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To realize transparent threads, we propose three mechanisms for maintaining the transparency of background threads: slot prioritization, background thread instruction-window partitioning, and background thread flushing. In addition, we propose three mechanisms to boost background thread performance without sacrificing transparency: aggressive fetch partitioning, foreground thread instruction-window partitioning, and foreground thread flushing. We implement our mechanisms on a detailed simulator of an SMT processor and evaluate them using 8 benchmarks, including 7 from the SPEC CPU2000 suite. Our results show when cache and branch predictor interference are factored out, background threads introduce less than 1% performance degradation on the foreground thread Furthermore, maintaining the transparency of background threads reduces their throughput by only 23% relative to an equal priority scheme. To demonstrate the usefulness of transparent threads, we study transparent software prefetching (TSP), an implementation of software data prefetching using transparent threads. Due to its near-zero overhead, TSP enables prefetch instrumentation for all loads in a program, eliminating the need for profiling. TSP without any profile information, achieves a 9.52% gain across 6 SPEC benchmarks, whereas conventional software prefetching guided by cache-miss profiles increases performance by only 2.47%.