Fidelity index fund security lending in 2018

Fidelity stock index funds earn additional income by lending securities to qualified institutional borrowers.A fund’s expenses are paid out of fund earnings. Given that the US tax code gives a tax preference to dividends that qualify for lower tax rates, it is prudent for fund managers to allocate non-qualified income to fund expenses. The table below shows the amount of security lending income earned by each fund in fiscal year 2018 and calculates its percentage ratio to total annual fund expenses.[1]

2018 Fidelity security lending income [2]

FundNet security lending incomeTotal fund expenses% of fund expenses
Total Market11,878,01014,170,93983.82%
S&P 5002,89545,7516.33%
Extended market30,959,618 13,914,991222.49%
Large growth52,366371,78314.09%
Large value24,082364,3866.61%
Mid cap9014971,349,54766.80%
Small cap7,786,7582,031,722383.26%
Emerging markets193,8981,765,38610.98%
Global ex-US701,3733,437,50520.40%
International2,913,01412,684,58422.96%
Total International85,453823,66410.37%
Total55,498,964 50,961,358 108.90%

Fidelity Zero Index funds

Fidelity added four zero expense index funds in fiscal year 2018. The security lending income, fund expenses, and the percentage of fund expenses covered by security lending income are tabulated below.

FundNet Security Lending IncomeTotal Fund Expenses% of Fund Expenses
Zero Total Market7,5204581641.92%
Zero Large Cap6785.71%
Zero Extended691513,820.00%
Zero International244142171.82%

Notes

[1] Fidelity’s net after expense security lending revenue for fiscal year 2018 is tabulated in Index fund net security lending income (2018).

[2] Table data is derived from fund annual reports for fiscal year 2018. The computations are derived from the linked spreadsheet: Fidelity index fund security lending.

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