds’ investment objectives, strategies, policies, and limitations, please refer to the “Investment
Details” section of the funds’ Prospectuses, and to the “Investment Policies and Limitations” section of the funds’
Statements of Additional Information, each of which is incorporated herein by reference.
Following
the Reorganization, the combined fund will be managed in accordance with the investment objective, strategies, policies, and limitations
of the Acquiring Fund.
How
do the funds’ management and distribution arrangements compare?
The
following summarizes the management and distribution arrangements of the Acquired Fund and the Acquiring Fund:
Management
of the Funds
The
introductory section to this Information Statement provides the principal business address of FMR, each fund’s investment adviser,
and FMR UK, FMR H.K., and FMR Japan, sub-advisers to the funds.
As
the manager, FMR has overall responsibility for directing the funds’ investments and handling their business affairs. As of December
31, 2023, FMR had approximately $3.9 trillion in discretionary assets under management, and approximately $4.9 trillion when combined
with all of its affiliates’ assets under management.
FMR
and each of the sub-advisers will continue serving as manager or sub-adviser of the combined fund after the Reorganization.
Brandon
Bettencourt is Co-Portfolio Manager of the Acquired Fund, which he has managed since 2019. He also manages other funds. Since joining
Fidelity Investments in 2008, Mr. Bettencourt has worked as a research associate, portfolio analyst, and portfolio manager.
Mark
Lande is Co-Portfolio Manager of the Acquired Fund, which he has managed since 2024. He also manages other funds. Since joining Fidelity
Investments in 2011, Mr. Lande has worked as a quantitative analyst and portfolio manager.
Richard
Munclinger is Co-Portfolio Manager of the Acquired Fund, which he has managed since 2020. He also manages other funds. Since joining Fidelity
Investments in 2016, Mr. Munclinger has worked as a quantitative analyst and portfolio manager.
The
portfolio management team of the Acquiring Fund is the same as that of the Acquired Fund.
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For
information about the compensation of, any other accounts managed by, and any fund shares held by a fund’s portfolio manager(s),
please refer to the “Management Contracts” section of each fund’s Statement of Additional Information, which are incorporated
herein by reference.
Each
fund has entered into a management contract with FMR, pursuant to which FMR furnishes investment
advisory and other services.
The
Acquired Fund and the Acquiring Fund each pay a management fee to the Adviser. The management fees are calculated and paid to the Adviser
every month.
The
Adviser pays all of the other expenses of the Acquired Fund and the Acquiring Fund with limited exceptions.
The
annual management fee rate, as a percentage of each fund’s average net assets, is 0.07% for the Acquired Fund and 0.05% for the
Acquiring Fund.
The
basis for the Board of Trustees approving the management contract and sub-advisory agreements for the Acquired Fund is available in the
fund’s semi-annual report for the fiscal period ended December 31, 2023, and in the fund’s annual report for the fiscal
period ended June 30, 2024.
The
basis for the Board of Trustees approving the management contract and sub-advisory agreements for the Acquiring Fund will be included
in the fund’s Form N-CSR report for the fiscal period ending June 30, 2025, when available.
For
more information about fund management, please refer to the “Fund Management” section of the funds’ Prospectuses, and
to the “Control of Investment Adviser” and “Management Contracts” sections of the funds’ Statements of Additional
Information, each of which is incorporated herein by reference.
Expense
Arrangements
For
more information about the funds’ fees and operating expenses, please refer to the funds’ Prospectuses, each of which is incorporated
herein by reference, and to the “Annual Operating Expenses” below.
Distribution
of Fund Shares
Each
fund has adopted a Distribution and Service Plan pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (1940 Act) that recognizes that the Adviser may use its management fee revenues, as well as its past profits or its
resources from any other source, to pay FDC for expenses incurred in connection with providing services intended to result in the sale
of fund shares and/or shareholder support services. The Adviser, directly or through FDC, may pay significant amounts to intermediaries
that provide those services. Currently, the Board of Trustees of each fund has authorized such payments for shares of each fund.
The
Distribution and Service Plan for the Acquiring Fund is substantially the same as the Distribution and Service Plan for the Acquired Fund.
For
more information about fund distribution, please refer to the “Fund Distribution” section of the funds’ Prospectuses
and to the “Distribution Services” section of the funds’ Statements of Additional Information, each of which is incorporated
herein by reference.
How
do the funds’ fees and operating expenses compare, and what are the combined fund’s fees and operating expenses estimated
to be following the Reorganization?
The
following tables allow you to compare the fees and expenses of each fund and to analyze the pro forma estimated fees and expenses of the
combined fund.
Annual
Operating Expenses
The
following table shows the fees and expenses of the Acquired Fund for the 12 months ended June 30, 2024, and the pro forma estimated fees
and expenses of the combined fund based on the same time period after giving effect to the Reorganization. Annual operating expenses are
paid by each fund. You may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples below.
As
shown below, the Reorganization is expected to result in lower total annual operating expenses for shareholders of the Acquired Fund.
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Shareholder
fees
(fees
paid directly from your investment)
None
Annual
Operating Expenses
(expenses
that you pay each year as a % of the value of your investment)
|
|
|
|
|
|
|
|
|
Management
fee |
|
|
0.07% |
|
|
0.05%
|
|
Distribution
and/or Service (12b-1) fees |
|
|
None |
|
|
None
|
|
Other
expenses |
|
|
0.00% |
|
|
0.00%
|
|
Total
annual operating expenses |
|
|
0.07% |
|
|
0.05% |
|
|
|
|
|
|
|
|
Examples
of Effect of Fund Expenses
The
following table illustrates the expenses on a hypothetical $10,000 investment in each fund under the current and pro forma (combined fund)
expenses calculated at the rates stated above, assuming a 5% annual return after giving effect to the Reorganization. The table illustrates
how much a shareholder would pay in total expenses if the shareholder sells all of his or her shares at the end of each time period indicated.
|
|
|
|
|
|
|
|
|
1
year |
|
|
$7 |
|
|
$5
|
|
3
years |
|
|
$23 |
|
|
$16
|
|
5
years |
|
|
$40 |
|
|
$28
|
|
10
years |
|
|
$90 |
|
|
$64 |
|
|
|
|
|
|
|
|
These
examples assume that all dividends and other distributions are reinvested and that the percentage amounts listed under Annual Operating
Expenses remain the same in the years shown. These examples illustrate the effect of expenses, but are not meant to suggest actual or
expected expenses, which may vary. The assumed return of 5% is not a prediction of, and does not represent, actual or expected performance
of any fund.
Do
the procedures for purchasing and redeeming shares of the funds differ?
The
Acquired Fund and the Acquiring Fund have different procedures for purchasing and redeeming shares, which are summarized below.
Acquired
Fund
In
connection with the Reorganization, effective the close of business on February 18, 2025, new positions in the Acquired Fund may
no longer be opened. Existing shareholders may continue to hold their shares and purchase additional shares through the reinvestment of
dividend and capital gain distributions until the Reorganization takes place. Shareholders of the Acquired Fund may redeem shares of the
fund through April 3, 2025.
An
investor may purchase shares of the Acquired Fund directly from the Acquired Fund through the Distributor or through a financial intermediary.
For
more information about the procedures for purchasing and redeeming the Acquired Fund’s shares, please refer to the “Additional
Information about the Purchase and Sale of Shares” section of the Acquired Fund’s Prospectus, and to the “Buying, Selling,
and Exchanging Information” section of the Acquired Fund’s Statement of Additional Information, each of which is incorporated
herein by reference.
Acquiring
Fund
Shares
of the Acquiring Fund are listed and traded on an exchange, and individual fund shares may only be bought and sold in the secondary market
through a broker. The Acquiring Fund does not impose any minimum investment for shares of the Acquiring Fund purchased on an exchange.
These transactions are made at market prices that may vary throughout the day and may be greater than the Acquiring Fund’s
NAV (premium) or less than the Acquiring Fund’s NAV (discount). As a result, you may pay more than NAV when you
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purchase
shares, and receive less than NAV when you sell shares, in the secondary market. If you buy or sell shares in the secondary market, you
will generally incur customary brokerage commissions and charges. Due to such commissions and charges, frequent trading may detract significantly
from investment returns.
The
Acquiring Fund is designed to offer investors an investment that can be bought and sold frequently in the secondary market without impact
on the fund, and such trading activity is critical to ensuring that the market price of fund shares remains at or close to NAV. Accordingly,
the Board of Trustees of the Acquiring Fund has not adopted policies and procedures designed to discourage excessive or short-term trading
by these investors.
Shares
can be purchased and redeemed directly from the Acquiring Fund at NAV only by Authorized Participants in large increments called “Creation
Units.” The Acquiring Fund accommodates frequent purchases and redemptions of Creation Units by Authorized Participants and does
not place a limit on purchases or redemptions of Creation Units by these investors. The Acquiring Fund reserves the right but does not
have the obligation, to reject any purchase transaction at any time. In addition, the Acquiring Fund reserves the right to impose restrictions
on disruptive, excessive, or short-term trading.
For
more information about the procedures for purchasing and redeeming shares of the Acquiring Fund, please refer to the “Additional
Information about the Purchase and Sale of Shares” section of the Acquiring Fund’s Prospectus, and to the “Buying and
Selling Information” section of the Acquiring Fund’s Statement of Additional Information, each of which is incorporated herein
by reference.
Do
the funds’ exchange privileges differ?
The
Acquired Fund and the Acquiring Fund have different exchange privileges.
Acquired
Fund shareholders have the privilege of exchanging shares for shares of other Fidelity® funds.
Shareholders
of the Acquiring Fund do not have the privilege of exchanging shares for shares of other Fidelity® funds because shares
are listed and traded on an exchange, and individual fund shares may only be bought and sold in the secondary market through a broker.
For
more information about exchange privileges of the Acquired Fund, please refer to the “Additional Information about the Purchase
and Sale of Shares” section of the Acquired Fund’s Prospectus, and to the “Buying, Selling, and Exchanging Information”
section of the Acquired Fund’s Statement of Additional Information, each of which is incorporated herein by reference.
Do
the funds’ dividend and distribution policies differ?
The
Acquired Fund and the Acquiring Fund have different dividend and distribution policies.
The
Acquired Fund normally declares dividends daily and pays monthly and pays capital gain distributions in August and December. The Acquiring
Fund normally declares and pays dividends monthly and pays capital gain distributions in December.
The
dividend and distribution policies of the combined fund will be the same as the dividend and distribution policies of the Acquiring Fund.
On
or before the Closing Date, the Acquired Fund may declare additional dividends or other distributions of its net income and/or net realized
capital gains.
For
more information about the funds’ dividend and distribution policies, please refer to the “Dividends and Capital Gain Distributions”
section of the funds’ Prospectuses and the “Distributions and Taxes” section of the funds’ Statements of Additional
Information, each of which is incorporated herein by reference.
Who
bears the expenses associated with the Reorganization?
FMR
will bear the one-time administrative costs associated with the Reorganization. Any transaction costs associated with portfolio adjustments
to the Acquired Fund due to the Reorganization that occur prior to the Closing Date will be borne by the Acquired Fund. Any transaction
costs associated with portfolio adjustments to the Acquiring Fund due to the Reorganization that occur after the Closing Date and any
additional merger-related costs attributable to the Acquiring Fund that occur after the Closing Date will be borne by the Acquiring Fund.
For
more information, please refer to the section entitled “Additional Information about the Funds – Expenses.”
COMPARISON
OF PRINCIPAL RISK FACTORS
The
following is a summary of the principal risks associated with an investment in the funds. Because the funds have identical investment
objectives and principal investment strategies, except that the Acquiring Fund will be managed to a new proprietary index, as described
above, the funds are subject to substantially similar principal investment risks, except that the Acquiring Fund is subject to additional
ETF-related risks and a rules-based proprietary index risk.
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Risks
Associated with an Investment in the Funds
Many
factors affect each fund’s performance. Developments that disrupt global economies and financial markets, such as pandemics and
epidemics, may magnify factors that affect a fund’s performance. A fund’s share price and yield change daily based on changes
in market conditions and interest rates and in response to other economic, political, or financial developments. A fund’s reaction
to these developments will be affected by the types and maturities of securities in which the fund invests, the financial condition, industry
and economic sector, and geographic location of an issuer, and the fund’s level of investment in the securities of that issuer.
Unlike individual debt securities, which typically pay principal at maturity, the value of an investment in a fund will fluctuate. When
you sell your shares they may be worth more or less than what you paid for them, which means that you could lose money by investing in
a fund.
The
following factors can significantly affect a fund’s performance:
|
• |
Municipal
Market Volatility. Municipal securities can be significantly affected by political changes as well as uncertainties in the municipal
market related to taxation, legislative changes, or the rights of municipal security holders. Because many municipal securities are issued
to finance similar projects, especially those relating to education, health care, transportation, and utilities, conditions in those sectors
can affect the overall municipal market. Budgetary constraints of local, state, and federal governments upon which the issuers may be
relying for funding may also impact municipal securities. In addition, changes in the financial condition of an individual municipal insurer
can affect the overall municipal market, and market conditions may directly impact the liquidity and valuation of municipal securities.
|
|
• |
Interest
Rate Changes. Debt securities, including money market securities, have varying levels of sensitivity to changes in interest rates.
In general, the price of a debt security can fall when interest rates rise and can rise when interest rates fall. Securities with longer
maturities can be more sensitive to interest rate changes, meaning the longer the maturity of a security, the greater the impact a change
in interest rates could have on the security’s price. Short-term and long-term interest rates do not necessarily move in the same
amount or the same direction. Short-term securities tend to react to changes in short-term interest rates, and long-term securities tend
to react to changes in long-term interest rates. Securities with floating interest rates can be less sensitive to interest rate changes,
but may decline in value if their interest rates do not rise as much as interest rates in general. Securities whose payment at maturity
is based on the movement of all or part of an index and inflation-protected debt securities may react differently from other types of
debt securities. In market environments where interest rates are rising, issuers may be less willing or able to make principal and/or
interest payments on securities when due. Although the transition process away from certain benchmark rates, including London Interbank
Offered Rate (LIBOR) (an indicative measure of the average interest rate at which major global banks could borrow from one another), has
become increasingly well-defined, any potential effects of the transition away from LIBOR and other benchmark rates on financial markets,
a fund or the financial instruments in which a fund invests can be difficult to ascertain and may adversely impact a fund’s performance.
|
|
• |
Prepayment.
Many types of debt securities are subject to prepayment risk. Prepayment risk occurs when the issuer of a security can repay principal
prior to the security’s maturity. Securities subject to prepayment can offer less potential for gains during a declining interest
rate environment and similar or greater potential for loss in a rising interest rate environment. In addition, the potential impact of
prepayment features on the price of a debt security can be difficult to predict and result in greater volatility. |
|
• |
Issuer-Specific
Changes. Changes in the financial condition of an issuer or counterparty, changes in specific economic or political conditions
that affect a particular type of security or issuer, and changes in general economic or political conditions can increase the risk of
default by an issuer or counterparty, which can affect a security’s or instrument’s credit quality or value. Entities providing
credit support or a maturity-shortening structure also can be affected by these types of changes, and if the structure of a security fails
to function as intended, the security could decline in value. Municipal securities backed by current or anticipated revenues from a specific
project or specific assets can be negatively affected by the discontinuance of the taxation supporting the project or assets or the inability
to collect revenues for the project or from the assets. If the Internal Revenue Service (IRS) determines an issuer of a municipal security
has not complied with applicable tax requirements, interest from the security could become taxable and the security could decline significantly
in value. |
Generally,
the funds purchase municipal securities whose interest, in the opinion of bond counsel, is free from federal income tax. Neither the Adviser
nor the funds guarantees that this opinion is correct, and there is no assurance that the IRS will agree with bond counsel’s opinion.
Issuers or other parties generally enter into covenants requiring continuing compliance with federal tax requirements to preserve the
tax-free status of interest payments over the life of the security. If at any time the covenants are not complied with, or if the IRS
otherwise determines that the issuer did not comply with relevant tax requirements, interest payments from a security could become federally
taxable, possibly retroactively to the date the security was issued. For certain types of structured securities, the tax status of the
pass-through of tax-free income may also be based on the federal tax treatment of the structure.
|
• |
Passive
Management Risk. An index fund is managed with a passive investment strategy, attempting to track the performance of an unmanaged
index of securities, regardless of the current or projected performance of the fund’s index or of the actual securities included
in the index. This differs from an actively managed fund, which typically seeks to outperform a benchmark index. As a |
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result,
an index fund’s performance could be lower than actively managed funds that may shift their portfolio assets to take advantage of
market opportunities or lessen the impact of a market decline or a decline in the value of one or more issuers. The structure and composition
of an index fund’s index will affect the performance, volatility, and risk of the index and, consequently, the performance, volatility,
and risk of the fund.
Similar
Risks Associated with an Investment in the Funds
The
following Acquired Fund principal risk is similar to the Acquiring Fund principal risk:
Acquired
Fund
|
• |
Correlation
to Index. The performance of the fund and its index may vary somewhat due to factors such as fees and expenses of the fund,
transaction costs, imperfect correlation between the fund’s securities and those in its index, timing differences associated with
additions to and deletions from its index, and changes in the component securities. In addition, the fund may not be able to invest in
certain securities in its index or invest in them in the exact proportions in which they are represented in the index due to regulatory
restrictions. The fund may not be fully invested at times, either as a result of cash flows into the fund or as a result of reserves of
cash held by the fund to meet redemptions. The use of sampling techniques or futures or other derivative positions may affect the fund’s
ability to achieve close correlation with its index. Errors in the construction or calculation of the index may occur from time to time
and may not be identified and corrected for some period of time, which may have an adverse impact on the fund and its shareholders. |
Acquiring
Fund
|
• |
Correlation
to Index. The performance of the fund and its index may vary somewhat due to factors such as fees and expenses of the fund,
transaction costs, imperfect correlation between the fund’s securities and those in the index, timing differences associated with
additions to and deletions from the index, and changes in the component securities. The fund may not be fully invested at times as a result
of cash flows into the fund. The use of sampling techniques or futures or other derivative positions may affect the fund’s ability
to achieve close correlation with the index. In addition, the fund may not be able to invest in certain securities included in the index
or invest in them in the exact proportions in which they are represented in the index due to regulatory restrictions. Errors in the construction
or calculation of the index may occur from time to time and may not be identified and corrected for some period of time, which may have
an adverse impact on the fund and its shareholders. |
Additional
Risks Associated with an Investment in the Acquiring Fund
The
Acquiring Fund is subject to the following principal risks, which are not principal risks generally associated with an investment in the
Acquired Fund:
|
• |
Fluctuation
of Net Asset Value and Share Price. The NAV of the fund’s shares will generally fluctuate with changes in the market value
of the fund’s holdings. The fund’s shares are listed on an exchange and can be bought and sold in the secondary market at
market prices. The market prices of shares will fluctuate in accordance with changes in NAV and supply and demand on the listing exchange.
Although a share’s market price is expected to approximate its NAV, it is possible that the market price and NAV will vary significantly.
As a result, you may sustain losses if you pay more than the shares’ NAV when you purchase shares, or receive less than the shares’
NAV when you sell shares, in the secondary market. During periods of disruptions to creations and redemptions, the existence of extreme
market volatility, or lack of an active trading market for the fund’s shares, the market price of fund shares is more likely to
differ significantly from the fund’s NAV. During such periods, you may be unable to sell your shares or may incur significant losses
if you sell your shares. There are various methods by which investors can purchase and sell shares and various orders that may be placed.
Investors should consult their financial intermediary before purchasing or selling shares of a fund. Disruptions at market makers, Authorized
Participants or market participants may also result in significant differences between the market price of the fund’s shares and
the fund’s NAV. In addition, in stressed market conditions or periods of market disruption or volatility, the market for shares
may become less liquid in response to deteriorating liquidity in the markets for the fund’s underlying portfolio holdings. |
The
market price of shares during the trading day, like the price of any exchange-traded security, includes a bid-ask spread charged by the
exchange specialist, market makers, or other participants that trade the particular security. In times of severe market disruption or
volatility, the bid-ask spread can increase significantly. At those times, shares are most likely to be traded at a discount to NAV, and
the discount is likely to be greatest when the price of shares is falling fastest, which may be the time that you most want to sell your
shares. Securities held by a fund may be traded in markets that close at a different time than the listing exchange. During the time when
the listing exchange is open but after the applicable market closing, fixing or settlement times, bid-ask spreads and the resulting premium
or discount to the fund’s NAV may widen. The Adviser expects that, under normal market conditions, large discounts or premiums to
NAV will not be sustained in the long term because of arbitrage opportunities.
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|
• |
Trading
Issues. Although shares are listed on an exchange, there can be no assurance that an active trading market or requirements to remain
listed will be met or maintained. Only an Authorized Participant may engage in creation or redemption transactions directly with the fund.
The fund has a limited number of intermediaries that act as Authorized Participants. There are no obligations of market makers to make
a market in the fund’s shares or of Authorized Participants to submit purchase or redemption orders for Creation Units. Decisions
by market makers or Authorized Participants to reduce their role with respect to market making or creation and redemption activities during
times of market stress, or a decline in the number of Authorized Participants due to decisions to exit the business, bankruptcy, or other
factors, could inhibit the effectiveness of the arbitrage process in maintaining the relationship between the underlying value of the
fund’s portfolio securities and the market price of fund shares. To the extent no other Authorized Participants are able to step
forward to create or redeem, shares may trade at a discount to NAV and possibly face delisting. In addition, trading of shares in the
secondary market may be halted, for example, due to activation of marketwide “circuit breakers.” If trading halts or an unanticipated
early closing of the listing exchange occurs, a shareholder may be unable to purchase or sell shares of the fund. FDC, the distributor
of the fund’s shares, does not maintain a secondary market in the shares. |
If
the fund’s shares are delisted from the listing exchange, the Adviser may seek to list the fund shares on another market, merge
the fund with another exchange-traded fund or traditional mutual fund, or redeem the fund shares at NAV.
Shares
of the fund, similar to shares of other issuers listed on a stock exchange, may be sold short and are therefore subject to the risk of
increased volatility and price decreases associated with being sold short.
|
• |
Cash
Transactions Risk. Unlike certain ETFs, the fund may effect some or all creations and redemptions using cash, rather than in-kind
securities. Therefore, it may be required to sell portfolio securities and recognize gains on such sales that the fund might not have
recognized if it were to distribute portfolio securities in-kind. As a result, an investment in the fund may be less tax-efficient than
an investment in an ETF that distributes portfolio securities entirely in-kind. The use of cash creations and redemptions may also cause
the fund’s shares to trade in the market at greater bid-ask spreads or greater premiums or discounts to the fund’s NAV. Furthermore,
cash creation and redemption transactions may result in certain brokerage, tax, foreign exchange, execution, price movement and other
costs and expenses related to the execution of trades resulting from such transactions. To the extent that the maximum additional charge
for creation or redemption transactions is insufficient to cover these costs and expenses, the fund’s performance could be negatively
impacted. |
|
• |
Rules-Based
Strategy Risk. Although the index uses a rules-based proprietary index methodology, there is no guarantee that this methodology
will be successful. |
For
more information about the principal risks associated with an investment in the funds, please refer to the “Investment Details”
section of the funds’ Prospectuses, and to the “Investment Policies and Limitations” section of the funds’ Statements
of Additional Information, each of which is incorporated herein by reference.
How
do the funds compare in terms of their performance?
The
Acquiring Fund is a newly formed “shell” fund that has not yet commenced operations and, therefore, will have no performance
history prior to the Reorganization. The Acquiring Fund has been organized solely in connection with the Reorganization to acquire all
of the assets and liabilities of the Acquired Fund and continue the business of the Acquired Fund. Therefore, after the Reorganization,
the Acquired Fund will remain the “accounting survivor.” This means that the Acquiring Fund will continue to show the historical
investment performance and returns of the Acquired Fund (even after liquidation of the Acquired Fund).
The
historical performance of the Acquired Fund, as it is to be adopted by the Acquiring Fund, is included in the Acquiring Fund’s Prospectus,
which is incorporated herein by reference.
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AGREEMENT
AND PLAN OF REORGANIZATION AND LIQUIDATION BETWEEN FIDELITY® MUNICIPAL BOND INDEX FUND AND FIDELITY® SYSTEMATIC
MUNICIPAL BOND INDEX ETF.
Agreement
and Plan of Reorganization and Liquidation
The
terms and conditions under which the transaction may be consummated are set forth in the Agreement. Significant provisions of the Agreement
are summarized below; however, this summary is qualified in its entirety by reference to the Agreement, a copy of which is attached as
Exhibit 1 to this Information Statement.
The
Agreement contemplates (a) the Acquiring Fund acquiring as of the Closing Date all of the assets of the Acquired Fund (excluding assets
having a value equal to cash to be distributed in accordance with the Agreement) in exchange for shares of the Acquired Fund and the assumption
by the Acquiring Fund of the Acquired Fund’s liabilities; (b) the distribution of shares of the Acquiring Fund to the shareholders
of the Acquired Fund as provided for in the Agreement (shareholders may receive cash in lieu of fractional Acquiring Fund shares); and
(c) the distribution of cash to shareholders of the Acquired Fund who do not hold Acquired Fund shares through a brokerage account that
can accept Acquiring Fund shares (and for which no account has been established to receive such shares).
The
value of Acquired Fund assets to be acquired by the Acquiring Fund and the amount of its liabilities to be assumed by the Acquiring Fund
will be determined as of the close of business of the NYSE on the Closing Date, using the valuation procedures set forth in the Acquired
Fund’s then-current Prospectus and Statement of Additional Information. The net asset value of a share of the Acquiring Fund will
be determined as of the same time using the valuation procedures set forth in the Acquired Fund’s then-current Prospectus and Statement
of Additional Information.
As
of the Closing Date, the Acquiring Fund will deliver to the Acquired Fund, and the Acquired Fund will distribute to its shareholders of
record, shares of the Acquiring Fund and, in some cases, cash so that each Acquired Fund shareholder will receive the number of shares
of the Acquiring Fund, and, in some cases, cash equal in value to the aggregate net asset value of shares of the Acquired Fund held by
such shareholder on the Closing Date; the Acquired Fund will be liquidated as soon as practicable thereafter. Each Acquired Fund shareholder’s
account shall be credited with the respective pro rata number of shares of the Acquiring Fund
due that shareholder (shareholders may receive cash in lieu of fractional shares, which may be a taxable event). Shareholders of the Acquired
Fund who do not hold Acquired Fund shares through a brokerage account that can accept Acquiring Fund shares (and for which no account
has been established to receive such shares) will receive cash in connection with the Reorganization, and that cash payment may be a taxable
event. Capital gains from securities sales by the Acquired Fund prior to the Reorganization may be distributed by the Acquired Fund prior
to the Reorganization or by the Acquiring Fund after the Reorganization.
Any
transfer taxes payable upon issuance of shares of the Acquiring Fund in a name other than that of the registered holder of the shares
on the books of the Acquired Fund as of that time shall be paid by the person to whom such shares are to be issued as a condition of such
transfer. Any reporting responsibility of the Acquired Fund is and will continue to be its responsibility up to and including the Closing
Date and such later date on which the Acquired Fund is liquidated.
FMR
will bear the one-time administrative costs associated with the Reorganization, including professional fees, expenses associated with
the filing of registration statements, and the cost of printing and mailing prospectuses and the Information Statement.
The
consummation of the Reorganization is subject to a number of conditions set forth in the Agreement, some of which may be waived by a fund.
The requirement to receive the tax opinion discussed under “Federal Income Tax Considerations” below cannot be waived by the
Acquired Fund or the Acquiring Fund. The Agreement may be amended in any mutually agreeable manner.
Reasons
for the Reorganization
In
determining whether to approve the Reorganization, each fund’s Board of Trustees (the Board) considered a number of factors, including
the following:
|
(1)
|
the investment objectives,
strategies, and policies of the funds, including the lack of changes to the investment process for each fund; |
|
(2)
|
the fees and expenses and
the relative expense ratios of the funds, including the lower expense ratios that would result for shareholders as a result of the Reorganization;
|
|
(3)
|
the differences between the
mutual fund and ETF structures; |
|
(4)
|
the potential benefits of
the Reorganization to shareholders of the funds, including potential benefits associated with the ETF structure; |
|
(5)
|
the costs to be incurred
by each fund as a result of the Reorganization and the fact that minimal to no transaction costs were anticipated; |
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|
(6)
|
the tax consequences of the
Reorganization; and |
|
(7)
|
the potential benefit of the
Reorganization to FMR and its affiliates. |
FMR
proposed the Reorganization to the Board at a meeting of the Board held on September 19, 2024. In proposing the Reorganization, FMR
advised the Board that the Reorganization would allow Acquired Fund shareholders to benefit from lower expenses, intraday trading, and
full daily holdings transparency. The Reorganization will qualify as a tax-free reorganization for federal income tax purposes (except
with respect to cash received by the shareholders, if any).
Each
fund’s Board carefully reviewed the proposal and determined that the Reorganization is in the best interests of the shareholders
of each fund and that the Reorganization will not result in a dilution of the interests of the shareholders of either fund.
Description
of the Securities to be Issued
Holders
of the Acquired Fund will receive shares of the Acquiring Fund. For the avoidance of doubt, the Acquiring Fund shall not issue fractional
shares, and Acquired Fund shareholders may receive cash in connection with the Reorganization in lieu of fractional Acquiring Fund shares.
The
Acquiring Fund is a series of Fidelity Merrimack Street Trust. The Trustees of Fidelity Merrimack Street Trust are authorized to issue
an unlimited number of shares of beneficial interest of separate series. Each share of the Acquiring Fund represents an equal proportionate
interest with each other share of the fund, and each such share of the Acquiring Fund is entitled to equal voting, dividend, liquidation,
and redemption rights. Each shareholder of the Acquiring Fund is entitled to one vote for each dollar of net asset value of the fund that
shareholder owns, with fractional dollar amounts entitled to a proportionate fractional vote. Shares of the Acquiring Fund have no preemptive
or conversion rights. Shares are fully paid and nonassessable, except as set forth in the “Description of the Trust – Shareholder
Liability” section of the Acquiring Fund’s Statement of Additional Information, which is incorporated herein by reference.
Fidelity
Merrimack Street Trust does not hold annual meetings of shareholders. There will normally be no meetings of shareholders for the purpose
of electing Trustees unless less than a majority of the Trustees holding office have been elected by shareholders, at which time the Trustees
then in office will call a shareholder meeting for the election of Trustees. Under the 1940 Act, shareholders of record of at least two-thirds
of the outstanding shares of an investment company may remove a Trustee by votes cast in person or by proxy at a meeting called for that
purpose. The Trustees are required to call a meeting of shareholders for the purpose of voting upon the question of removal of any Trustee
when requested in writing to do so by the shareholders of record holding at least 10% of the trust’s outstanding shares.
For
more information about voting rights and dividend rights, please refer to the “Description of the Trust – Voting Rights”
and the “Distributions and Taxes” sections, respectively, of the Acquiring Fund’s Statement of Additional Information,
which is incorporated herein by reference.
Federal
Income Tax Considerations
The
following is a general summary of some of the important U.S. federal income tax consequences of the Reorganization and is based upon the
current provisions of the Internal Revenue Code of 1986, as amended (the Code), the existing U.S. Treasury Regulations thereunder, current
administrative rulings of the U.S. Internal Revenue Service (IRS) and published judicial decisions, all of which are subject to change,
possibly with retroactive effect. These considerations are general in nature and apply with respect to Acquired Fund shareholders that
have their Acquired Fund shares exchanged for Acquiring Fund shares. Individual shareholders should consult their own tax advisors as
to the federal, state, local, and foreign tax considerations applicable to them and their individual circumstances. These same considerations
generally do not apply to shareholders whose investment is liquidated and the cash value of whose Acquired Fund shares is returned to
them, shareholders who hold their Acquired Fund shares through an account that cannot hold the Acquiring Fund shares at the time of the
Reorganization, or shareholders whose Acquired Fund shares are transferred by their broker or financial intermediary to a different investment
option because such shareholders did not hold their Acquired Fund shares through an account that can accept shares of the Acquiring Fund
on the Closing Date of the Reorganization.
The
exchange of the Acquired Fund’s assets for the Acquiring Fund’s shares and the assumption of the liabilities of the Acquired
Fund by the Acquiring Fund followed by the distribution of Acquiring Fund shares to the Acquired Fund shareholders and cash in lieu of
fractional shares in exchange for their Acquired Fund shares in complete liquidation and termination of the Acquired Fund is intended
to qualify for federal income tax purposes as a tax-free reorganization under the Code. With respect to the Reorganization, the participating
funds will receive an opinion from Dechert LLP, counsel to the funds, substantially to the effect that:
(i)
The acquisition by the Acquiring Fund of substantially all of the assets of the Acquired Fund in exchange solely for Acquiring Fund shares
and the assumption by Acquiring Fund of all liabilities of the Acquired Fund followed by the distribution of Acquiring Fund shares and
cash in lieu of fractional shares to the Acquired Fund shareholders in exchange for their Acquired Fund shares in complete liquidation
and termination of the Acquired Fund will constitute a tax-free reorganization under Section 368(a)(1)(F) of the Code;
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(ii)
The Acquired Fund will recognize no gain or loss upon the transfer of substantially all of its assets to the Acquiring Fund in exchange
solely for Acquiring Fund shares and the assumption by Acquiring Fund of all liabilities of the Acquired Fund;
(iii)
The Acquired Fund will recognize no gain or loss upon the distribution to its shareholders of the Acquiring Fund shares received by the
Acquired Fund in the Reorganization;
(iv)
The Acquiring Fund will recognize no gain or loss upon the receipt of the assets of the Acquired Fund in exchange solely for Acquiring
Fund shares and the assumption of all liabilities of the Acquired Fund;
(v)
The adjusted basis to the Acquiring Fund of the assets of the Acquired Fund received by the Acquiring Fund in the Reorganization will
be the same as the adjusted basis of those assets in the hands of the Acquired Fund immediately before the exchange;
(vi)
The Acquiring Fund’s holding periods with respect to the assets of the Acquired Fund that the Acquiring Fund acquires in the Reorganization
will include the respective periods for which those assets were held by the Acquired Fund (except where investment activities of the Acquiring
Fund have the effect of reducing or eliminating a holding period with respect to an asset);
(vii)
Acquired Fund shareholders will recognize no gain or loss upon receiving the Acquiring Fund shares in exchange solely for Acquired Fund
shares (except with respect to cash received);
(viii)
The aggregate basis of the Acquiring Fund shares received by an Acquired Fund shareholder in the Reorganization will be the same as the
aggregate basis of the Acquired Fund shares surrendered by the Acquired Fund shareholder in exchange therefor (reduced by any amount of
tax basis allocable to shares for which cash is received);
(ix)
An Acquired Fund shareholder’s holding period for the Acquiring Fund shares received by the Acquired Fund shareholder in the Reorganization
will include the holding period during which the Acquired Fund shareholder held Acquired Fund shares surrendered in exchange therefor,
provided that the Acquired Fund shareholder held such shares as a capital asset on the date of the Reorganization; and
(x)
The Reorganization will not result in the termination of the Acquired Fund’s taxable year, and the Acquired Fund’s tax attributes
enumerated in Section 381(c) of the Code will be taken into account by the Acquiring Fund as if there had been no Reorganization.
Notwithstanding
the foregoing, no opinion will be expressed as to the tax consequences of the Reorganization with respect to contracts or securities on
which gain or loss is recognized upon the transfer of such contracts or securities regardless of whether such transfer would otherwise
be a nonrecognition transaction under the Code, as to Acquired Fund shareholders whose investment is liquidated and the cash value of
whose Acquired Fund shares is returned to them, as to Acquired Fund shareholders who hold their Acquired Fund shares through an account
that cannot hold the Acquiring Fund shares at the time of the Reorganization, or as to Acquired Fund shareholders whose Acquired Fund
shares are transferred by their broker or financial intermediary to a different investment option because such shareholders did not hold
their Acquired Fund shares through an account that can accept shares of the Acquiring Fund on the Closing Date of the Reorganization.
Neither fund has requested or will request an advance ruling from the IRS as to the U.S. federal income tax consequences of the Reorganization.
The
opinion is not binding on the IRS or the courts and is not a guarantee that the tax consequences of the Reorganization will be as described
above. If the Reorganization was consummated but the IRS or the courts were to determine that the Reorganization did not qualify as a
tax-free reorganization under the Code and thus were taxable, then the Acquired Fund would recognize gain or loss on the transfer of its
assets to the Acquiring Fund, and each shareholder of the Acquired Fund that held shares in a taxable account would recognize a taxable
gain or loss equal to the difference between its tax basis in the Acquired Fund shares and the fair market value of the shares of the
Acquiring Fund it received.
The
tax year of the Acquired Fund is expected to continue with the Acquiring Fund, and the capital gains, if any, resulting from portfolio
turnover prior to the Reorganization will be carried over to the Acquiring Fund unless distributed prior to the Reorganization. The Acquired
Fund may declare a distribution to shareholders prior to the Reorganization. If the Reorganization were to end the tax year of the Acquired
Fund (which is not the intended or expected plan as of the date of this Information Statement), it could accelerate distributions to shareholders
from the Acquired Fund for its short tax year ending on the Closing Date. If determined necessary by the Acquired Fund, the Acquired Fund
will declare a distribution to shareholders, which together with all previous distributions, will have the effect of distributing to shareholders
all or substantially all of its investment company taxable income (computed without regard to the deduction for dividends paid), net tax-exempt
income and net realized capital gains, if any, through the closing of the Reorganization. Any of the foregoing distributions, regardless
of whether distributed before or after the Reorganization, may be from net tax-exempt income to the extent available, from taxable income,
and/or from taxable net capital gains from securities sales by the Acquired Fund prior to the Reorganization.
Assuming
the Reorganization qualifies as a tax-free reorganization, as expected, the Acquiring Fund will succeed to the tax attributes of the Acquired
Fund upon the closing of the Reorganization, including any capital loss carryovers that could have been used by the Acquired Fund to offset
its future realized capital gains, if any, for federal income tax purposes. The capital loss carryovers of the Acquired Fund, if any,
will be available to offset future gains recognized by the Acquiring Fund (subject to the conditions and limitations under the
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Code).
Capital losses of the Acquired Fund may be carried forward indefinitely to offset future capital gains. However, the capital losses of
the Acquiring Fund, as the successor in interest to the Acquired Fund, may subsequently become subject to an annual limitation as a result
of ownership changes, if such occur.
The
foregoing description of the U.S. federal income tax consequences of the Reorganization applies generally to shareholders who are not
tax-exempt investors and does not take into account your particular facts and circumstances. Consult your own tax advisor about the effect
of state, local, foreign, and other tax laws because this discussion only relates to U.S. federal income tax laws.
Shareholders
of the Acquired Fund should consult their tax advisers regarding the effect, if any, of the Reorganization in light of their individual
circumstances. Because the foregoing discussion relates only to the federal income tax consequences of the Reorganization, those shareholders
also should consult their tax advisers as to state and local tax consequences, if any, of the Reorganization.
Forms
of Organization
The
Acquired Fund is a series of Fidelity Salem Street Trust, an open-end management investment company organized as a Massachusetts business
trust on September 5, 1984. The Acquiring Fund is a series of Fidelity Merrimack Street Trust, an open-end management investment company
organized as a Massachusetts business trust on November 15, 2012. The trusts are authorized to issue an unlimited number of shares
of beneficial interest. The Acquired Fund and the Acquiring Fund are governed by substantially similar Declarations of Trust and by-laws,
except that the Declaration of Trust for Fidelity Merrimack Street Trust specifically contemplates issuance and redemption of shares in
creation unit aggregations. Because the Acquiring Fund operates as an exchange-traded fund and issues and redeems shares in Creation Unit
aggregations, shareholders of the Acquiring Fund cannot purchase or redeem individual shares of the Acquiring Fund at NAV. Shares of the
Acquired Fund, on the other hand, can be purchased and redeemed directly from the Acquired Fund at NAV.
For
more information regarding shareholder rights, please refer to the “Description of the Trust” section of the funds’
Statements of Additional Information, each of which is incorporated herein by reference.
Capitalization
The
following table shows the capitalization of the Acquired Fund as of June 30, 2024, and on a pro forma combined basis (unaudited) as of
that date giving effect to the Reorganization. Pro forma numbers do not reflect any potential liquidation of shareholders associated with
the Reorganization or cash paid in lieu of fractional Acquiring Fund shares.
|
|
|
|
|
|
|
|
|
|
|
|
Fidelity®
Municipal Bond Index Fund |
|
|
$164,812,968 |
|
|
$18.41
|
|
|
8,951,133 |
|
Fidelity®
Systematic Municipal Bond Index ETFa |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
Fidelity®
Systematic Municipal Bond Index ETF (pro forma combined) |
|
|
$164,812,968 |
|
|
$18.41b |
|
|
8,951,133c |
|
|
|
|
|
|
|
|
|
|
|
|
a
|
Fidelity®
Systematic Municipal Bond Index ETF is expected to commence operations in April 2025. |
|
b
|
Fidelity®
Systematic Municipal Bond Index ETF is expected to launch at approximately $50.00 net asset value per share. |
|
c
|
Shares
have been adjusted to reflect what will be issued post-merger. |
The
table above assumes that the Reorganization occurred on June 30, 2024. The table is for information purposes only. No assurance can be
given as to how many Acquiring Fund shares will be received by shareholders of the Acquired Fund on the date that the Reorganization takes
place, and the foregoing should not be relied upon to reflect the number of shares of the Acquiring Fund that actually will be received
on or after that date.
Conclusion
The
Agreement and Plan of Reorganization and Liquidation was approved by the Board of Trustees of Fidelity Salem Street Trust at a meeting
held on September 19, 2024. The Board of Trustees determined that the Reorganization is in the best interests of shareholders of
the Acquired Fund and that the interests of existing shareholders of the fund would not be diluted as a result of the Reorganization.
In the event that the Reorganization does not occur, the Acquired Fund will continue to engage in business as a fund of a registered investment
company and the Board of Trustees of Fidelity Salem Street Trust may consider other proposals for the reorganization or liquidation of
the fund.
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ADDITIONAL
INFORMATION ABOUT THE FUNDS
The
Acquiring Fund is new and has no performance history as of the date of this Information Statement. The Acquiring Fund will adopt the financial
history, including the financial highlights, of the Acquired Fund following the Reorganization.
The
Acquired Fund’s financial highlights for the fiscal year ended June 30, 2024 (audited), are shown in the table below. The Acquired
Fund’s financial highlights should be read in conjunction with the financial statements audited by PricewaterhouseCoopers LLP, contained
in the fund’s annual report to shareholders, which is incorporated by reference into the Statement of Additional Information relating
to this Information Statement.
Financial
Highlights
Fidelity®
Municipal Bond Index Fund
|
|
|
|
|
|
Selected
Per-Share Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
asset value, beginning of period |
|
|
$18.32 |
|
|
$18.24 |
|
|
$20.39 |
|
|
$19.97 |
|
|
$20.00
|
|
Income
from Investment Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss)B,C |
|
|
.459 |
|
|
.402 |
|
|
.281 |
|
|
.309 |
|
|
.324
|
|
Net
realized and unrealized gain (loss) |
|
|
.082 |
|
|
.073 |
|
|
(2.152) |
|
|
.421 |
|
|
(.035)
|
|
Total
from investment operations |
|
|
.541 |
|
|
.475 |
|
|
(1.871) |
|
|
.730 |
|
|
.289
|
|
Distributions
from net investment income |
|
|
(.451) |
|
|
(.395) |
|
|
(.279) |
|
|
(.310) |
|
|
(.319)
|
|
Total
distributions |
|
|
(.451) |
|
|
(.395) |
|
|
(.279) |
|
|
(.310) |
|
|
(.319)
|
|
Net
asset value, end of period |
|
|
$18.41 |
|
|
$18.32 |
|
|
$18.24 |
|
|
$20.39 |
|
|
$19.97
|
|
Total
ReturnD,E |
|
|
3.01% |
|
|
2.64% |
|
|
(9.26)% |
|
|
3.68% |
|
|
1.46%
|
|
Ratios
to Average Net AssetsC,F,G |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
before reductions |
|
|
.07% |
|
|
.07% |
|
|
.07% |
|
|
.07% |
|
|
.07%H
|
|
Expenses
net of fee waivers, if any |
|
|
.07% |
|
|
.07% |
|
|
.07% |
|
|
.07%H |
|
|
.07%
|
|
Expenses
net of all reductions |
|
|
.07% |
|
|
.07% |
|
|
.07% |
|
|
.07% |
|
|
.07%H
|
|
Net
investment income (loss) |
|
|
2.52% |
|
|
2.21% |
|
|
1.43% |
|
|
1.53% |
|
|
1.67%H
|
|
Supplemental
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
|
|
$164,813 |
|
|
$155,890 |
|
|
$124,941 |
|
|
$106,786 |
|
|
$60,060
|
|
Portfolio
turnover rateI |
|
|
15% |
|
|
18% |
|
|
30% |
|
|
8% |
|
|
76%H |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A
|
For
the period July 11, 2019 (commencement of operations) through June 30, 2020. |
|
B
|
Calculated
based on average shares outstanding during the period. |
|
C
|
Net
investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds
(ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund’s net investment income (loss) ratio.
|
|
D
|
Total
returns for periods of less than one year are not annualized. |
|
E
|
Total
returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
|
|
F
|
Fees
and expenses of any underlying mutual funds or exchange-traded funds (ETFs) are not included in the Fund’s expense ratio. The Fund
indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central
Funds, please refer to the “Investments in Fidelity Central Funds” note found in the Notes to Financial Statements section
of the most recent Annual or Semi-Annual report. |
|
G
|
Expense
ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through
arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount
paid by the class during periods when reimbursements, waivers or reductions occur. |
|
I
|
Amount
does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
|
Expenses
FMR
will bear the one-time administrative costs associated with the Reorganization, including professional fees, expenses associated with
the filing of registration statements, and the cost of printing and mailing prospectuses and the Information Statement.
FMR
will reimburse brokerage firms and others for their reasonable expenses in forwarding material to the beneficial owners of shares.
For
a free copy of the Acquired Fund’s annual report for the fiscal year ended June 30, 2024, call 1-800-544-8544, visit Fidelity’s
website at www.fidelity.com, or write to FDC at 900 Salem Street, Smithfield, Rhode Island 02917.
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Share
Ownership
As
of December 31, 2024, shares of the Acquired Fund issued and outstanding were [ ].
The
Acquiring Fund is a newly created fund and will not issue shares until the Closing Date.
[As
of December 31, 2024, the Trustees, Members of the Advisory Board (if any), and officers of each fund owned, in the aggregate, less
than 1% of each class’s total outstanding shares, with respect to each fund.]
[As
of December 31, 2024, the following owned of record and/or beneficially 5% or more of the outstanding shares:
As
of December 31, 2024, the following owned of record and/or beneficially 25% or more of the outstanding shares:
A
shareholder owning of record or beneficially more than 25% of a fund’s outstanding shares may be considered a controlling person.
That shareholder’s vote could have a more significant effect on matters presented at a shareholders’ meeting than votes of
other shareholders.]
Legal
Matters
Certain
legal matters in connection with the issuance of shares of the Acquiring Fund have been passed upon by Dechert LLP, counsel to Fidelity
Merrimack Street Trust.
Experts
The
audited financial statements of the Acquired Fund are incorporated by reference into the Statement of Additional Information relating
to this Information Statement and have been audited by PricewaterhouseCoopers LLP, independent registered public accounting firm, whose
report thereon is included in the fund’s Annual Report to Shareholders for the fiscal year ended June 30, 2024. The financial
statements audited by PricewaterhouseCoopers LLP have been incorporated by reference in reliance on their report given on their authority
as experts in auditing and accounting.
Notice
to Banks, Broker-Dealers and Voting Trustees and Their Nominees
Please
advise Fidelity Salem Street Trust, in care of Fidelity Investments Institutional Operations Company LLC, 245 Summer Street, Boston, Massachusetts,
02210, whether other persons are beneficial owners of shares for which the Information Statement is being mailed and, if so, the number
of copies of the Information Statement and Annual Reports you wish to receive in order to supply copies to the beneficial owners of the
respective shares.
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FORM
OF AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
THIS
AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION (the Agreement) is made as of this [ ] day of [ ], [ ] by and between
Fidelity Salem Street Trust, a Massachusetts business trust (the Acquired Fund Trust), on behalf of its series Fidelity Municipal Bond
Index Fund (the Acquired Fund), and Fidelity Merrimack Street Trust, a Massachusetts business trust (the Acquiring Fund Trust), on behalf
of its series Fidelity Systematic Municipal Bond Index ETF (the Acquiring Fund). The Acquired Fund Trust and the Acquiring Fund Trust
may be referred to herein collectively as the “Trusts” or each individually as a “Trust.” The Trusts are duly
organized business trusts under the laws of the Commonwealth of Massachusetts with their principal place of business at 245 Summer Street,
Boston, Massachusetts 02210. The Acquiring Fund and the Acquired Fund may be referred to herein collectively as the “Funds”
or each individually as the “Fund.”
This
Agreement is intended to be, and is adopted as, a plan of reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the Code). The reorganization will comprise: (a) the transfer of all of the assets of the Acquired Fund
to the Acquiring Fund in exchange for shares of beneficial interest in the Acquiring Fund (the Acquiring Fund Shares) and the assumption
by the Acquiring Fund of the Acquired Fund’s liabilities; and (b) the constructive distribution of such shares by the Acquired
Fund pro rata to its applicable shareholders, excluding Cash-Out Shareholders (defined below) in complete liquidation and termination
of the Acquired Fund, all upon the terms and conditions set forth in this Agreement. The foregoing transactions are referred to herein
as the “Reorganization.”
In
consideration of the mutual promises and subject to the terms and conditions herein, the parties covenant and agree as follows:
1.
REPRESENTATIONS AND WARRANTIES OF THE ACQUIRED FUND. The Acquired Fund represents and warrants to and
agrees with the Acquiring Fund that:
(a)
The Acquired Fund is a series of the Acquired Fund Trust, a business trust duly organized, validly existing, and in good standing under
the laws of the Commonwealth of Massachusetts, and has the power to own all of its properties and assets and to carry out its obligations
under this Agreement. It has all necessary federal, state, and local authorizations to carry on its business as now being conducted and
to carry out this Agreement;
(b)
The Acquired Fund Trust is an open-end, management investment company duly registered under the Investment Company Act of 1940, as amended
(the 1940 Act), and such registration is in full force and effect;
(c)
The Prospectus and Statement of Additional Information of the Acquired Fund dated August 29, 2024, as supplemented, previously furnished
to the Acquiring Fund, did not and do not contain any untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
(d)
Except as disclosed in writing to the Acquiring Fund, there are no material legal, administrative, or other proceedings pending or, to
the knowledge of the Acquired Fund, threatened against the Acquired Fund which assert liability on the part of the Acquired Fund. The
Acquired Fund knows of no facts which might reasonably form the basis for the institution of such proceedings, except as otherwise disclosed
to the Acquiring Fund;
(e)
The Acquired Fund is not in, and the execution, delivery, and performance of this Agreement will not result in, violation of any provision
of its Amended and Restated Declaration of Trust or By-laws, or, to the knowledge of the Acquired Fund, of any agreement, indenture, instrument,
contract, lease, or other undertaking to which the Acquired Fund is a party or by which the Acquired Fund is bound or result in the acceleration
of any obligation or the imposition of any penalty under any agreement, judgment or decree to which the Acquired Fund is a party or is
bound;
(f)
The Statement of Assets and Liabilities, the Statement of Operations, the Statement of Changes in Net Assets, Financial Highlights, and
the Schedule of Investments (including market values) of the Acquired Fund at June 30, 2024, have been audited by PricewaterhouseCoopers
LLP, independent registered public accounting firm, and have been furnished to the Acquiring Fund. Said Statement of Assets and Liabilities
and Schedule of Investments fairly present the Acquired Fund’s financial position as of such date and said Statement of Operations,
Statement of Changes in Net Assets, and Financial Highlights fairly reflect the Acquired Fund’s results of operations, changes in
financial position, and financial highlights for the periods covered thereby in conformity with generally accepted accounting principles
consistently applied;
(g)
The Acquired Fund has no known liabilities of a material nature, contingent or otherwise, other than those shown as belonging to it on
its statement of assets and liabilities as of June 30, 2024 and those incurred in the ordinary course of the Acquired Fund’s business
as an investment company since June 30, 2024;
(h)
The registration statement (Registration Statement) filed with the Securities and Exchange Commission (Commission) by the Acquiring Fund
Trust on Form N–14 relating to the shares of the Acquiring Fund issuable hereunder and the information statement of the Acquired
Fund included therein (Information Statement), on the effective date of the Registration Statement and insofar as they relate to
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the
Acquired Fund (i) comply in all material respects with the provisions of the Securities Act of 1933, as amended (the 1933 Act), the
Securities Exchange Act of 1934, as amended (the 1934 Act), and the 1940 Act, and the rules and regulations thereunder, and (ii) do
not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading; and on the Closing Date (as defined in Section 6), the prospectus contained in the Registration
Statement of which the Information Statement is a part (the Prospectus), as amended or supplemented, insofar as it relates to the Acquired
Fund, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading;
(i)
No consent, approval, authorization, or order of any court or governmental authority is required for the consummation by the Acquired
Fund of the transactions contemplated by this Agreement, except such as have been obtained under the 1933 Act, the 1934 Act, the 1940
Act, and state securities or blue sky laws (which term as used in this Agreement shall include the District of Columbia and Puerto Rico);
(j)
The Acquired Fund has filed or will file all federal and state tax returns which, to the knowledge of the Acquired Fund’s officers,
are required to be filed by the Acquired Fund and has paid or will pay all federal and state taxes shown to be due on said returns or
provision shall have been made for the payment thereof, and, to the best of the Acquired Fund’s knowledge, no such return is currently
under audit and no assessment has been asserted with respect to such returns;
(k)
The Acquired Fund has met the requirements of Subchapter M of the Code for qualification and treatment as a regulated investment company
for all prior taxable years and intends to meet such requirements for its taxable year which includes the Closing Date;
(l)
All of the issued and outstanding shares of the Acquired Fund are, and at the Closing Date will be, duly and validly issued and outstanding
and fully paid and nonassessable as a matter of Massachusetts law (except as disclosed in the Acquired Fund’s Statement of Additional
Information), and have been offered for sale and in conformity with all applicable federal securities laws. All of the issued and outstanding
shares of the Acquired Fund will, at the Closing Date, be held by the persons and in the amounts set forth in the list of shareholders
submitted to the Acquiring Fund in accordance with this Agreement;
(m)
As of both the Valuation Time (as defined in Section 4) and the Closing Date, the Acquired Fund will have the full right, power,
and authority to sell, assign, transfer, and deliver its portfolio securities and any other assets of the Acquired Fund to be transferred
to the Acquiring Fund pursuant to this Agreement. As of the Closing Date, subject only to the delivery of the Acquired Fund’s portfolio
securities and any such other assets as contemplated by this Agreement, the Acquiring Fund will acquire the Acquired Fund’s portfolio
securities and any such other assets subject to no encumbrances, liens, or security interests (except for those that may arise in the
ordinary course and are disclosed to the Acquiring Fund) and without any restrictions upon the transfer thereof; and
(n)
The execution, delivery, and performance of this Agreement will have been duly authorized prior to the Closing Date by all necessary corporate
action on the part of the Acquired Fund, and this Agreement constitutes a valid and binding obligation of the Acquired Fund enforceable
in accordance with its terms.
2.
REPRESENTATIONS AND WARRANTIES OF THE ACQUIRING FUND. The Acquiring Fund represents and warrants to
and agrees with the Acquired Fund that:
(a)
The Acquiring Fund is a series of the Acquiring Fund Trust, a business trust duly organized, validly existing, and in good standing under
the laws of the Commonwealth of Massachusetts, and has the power to own all of its properties and assets and to carry out its obligations
under this Agreement. It has all necessary federal, state, and local authorizations to carry on its business as now being conducted and
to carry out this Agreement;
(b)
The Acquiring Fund Trust is an open-end, management investment company duly registered under the 1940 Act, and such registration is in
full force and effect;
(c)
The Prospectus and Statement of Additional Information of the Acquiring Fund, dated [ ], as supplemented, previously furnished to
the Acquired Fund, did not and do not contain any untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
(d)
Except as disclosed in writing to the Acquired Fund, there are no material legal, administrative, or other proceedings pending or, to
the knowledge of the Acquiring Fund, threatened against the Acquiring Fund which assert liability on the part of the Acquiring Fund. The
Acquiring Fund knows of no facts which might reasonably form the basis for the institution of such proceedings, except as otherwise disclosed
to the Acquired Fund;
(e)
The Acquiring Fund is not in, and the execution, delivery, and performance of this Agreement will not result in, violation of any provision
of its Declaration of Trust or By-laws, or, to the knowledge of the Acquiring Fund, of any agreement, indenture, instrument, contract,
lease, or other undertaking to which the Acquiring Fund is a party or by which the Acquiring Fund is bound or result in the acceleration
of any obligation or the imposition of any penalty under any agreement, judgment, or decree to which the Acquiring Fund is a party or
is bound;
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(f)
[Reserved];
(g)
[Reserved];
(h)
No consent, approval, authorization, or order of any court or governmental authority is required for the consummation by the Acquiring
Fund of the transactions contemplated by this Agreement, except such as have been obtained under the 1933 Act, the 1934 Act, the 1940
Act, and state securities or blue sky laws;
(i)
[Reserved];
(j)
The Acquiring Fund intends to meet the requirements of Subchapter M of the Code for qualification and treatment as a regulated investment
company for its current taxable year ending on June 30, 2025;
(k)
As of the Closing Date, the shares of beneficial interest of the Acquiring Fund to be issued to the Acquired Fund will have been duly
authorized and, when issued and delivered pursuant to this Agreement, will be legally and validly issued and will be fully paid and nonassessable
(except as disclosed in the Acquiring Fund’s Statement of Additional Information) by the Acquiring Fund, and no shareholder of the
Acquiring Fund will have any preemptive right of subscription or purchase in respect thereof;
(l)
The execution, delivery, and performance of this Agreement will have been duly authorized prior to the Closing Date by all necessary corporate
action on the part of the Acquiring Fund, and this Agreement constitutes a valid and binding obligation of the Acquiring Fund enforceable
in accordance with its terms;
(m)
The Registration Statement and the Information Statement, on the effective date of the Registration Statement and insofar as they relate
to the Acquiring Fund, (i) comply in all material respects with the provisions of the 1933 Act, the 1934 Act, and the 1940 Act, and
the rules and regulations thereunder, and (ii) do not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein not misleading; and on the Closing Date, the Prospectus,
as amended or supplemented, insofar as it relates to the Acquiring Fund, will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the statements therein not misleading;
(n)
The issuance of the Acquiring Fund Shares pursuant to this Agreement will be in compliance with all applicable federal securities laws;
and
(o)
All of the issued and outstanding shares of beneficial interest of the Acquiring Fund have been offered for sale and sold in conformity
with the federal securities laws.
3.
REORGANIZATION.
(a)
Subject to the terms and conditions contained herein, the Acquired Fund agrees to assign, sell, convey, transfer, and deliver to the Acquiring
Fund as of the Closing Date all of the assets of the Acquired Fund of every kind and nature existing on the Closing Date. The Acquiring
Fund agrees in exchange therefor: (i) to assume all of the Acquired Fund’s liabilities existing on or after the Closing Date,
whether or not determinable on the Closing Date, and (ii) to issue and deliver to the Acquired Fund the number of full shares of
the Acquiring Fund having an aggregate net asset value equal to the value of the assets of the Acquired Fund transferred hereunder, less
(1) the value of the liabilities of the Acquired Fund, determined as provided for under Section 4; (2) the value of cash to be distributed
to applicable Acquired Fund shareholders in lieu of fractional Acquiring Fund shares; and (3) the value of cash to be distributed to Acquired
Fund shareholders who do not hold Acquired Fund shares through a brokerage account that can accept Acquiring Fund shares and for which
no account has been established to receive such shares (“Cash-Out Shareholders”), who shall not receive a distribution of
such Acquiring Fund shares and in lieu thereof shall receive a distribution of cash equal to the net asset value of their Acquired Fund
shares.
(b)
The assets of the Acquired Fund to be acquired by the Acquiring Fund shall include, without limitation, all cash, cash equivalents, securities,
commodities and futures interests, receivables (including interest or dividends receivables), claims, choses in action, and other property
owned by the Acquired Fund, and any deferred or prepaid expenses shown as an asset on the books of the Acquired Fund on the Closing Date,
except for assets having a value equal to the sum of the values in (1)-(3) in of Section 3(a). The Acquired Fund will pay or cause
to be paid to the Acquiring Fund any dividend or interest payments received by it on or after the Closing Date with respect to the assets
transferred to the Acquiring Fund hereunder, and the Acquiring Fund will retain any dividend or interest payments received by it after
the Valuation Time with respect to the assets transferred hereunder without regard to the payment date thereof.
(c)
The liabilities of the Acquired Fund to be assumed by the Acquiring Fund shall include (except as otherwise provided for herein) all of
the Acquired Fund’s liabilities, debts, obligations, and duties, of whatever kind or nature, whether absolute, accrued, contingent,
or otherwise, whether or not arising in the ordinary course of business, whether or not determinable on the Closing Date, and whether
or not specifically referred to in this Agreement. Notwithstanding the foregoing, the Acquired Fund agrees to use its best efforts to
discharge all of its known liabilities prior to the Closing Date, other than liabilities incurred in the ordinary course of business.
(d)
Pursuant to this Agreement, as soon after the Closing Date as is conveniently practicable, the Acquired Fund will take such actions necessary
to complete the liquidation of the Acquired Fund in accordance with the Acquired Fund’s Amended and Restated Declaration of Trust.
To complete the liquidation, the Acquired Fund will (i) constructively distribute pro rata to its shareholders of record (except
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Cash-Out
Shareholders), determined as of the Valuation Time on the Closing Date, the Acquiring Fund Shares in exchange for such shareholders’
shares of beneficial interest in the Acquired Fund; (ii) distribute cash, as provided in Section 3(a) to the Cash-Out Shareholders;
and (iii) completely liquidate. The distribution of Acquiring Fund Shares shall be accomplished by the Funds’ transfer agent opening
accounts on the Acquiring Fund’s share transfer books in the names of the Acquired Fund shareholders and transferring the Acquiring
Fund shares thereto. Each Acquired Fund shareholder’s account shall be credited with the respective pro rata number of Acquiring
Fund shares due that shareholder. All outstanding Acquired Fund shares, including any represented by certificates, shall simultaneously
be canceled on the Acquired Fund’s share transfer records. The Acquiring Fund shall not issue certificates representing the Acquiring
Fund Shares in connection with the Reorganization. For the avoidance of doubt, the Acquiring Fund shall not issue fractional shares, and
Acquired Fund shareholders may receive cash in connection with the Reorganization in lieu of fractional Acquiring Fund Shares.
(e)
Any reporting responsibility of the Acquired Fund is and shall remain its responsibility up to and including the date on which it is terminated.
(f)
Any transfer taxes payable upon issuance of the Acquiring Fund shares in a name other than that of the registered holder on the Acquired
Fund’s books of the Acquired Fund shares constructively exchanged for the Acquiring Fund Shares shall be paid by the person to whom
such Acquiring Fund Shares are to be issued, as a condition of such transfer.
4.
VALUATION.
(a)
The Valuation Time shall be as of the close of business of the New York Stock Exchange on the Closing Date, or such other date as may
be mutually agreed upon in writing by the parties hereto (the Valuation Time).
(b)
As of the Closing Date, the Acquiring Fund will deliver to the Acquired Fund the number of Acquiring Fund Shares having an aggregate net
asset value equal to the value of the assets of the Acquired Fund transferred hereunder less the liabilities of the Acquired Fund, determined
as provided in this Section 4.
(c)
The net asset value per share of the Acquiring Fund shares to be delivered to the Acquired Fund, the value of the assets of the Acquired
Fund transferred hereunder, and the value of the liabilities of the Acquired Fund to be assumed hereunder shall in each case be determined
as of the Valuation Time.
(d)
The net asset value per share of the Acquiring Fund shares and the value of the assets and liabilities of the Acquired Fund shall be computed
in the manner set forth in the then-current Acquired Fund Prospectus and Statement of Additional Information.
(e)
All computations pursuant to this Section shall be made by or under the direction of Fidelity Service Company, Inc., a wholly-owned
subsidiary of FMR LLC, in accordance with its regular practice as pricing agent for the Acquired Fund and the Acquiring Fund.
5.
FEES; EXPENSES.
(a)
The Acquired Fund’s investment adviser (the “Adviser”) shall be responsible for all expenses, fees and other charges
in connection with the transactions contemplated by this Agreement (but not including costs incurred in connection with the purchase or
sale of portfolio securities).
(b)
Any expenses incurred in connection with the transactions contemplated by this Agreement which may be attributable to the Acquiring Fund
will be borne by the Adviser (but not including costs incurred in connection with the purchase or sale of portfolio securities).
(c)
Each of the Acquiring Fund and the Acquired Fund represents that there is no person who has dealt with it who by reason of such dealings
is entitled to any broker’s or finder’s or other similar fee or commission arising out of the transactions contemplated by
this Agreement.
6.
CLOSING DATE.
(a)
The Reorganization, together with related acts necessary to consummate the same (the Closing), unless otherwise provided herein, shall
occur at the principal office of the Trusts, 245 Summer Street, Boston, Massachusetts, as of the Valuation Time on April 4, 2025,
or at some other time, date, and place agreed to by the Acquired Fund and the Acquiring Fund (the Closing Date).
(b)
In the event that on the Closing Date: (i) any of the markets for securities held by the Funds is closed to trading, or (ii) trading
thereon is restricted, or (iii) trading or the reporting of trading on said market or elsewhere is disrupted, all so that accurate
appraisal of the total net asset value of the Acquired Fund and the net asset value per share of the Acquiring Fund is impracticable,
the Valuation Time and the Closing Date shall be postponed until the first business day after the day when such trading shall have been
fully resumed and such reporting shall have been restored, or such other date as the parties may agree.
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7.
TERMINATION OF THE ACQUIRED FUND.
(a)
The Acquired Fund agrees that as soon as reasonably practicable after distribution of the Acquiring Fund Shares and cash as provided herein,
the Acquired Fund shall be terminated as a series of the Acquired Fund Trust pursuant to its Amended and Restated Declaration of Trust,
any further actions shall be taken in connection therewith as required by applicable law, and on and after the Closing Date the Acquired
Fund shall not conduct any business except in connection with its liquidation and termination.
8.
CONDITIONS TO OBLIGATIONS OF THE ACQUIRING FUND.
(a)
That, as of the Valuation Time and the Closing Date, all representations and warranties of the Acquired Fund made in this Agreement are
true and correct in all material respects and that the Acquired Fund has complied with all the agreements and satisfied all the conditions
on its part to be performed or satisfied at or prior to such dates;
(b)
That this Agreement and the transactions contemplated herein are approved by the Board of Trustees of the Acquired Fund Trust on behalf
of the Acquired Fund;
(c)
That the Acquiring Fund at the Closing shall have access to a statement of the Acquired Fund’s assets and liabilities, together
with a list of its portfolio securities showing each such security’s adjusted tax basis and holding period by lot, with values determined
as provided in Section 4 of this Agreement, all as of the Valuation Time;
(d)
That the Acquired Fund’s custodian shall deliver to the Acquiring Fund a certificate identifying the assets of the Acquired Fund
held by such custodian as of the Valuation Time on the Closing Date and stating that as of the Valuation Time: (i) the assets held
by the custodian will be transferred to the Acquiring Fund; (ii) the Acquired Fund’s assets have been duly endorsed in proper
form for transfer in such condition as to constitute good delivery thereof; and (iii) to the best of the custodian’s knowledge,
all applicable taxes (including stock transfer taxes, if any) in conjunction with the delivery of the assets, that the custodian has been
notified are due, have been paid or provision for payment has been made;
(e)
That the Acquiring Fund at the Closing shall have access to the number of shares of the Acquired Fund outstanding as of the Valuation
Time and the name and address of each holder of record of any such shares and the number of shares held of record by each such shareholder,
as maintained by the Acquired Fund’s transfer agent;
(f)
[Reserved];
(g)
That there has been no material adverse change in the Acquired Fund’s financial position since June 30, 2024, other than changes
in the market value of its portfolio securities, or changes due to net redemptions of its shares, dividends paid, or losses from operations;
and
(h)
That all of the issued and outstanding shares of beneficial interest of the Acquired Fund shall have been offered for sale and sold in
conformity with all applicable state securities laws and, to the extent that any audit of the records of the Acquired Fund or its transfer
agent by the Acquiring Fund or its agents shall have revealed otherwise, the Acquired Fund shall have taken all actions that in the opinion
of the Acquiring Fund are necessary to remedy any prior failure on the part of the Acquired Fund to have offered for sale and sold such
shares in conformity with such laws.
9.
CONDITIONS TO OBLIGATIONS OF THE ACQUIRED FUND.
(a)
That the Acquiring Fund shall have executed and delivered to the Acquired Fund an Assumption of Liabilities, certified by an authorized
officer of the Acquiring Fund Trust, dated as of the Closing Date pursuant to which the Acquiring Fund will assume all of the liabilities
of the Acquired Fund existing at the Valuation Time in connection with the transactions contemplated by this Agreement;
(b)
That, as of the Valuation Time and the Closing Date, all representations and warranties of the Acquiring Fund made in this Agreement are
true and correct in all material respects, and the Acquiring Fund has complied with all the agreements and satisfied all the conditions
on its part to be performed or satisfied at or prior to such dates; and
(c)
That the Acquired Fund shall have received an opinion of Dechert LLP, counsel to the Acquired Fund and the Acquiring Fund, to the effect
that the Acquiring Fund shares are duly authorized and upon delivery to the Acquired Fund as provided in this Agreement will be validly
issued and will be fully paid and nonassessable by the Acquiring Fund (except as disclosed in the Acquiring Fund’s Statement of
Additional Information) and no shareholder of the Acquiring Fund has any preemptive right of subscription or purchase in respect thereof.
10.
CONDITIONS TO OBLIGATIONS OF THE ACQUIRING FUND AND THE ACQUIRED FUND.
(a)
[Reserved];
(b)
That all consents of other parties and all other consents, orders, and permits of federal, state, and local regulatory authorities (including
those of the Commission and of state blue sky and securities authorities, and including “no action” positions of such federal
or state authorities) deemed necessary by the Acquiring Fund or the Acquired Fund to permit consummation, in all material respects, of
the
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transactions
contemplated hereby shall have been obtained, except where failure to obtain any such consent, order, or permit would not involve a risk
of a material adverse effect on the assets or properties of the Acquiring Fund or the Acquired Fund, provided that either party hereto
may for itself waive any of such conditions;
(c)
That all proceedings taken by either Fund in connection with the transactions contemplated by this Agreement and all documents incidental
thereto shall be satisfactory in form and substance to it and its counsel, Dechert LLP;
(d)
That there shall not be any material litigation pending with respect to the matters contemplated by this Agreement;
(e)
That the Registration Statement shall have become effective under the 1933 Act, and no stop order suspending such effectiveness shall
have been instituted or, to the knowledge of the Acquiring Fund and the Acquired Fund, threatened by the Commission; and
(f)
That based on the facts and assumptions stated therein (as well as certain representations made on behalf of the Acquiring Fund and the
Acquired Fund), the Acquiring Fund and the Acquired Fund shall have received an opinion of Dechert LLP satisfactory to the Acquiring Fund
and the Acquired Fund substantially to the effect that for federal income tax purposes:
(i)
The acquisition by the Acquiring Fund of all of the properties of the Acquired Fund in exchange solely for the Acquiring Fund Shares and
the assumption of all liabilities of the Acquired Fund by the Acquiring Fund followed by the distribution of the Acquiring Fund Shares
and cash in lieu of fractional shares to the Acquired Fund shareholders in exchange for their Acquired Fund shares in complete liquidation
and termination of the Acquired Fund will constitute a tax–free reorganization under Section 368(a)(1)(F) of the Code.
(ii)
The Acquired Fund will not recognize gain or loss upon the transfer of substantially all of its assets to the Acquiring Fund in exchange
solely for the Acquiring Fund Shares and the assumption of all liabilities of the Acquired Fund.
(iii)
The Acquired Fund will not recognize gain or loss upon the distribution to its shareholders of the Acquiring Fund Shares received by the
Acquired Fund in the Reorganization.
(iv)
The Acquiring Fund will recognize no gain or loss upon receiving the properties of the Acquired Fund in exchange solely for the Acquiring
Fund Shares and the assumption of all liabilities of the Acquired Fund.
(v)
The adjusted basis to the Acquiring Fund of the properties of the Acquired Fund received by the Acquiring Fund in the Reorganization will
be the same as the adjusted basis of those properties in the hands of the Acquired Fund immediately before the exchange.
(vi)
The Acquiring Fund’s holding periods with respect to the properties of the Acquired Fund that the Acquiring Fund acquires in the
Reorganization will include the respective periods for which those properties were held by the Acquired Fund (except where investment
activities of the Acquiring Fund have the effect of reducing or eliminating a holding period with respect to an asset).
(vii)
The Acquired Fund shareholders will recognize no gain or loss upon receiving the Acquiring Fund Shares solely in exchange for the Acquired
Fund shares (except with respect to cash received in exchange for fractional shares).
(viii)
The aggregate basis of the Acquiring Fund Shares received by an Acquired Fund shareholder in the Reorganization will be the same as the
aggregate basis of the Acquired Fund shares surrendered by the Acquired Fund shareholder in exchange therefor (reduced by any amount of
tax basis allocable to shares for which cash is received).
(ix)
An Acquired Fund shareholder’s holding period for the Acquiring Fund Shares received by the Acquired Fund shareholder in the Reorganization
will include the holding period during which the Acquired Fund shareholder held the Acquired Fund shares surrendered in exchange therefor,
provided that the Acquired Fund shareholder held such shares as a capital asset on the date of the Reorganization.
(x)
The Reorganization will not result in the termination of the Acquired Fund’s taxable year, and the Acquired Fund’s tax attributes
enumerated in Section 381(c) of the Code will be taken into account by the Acquiring Fund as if there had been no Reorganization.
Notwithstanding
anything herein to the contrary, neither the Acquired Fund nor the Acquiring Fund may waive the conditions set forth in this subsection
10(f).
11.
COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND.
(a)
The Acquiring Fund and the Acquired Fund covenant to operate its respective business in the ordinary course between the date hereof and
the Closing Date, it being understood that such ordinary course of business will include the payment of customary dividends and distributions;
(b)
The Acquired Fund covenants that it is not acquiring the Acquiring Fund shares for the purpose of making any distribution other than in
accordance with the terms of this Agreement;
(c)
The Acquired Fund covenants that it will assist the Acquiring Fund in obtaining such information as the Acquiring Fund reasonably requests
concerning the beneficial ownership of the Acquired Fund’s shares; and
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(d)
The Acquired Fund covenants that its liquidation and termination will be effected in the manner provided in its Amended and Restated Declaration
of Trust in accordance with applicable law, and after the Closing Date, the Acquired Fund will not conduct any business except in connection
with its liquidation and termination.
12.
TERMINATION; WAIVER.
The
Acquiring Fund and the Acquired Fund may terminate this Agreement by mutual agreement. In addition, either the Acquiring Fund or the Acquired
Fund may at its option terminate this Agreement at or prior to the Closing Date because:
(i)
of a material breach by the other of any representation, warranty, or agreement contained herein to be performed at or prior to the Closing
Date; or
(ii)
a condition herein expressed to be precedent to the obligations of the terminating party has not been met and it reasonably appears that
it will not or cannot be met.
In
the event of any such termination, there shall be no liability for damages on the part of the Acquired Fund or the Acquiring Fund, or
their respective Trustees or officers.
13.
SOLE AGREEMENT; AMENDMENTS; WAIVERS; SURVIVAL OF WARRANTIES.
(a)
This Agreement supersedes all previous correspondence and oral communications between the parties regarding the subject matter hereof,
constitutes the only understanding with respect to such subject matter, may not be changed except by a letter of agreement signed by each
party hereto and shall be construed in accordance with and governed by the laws of the Commonwealth of Massachusetts.
(b)
This Agreement may be amended, modified, or supplemented in such manner as may be mutually agreed upon in writing by the respective President,
any Vice President, or Treasurer of the Acquiring Fund or the Acquired Fund.
(c)
Either Fund may waive any condition to its obligations hereunder, provided that such waiver does not have any material adverse effect
on the interests of such Fund’s shareholders.
The
representations, warranties, and covenants contained in the Agreement, or in any document delivered pursuant hereto or in connection herewith,
shall survive the consummation of the transactions contemplated hereunder.
14.
DECLARATIONS OF TRUST.
A
copy of the Acquired Fund’s Amended and Restated Declaration of Trust is on file with the Secretary of State of the Commonwealth
of Massachusetts and a copy of the Acquiring Fund’s Declaration of Trust is on file with the Secretary of State of the Commonwealth
of Massachusetts, and notice is hereby given that this Agreement is executed on behalf of the Trustees of each Fund as trustees and not
individually and that the obligations of each Fund under this Agreement are not binding upon any of such Fund’s Trustees, officers,
or shareholders individually but are binding only upon the assets and property of such Fund. Each Fund agrees that its obligations hereunder
apply only to such Fund and not to its shareholders individually or to the Trustees of such Fund.
15.
ASSIGNMENT.
This
Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, but no assignment or
transfer of any rights or obligations hereunder shall be made by any party without the written consent of the other parties. Nothing herein
expressed or implied is intended or shall be construed to confer upon or give any person, firm, or corporation other than the parties
hereto and their respective successors and assigns any rights or remedies under or by reason of this Agreement.
This
Agreement may be executed in any number of counterparts, each of which, when executed and delivered, shall be deemed to be an original.
IN
WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed by an appropriate officer.
[SIGNATURE
LINES OMITTED]
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Fidelity,
the Fidelity Investments Logo and all other Fidelity trademarks or service marks used herein are trademarks or service marks of FMR LLC.
Any third-party marks that are used herein are trademarks or service marks of their respective owners. © 2025 FMR LLC. All rights
reserved.
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MBI25-N14-0225 |
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Fidelity Municipal Bond Index
Fund
(A Series of Fidelity Salem Street
Trust)
Fidelity Systematic Municipal
Bond Index ETF
(A Series of Fidelity Merrimack
Street Trust)
FORM N-14
STATEMENT OF ADDITIONAL INFORMATION
February 18, 2025
This Statement of Additional
Information (SAI) relates to the proposed acquisition of Fidelity Municipal Bond Index Fund (Acquired Fund or Predecessor Fund), a series
of Fidelity Salem Street Trust, by Fidelity Systematic Municipal Bond Index ETF (Acquiring Fund and together with the Acquired Fund,
the funds), a series of Fidelity Merrimack Street Trust. This SAI contains information that may be of interest to shareholders, but which
is not included in the Information Statement which relates to the Reorganization. As described in the Information Statement, Fidelity
Systematic Municipal Bond Index ETF will acquire all of the assets of Fidelity Municipal Bond Index Fund (excluding assets having a value
equal to cash to be distributed in accordance with the Agreement) and assume all of Fidelity Municipal Bond Index Fund’s liabilities,
in exchange solely for shares of beneficial interest in Fidelity Systematic Municipal Bond Index ETF.
This SAI is not a prospectus
and should be read in conjunction with the Information Statement. The Information Statement has been filed with the Securities and Exchange
Commission and may be obtained, without charge, from Fidelity Distributors Company LLC, 900 Salem Street, Smithfield, RI 02917.
This SAI consists of this cover
page and the following described documents, each of which is incorporated herein by reference:
1.
The Prospectus for Fidelity Systematic Municipal Bond Index ETF dated December 27, 2024, which was previously filed via EDGAR (Accession No. 0000744822-24-000251).
SUPPLEMENTAL
FINANCIAL INFORMATION (UNAUDITED)
A table showing the
fees and expenses of the Acquired Fund and the Acquiring Fund, and the fees and expenses of the Acquiring Fund on a pro forma basis after
giving effect to the proposed Reorganization, is included in the “Annual Fund Operating Expenses” section of the Prospectus/Proxy
Statement.
The Reorganization
will not result in a material change to the Acquired Fund’s investment portfolio due to the investment restrictions of the Acquiring
Fund. In particular, each security held by the Acquired Fund is eligible to be held by the Acquiring Fund. As a result, a schedule of
investments of the Acquired Fund modified to show the effects of the change is not required and is not included. Notwithstanding the
foregoing, changes may be made to the Acquired Fund’s portfolio in advance of the Reorganization and/or the Acquiring Fund’s
portfolio following the Reorganization.
There are no material
differences between the accounting and valuation policies of the Acquired Fund and those of the Acquiring Fund.
PART
C. OTHER INFORMATION
Item
15. Indemnification
Article XI,
Section 2 of the Declaration of Trust sets forth the reasonable and fair means for determining whether indemnification shall be provided
to any past or present Trustee or officer. It states that the Trust shall indemnify any present or past trustee or officer to the fullest
extent permitted by law against liability, and all expenses reasonably incurred by him or her in connection with any claim, action, suit
or proceeding in which he or she is involved by virtue of his or her service as a trustee or officer and against any amount incurred
in settlement thereof. Indemnification will not be provided to a person adjudged by a court or other adjudicatory body to be liable to
the Trust or its shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of his or her duties
(collectively, “disabling conduct”), or not to have acted in good faith in the reasonable belief that his or her action was
in the best interest of the Trust. In the event of a settlement, no indemnification may be provided unless there has been a determination,
as specified in the Declaration of Trust, that the officer or trustee did not engage in disabling conduct.
Pursuant to
Section 11 of the Distribution Agreement, the Trust agrees to indemnify and hold harmless the Distributor and each of its directors and
officers and each person, if any, who controls the Distributor within the meaning of Section 15 of the 1933 Act against any loss, liability,
claim, damages or expense (including the reasonable cost of investigating or defending any alleged loss, liability, claim, damages, or
expense and reasonable counsel fees incurred in connection therewith) arising by reason of any person acquiring any shares, based upon
the ground that the registration statement, Prospectus, Statement of Additional Information, shareholder reports or other information
filed or made public by the Trust (as from time to time amended) included an untrue statement of a material fact or omitted to state
a material fact required to be stated or necessary in order to make the statements not misleading under the 1933 Act, or any other statute
or the common law. However, the Trust does not agree to indemnify the Distributor or hold it harmless to the extent that the statement
or omission was made in reliance upon, and in conformity with, information furnished to the Trust by or on behalf of the Distributor.
In no case is the indemnity of the Trust in favor of the Distributor or any person indemnified to be deemed to protect the Distributor
or any person against any liability to the Issuer or its security holders to which the Distributor or such person would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the Registrant,
the Registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
Item
16. Exhibits
| (13) | Amended
and Restated Sub-Advisory Agreement, dated March 1, 2024, between Fidelity Management &
Research Company LLC and Fidelity Management & Research (Hong Kong) Limited, on behalf
of Fidelity Corporate Bond ETF, Fidelity Investment Grade Bond ETF, Fidelity Investment Grade
Securitized ETF, Fidelity Limited Term Bond ETF, Fidelity Low Duration Bond ETF, Fidelity
Low Duration Bond Factor ETF, Fidelity Municipal Bond Opportunities ETF, Fidelity Systematic
Municipal Bond Index ETF, and Fidelity Total Bond ETF, is incorporated herein by reference
to Exhibit (d)(5) of Fidelity Revere Street Trust’s (File No. 811-07807) Amendment
No. 54. |
| (14) | Schedule
A to the Amended and Restated Sub-Advisory Agreement, dated March 1, 2024, between Fidelity
Management & Research Company LLC and Fidelity Management & Research (Hong Kong)
Limited, on behalf of Fidelity Corporate Bond ETF, Fidelity Investment Grade Bond ETF, Fidelity
Investment Grade Securitized ETF, Fidelity Limited Term Bond ETF, Fidelity Low Duration Bond
ETF, Fidelity Low Duration Bond Factor ETF, Fidelity Municipal Bond Opportunities ETF, Fidelity
Systematic Municipal Bond Index ETF, and Fidelity Total Bond ETF, is incorporated herein
by reference to Exhibit (d)(5) of Fidelity Central Investment Portfolios II, LLC’s
(File No. 811-22083) Amendment No. 51. |
| | (15) | Amended
and Restated Sub-Advisory Agreement, dated March 1, 2024, between Fidelity Management & Research Company LLC and Fidelity Management
& Research (Hong Kong) Limited, on behalf of Fidelity Sustainable Core Plus Bond ETF, Fidelity Sustainable Low Duration Bond ETF,
and Fidelity Tactical Bond ETF, is incorporated herein by reference to Exhibit (d)(33) of Fidelity Income Fund’s (File No. 002-92661)
Post-Effective Amendment No. 171. |
| (16) | Schedule
A to the Amended and Restated Sub-Advisory Agreement, dated March 1, 2024, between Fidelity
Management & Research Company LLC and Fidelity Management & Research (Hong Kong)
Limited, on behalf of Fidelity Sustainable Core Plus Bond ETF, Fidelity Sustainable Low Duration
Bond ETF, and Fidelity Tactical Bond ETF, is incorporated herein by reference to Exhibit
(d)(34) of Fidelity Income Fund’s (File No. 002-92661) Post-Effective Amendment No.
171. |
| (17) | Amended
and Restated Sub-Advisory Agreement, dated March 1, 2024, between Fidelity Management &
Research Company LLC and Fidelity Management & Research (Japan) Limited, on behalf of
Fidelity Corporate Bond ETF, Fidelity Investment Grade Bond ETF, Fidelity Investment Grade
Securitized ETF, Fidelity Limited Term Bond ETF, Fidelity Low Duration Bond ETF, Fidelity
Low Duration Bond Factor ETF, Fidelity Municipal Bond Opportunities ETF, Fidelity Systematic
Municipal Bond Index ETF, and Fidelity Total Bond ETF, is incorporated herein by reference
to Exhibit (d)(7) of Fidelity Revere Street Trust’s (File No. 811-07807) Amendment
No. 54. |
| (18) | Schedule A to the Amended and Restated Sub-Advisory Agreement, dated March 1, 2024, between Fidelity Management & Research Company LLC and Fidelity Management & Research (Japan) Limited, on behalf of Fidelity Corporate Bond ETF, Fidelity Investment Grade Bond ETF, Fidelity Investment Grade Securitized ETF, Fidelity Limited Term Bond ETF, Fidelity Low Duration Bond ETF, Fidelity Low Duration Bond Factor ETF, Fidelity Municipal Bond Opportunities ETF, Fidelity Systematic Municipal Bond Index ETF, and Fidelity Total Bond ETF, is incorporated herein by reference to Exhibit (d)(18) of Post-Effective Amendment No. 32. |
| (21) | Amended
and Restated Sub-Advisory Agreement, dated March 1, 2024, between Fidelity Management &
Research Company LLC and FMR Investment Management (UK) Limited, on behalf of Fidelity Corporate
Bond ETF, Fidelity Investment Grade Bond ETF, Fidelity Investment Grade Securitized ETF,
Fidelity Limited Term Bond ETF, Fidelity Low Duration Bond ETF, Fidelity Low Duration Bond
Factor ETF, and Fidelity Municipal Bond Opportunities ETF, Fidelity Systematic Municipal
Bond Index ETF, Fidelity Total Bond ETF, is incorporated herein by reference to Exhibit (d)(138)
of Fidelity Salem Street Trust’s (File No. 002-41839) Post-Effective Amendment No.
576. |
| (22) | Schedule A to the Amended and Restated Sub-Advisory Agreement, dated March 1, 2024, between Fidelity Management & Research Company LLC and FMR Investment Management (UK) Limited, on behalf of Fidelity Corporate Bond ETF, Fidelity Investment Grade Bond ETF, Fidelity Investment Grade Securitized ETF, Fidelity Limited Term Bond ETF, Fidelity Low Duration Bond ETF, Fidelity Low Duration Bond Factor ETF, Fidelity Municipal Bond Opportunities ETF, Fidelity Systematic Municipal Bond Index ETF, and Fidelity Total Bond ETF, is incorporated herein by reference to Exhibit (d)(22) of Post-Effective Amendment No. 32. |
| (9) | (1) | Custodian
Agreement, dated January 1, 2007, between State Street Bank and Trust Company and Fidelity
Corporate Bond ETF, Fidelity Investment Grade Bond ETF, Fidelity Investment Grade Securitized
ETF, Fidelity Limited Term Bond ETF, Fidelity Low Duration Bond ETF, Fidelity Low Duration
Bond Factor ETF, Fidelity Sustainable Core Plus Bond ETF, Fidelity Sustainable Low Duration
Bond ETF, Fidelity Tactical Bond ETF, and Fidelity Total Bond ETF, is incorporated herein
by reference to Exhibit (g)(4) of Fidelity Advisor Series I’s (File No. 002-84776)
Post-Effective Amendment No. 72. |
| | (2) | Custodian
Agreement, dated January 1, 2007, between The Bank of New York (currently known as The Bank of New York Mellon) and Fidelity Municipal
Bond Opportunities ETF and Fidelity Systematic Municipal Bond Index ETF, is incorporated herein by reference to Exhibit (g)(1) of Fidelity
Advisor Series IV’s (File No. 002-83672) Post-Effective Amendment No. 88. |
| | (3) | Amendment,
dated March 20, 2024, to the Custodian Agreement, dated January 1, 2007, between State Street Bank and Trust Company and Fidelity Corporate
Bond ETF, Fidelity Investment Grade Bond ETF, Fidelity Investment Grade Securitized ETF, Fidelity Limited Term Bond ETF, Fidelity Low
Duration Bond ETF, Fidelity Low Duration Bond Factor ETF, Fidelity Sustainable Core Plus Bond ETF, Fidelity Sustainable Low Duration
Bond ETF, Fidelity Tactical Bond ETF and Fidelity Total Bond ETF, is incorporated herein by reference to Exhibit (g)(2) of Fidelity Covington
Trust’s (File No. 033-60973) Post-Effective Amendment No. 119. |
| (4) | Transfer
Agency and Service Agreement, dated October 11, 2013, between State Street Bank and Trust
Company and Fidelity Corporate Bond ETF, Fidelity Investment Grade Bond ETF, Fidelity Investment
Grade Securitized ETF, Fidelity Limited Term Bond ETF, Fidelity Low Duration Bond ETF, Fidelity
Low Duration Bond Factor ETF, Fidelity Sustainable Core Plus Bond ETF, Fidelity Sustainable
Low Duration Bond ETF, Fidelity Tactical Bond ETF, and Fidelity Total Bond ETF is incorporated
herein by reference to Exhibit (g)(5) of Fidelity Covington Trust’s (File No. 033-60973)
Post-Effective Amendment No. 11. |
| (5) | Amendment,
dated April 4, 2024, to the Transfer Agency and Service Agreement dated October 11, 2013,
between State Street Bank and Trust Company and Fidelity Corporate Bond ETF, Fidelity Investment
Grade Bond ETF, Fidelity Investment Grade Securitized ETF, Fidelity Limited Term Bond ETF,
Fidelity Low Duration Bond ETF, Fidelity Low Duration Bond Factor ETF, Fidelity Sustainable
Core Plus Bond ETF, Fidelity Sustainable Low Duration Bond ETF, Fidelity Tactical Bond ETF,
and Fidelity Total Bond ETF, is incorporated herein by reference to Exhibit (g)(4) of Fidelity
Covington Trust’s (File No. 033-60973) Post-Effective Amendment No. 119. |
| (12) | Opinion
and Consent of counsel Dechert LLP, as to tax matters - To be filed by Post-Effective Amendment. |
(a) Power of Attorney, dated December 1, 2024, is filed herein as Exhibit 16(a).
(b) Power of Attorney, dated November 20, 2024, is filed herein as Exhibit 16(b).
Item
17. Undertakings
(1)
The undersigned Registrant agrees that prior to any public reoffering of the securities registered through the use of the prospectus
which is a part of this Registration Statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c)
of the Securities Act of 1933, the reoffering prospectus will contain the information called for by the applicable registration form
for reoffering by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable
form.
(2) The undersigned
Registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as part of an amendment to the Registration
Statement and will not be used until the amendment is effective, and that, in determining any liability under the Securities Act of 1933,
each Post-Effective Amendment shall be deemed to be a new Registration Statement for the securities offered therein, and the offering
of securities at that time shall be deemed to be the initial bona fide offering of them.
(3) The undersigned
Registrant undertakes to file a post-effective amendment to this registration statement prior to the closing of the Reorganization described
in this Registration Statement that contains an opinion of counsel supporting the tax matters discussed in this Registration Statement.
SIGNATURES
Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement has been signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Boston, and Commonwealth of Massachusetts, on the 3rd day of January 2025.
| |
|
| |
Fidelity Merrimack Street
Trust |
| |
|
| |
By |
/s/ Laura M. Del Prato |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||| |
|
Laura M. Del Prato, President |
Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the
dates indicated.
| (Signature)
|
|
(Title) |
(Date) |
| |
|
|
|
| /s/ Laura
M. Del Prato |
|
President and Treasurer |
January 3, 2025 |
| Laura M. Del Prato |
|
(Principal Executive Officer) |
|
| |
|
|
|
| /s/
Stephanie Caron |
|
Chief Financial Officer |
January 3, 2025 |
| Stephanie Caron |
|
(Principal Financial Officer) |
|
| |
|
|
|
| /s/
Abigail P. Johnson |
† |
Trustee |
January 3, 2025 |
| Abigail P. Johnson |
|
|
|
| |
|
|
|
| /s/
Elizabeth S. Acton |
* |
Trustee |
January 3, 2025 |
| Elizabeth S. Acton |
|
|
|
| |
|
|
|
| /s/ Laura
M. Bishop |
* |
Trustee |
January 3, 2025 |
| Laura M. Bishop |
|
|
|
| |
|
|
|
| /s/ Ann
E. Dunwoody |
* |
Trustee |
January 3, 2025 |
| Ann E. Dunwoody |
|
|
|
| |
|
|
|
| /s/
Robert F. Gartland |
* |
Trustee |
January 3, 2025 |
| Robert F. Gartland |
|
|
|
| |
|
|
|
| /s/
Robert W. Helm |
* |
Trustee |
January 3, 2025 |
| Robert W. Helm |
|
|
|
| |
|
|
|
| /s/
Michael E. Kenneally |
* |
Trustee |
January 3, 2025 |
| Michael E. Kenneally |
|
|
|
| |
|
|
|
| /s/ Mark
A. Murray |
* |
Trustee |
January 3, 2025 |
| Mark A. Murray |
|
|
|
| |
|
|
|
| /s/
Jennifer Toolin McAuliffe |
* |
Trustee |
January 3, 2025 |
| Jennifer Toolin McAuliffe |
|
|
|
| |
|
|
|
| /s/
Lester Owens |
* |
Trustee |
January 3, 2025 |
| Lester Owens |
|
|
|
| |
|
|
|
| /s/
Christine J. Thompson |
* |
Trustee |
January 3, 2025 |
| Christine J. Thompson |
|
|
|
|
/s/ Carol J. Zierhoffer |
* |
Trustee |
January 3, 2025 |
| Carol J. Zierhoffer |
|
|
|
| † |
By: |
/s/ Stephanie J. Brown |
|
| |
|
Stephanie J. Brown, pursuant to a power of attorney dated November 20, 2024, and filed herewith.
|
| * |
By: |
/s/
Megan C. Johnson |
|
| |
|
Megan C. Johnson, pursuant to a power of attorney dated December 1, 2024, and filed herewith. |