FIDELITY SCHOOL STREET TRUST/, N-30D, 1999-08-19

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N-30D, 1999-08-19

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FIDELITY
INTERNATIONAL BOND
FUND

SEMIANNUAL REPORT

JUNE 30, 1999

(2_FIDELITY_LOGOS)(registered trademark)

CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.

PERFORMANCE 4 How the fund has done over
time.

FUND TALK 7 The managers' review of fund
performance, strategy and
outlook.

INVESTMENT CHANGES 10 A summary of major shifts in
the fund's investments over
the past six months.

INVESTMENTS 11 A complete list of the fund's
investments with their
market values.

FINANCIAL STATEMENTS 19 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.

NOTES 23 Notes to the financial
statements.

Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.

Other third party marks appearing herein are the property of their
respective owners.

All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.

THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUND.
THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.

MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.

NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.

FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.

PRESIDENT'S MESSAGE

(PHOTO_OF_EDWARD_C_JOHNSON_3D)

DEAR SHAREHOLDER:

After much speculation about the U.S. Federal Reserve Board's
near-term monetary policy, stock and bond investors breathed a sigh of
relief when the Fed shifted to a neutral position on rates following
its widely anticipated quarter-point increase in short-term rates on
June 30. This switch in bias helped the S&P 500(registered trademark)
and NASDAQ soar to record-closing highs, and sent yields on the
bellwether 30-year Treasury back below 6%.

While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.

The longer your investment time frame, the less likely it is that you
will be affected by short-term market volatility. A 10-year investment
horizon appropriate for saving for a college education, for example,
enables you to weather market cycles in a long-term fund, which may
have a higher risk potential, but also has a higher potential rate of
return.

An intermediate-length fund could make sense if your investment
horizon is two to four years, while a short-term bond fund could be
the right choice if you need your money in one or two years.

If your time horizon is less than a year, you might want to consider
moving some of your bond investment into a money market fund. These
funds seek income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.

Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.

If you have questions, please call us at 1-800-544-8888, or visit our
web site at www.fidelity.com. We are available 24 hours a day, seven
days a week to provide you the information you need to make the
investments that are right for you.

Best regards,
Edward C. Johnson 3d

PERFORMANCE: THE BOTTOM LINE

There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). You can also look at the fund's income, as
reflected in the Fund's yield, to measure performance. If Fidelity had
not reimbursed certain fund expenses, the past 10 year total returns
would have been lower.

CUMULATIVE TOTAL RETURNS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED JUNE 30, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS

FIDELITY INTERNATIONAL BOND A -3.45% 1.82% 11.81% 62.26%

SB Non-US Dollar World Govt -9.11% 4.87% 30.38% 134.83%
Bond

International Income Funds -6.14% 2.48% 34.88% 101.18%
Average

</TABLE>

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare the fund's returns to the performance
of the Salomon Brothers Non-U.S. Dollar World Government Bond Index -
a market value-weighted index that is designed to represent the
performance of 16 world Government bond markets, excluding the United
States. Issues included in the index have fixed-rate coupons and
maturities of at least one year. To measure how the fund's performance
stacked up against its peers, you can compare it to the international
income funds average, which reflects the performance of mutual funds
with similar objectives tracked by Lipper Inc. The past six months
average represents a peer group of 61 mutual funds. These benchmarks
reflect reinvestment of dividends and capital gains, if any, and
exclude the effect of sales charges.

AVERAGE ANNUAL TOTAL RETURNS

PERIODS ENDED JUNE 30, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS

FIDELITY INTERNATIONAL BOND A 1.82% 2.26% 4.96%

SB Non-US Dollar World Govt 4.87% 5.45% 8.91%
Bond

International Income Funds 2.48% 6.06% 7.14%
Average

AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by annualizing each fund's total return, then taking an
arithmetic average. This may produce a different figure than that
obtained by averaging the cumulative total returns and annualizing the
result.)

A PRIOR TO FEBRUARY 27, 1998, INTERNATIONAL BOND OPERATED UNDER
CERTAIN DIFFERENT INVESTMENT POLICIES. ACCORDINGLY, THE FUND'S
HISTORICAL PERFORMANCE MAY NOT REPRESENT ITS CURRENT INVESTMENT
POLICIES.

$10,000 OVER 10 YEARS

International Bond SB Non-US World Govt Bond
00451 SB023
1989/06/30 10000.00 10000.00
1989/07/31 10325.58 10689.23
1989/08/31 10176.74 10171.51
1989/09/30 10297.67 10505.47
1989/10/31 10437.21 10417.90
1989/11/30 10548.84 10509.10
1989/12/31 10762.79 10750.03
1990/01/31 10733.65 10620.26
1990/02/28 10597.66 10295.39
1990/03/31 10723.94 10080.77
1990/04/30 10723.94 10107.99
1990/05/31 10869.64 10505.92
1990/06/30 11102.77 10725.08
1990/07/31 11491.32 11253.23
1990/08/31 11423.32 11242.34
1990/09/30 11569.03 11374.84
1990/10/31 11841.01 12190.21
1990/11/30 11967.29 12338.58
1990/12/31 12084.10 12393.94
1991/01/31 12349.56 12872.18
1991/02/28 12466.37 12834.07
1991/03/31 12296.47 11867.60
1991/04/30 12466.37 12091.75
1991/05/31 12615.03 12020.96
1991/06/30 12466.37 11780.03
1991/07/31 12593.96 12136.67
1991/08/31 12712.57 12338.58
1991/09/30 13004.13 13037.80
1991/10/31 13180.16 13205.68
1991/11/30 13114.15 13479.29
1991/12/31 13627.43 14404.01
1992/01/31 13490.01 14122.69
1992/02/29 13547.27 13913.52
1992/03/31 13524.52 13707.06
1992/04/30 13708.37 13804.17
1992/05/31 13961.17 14410.82
1992/06/30 14134.24 14994.33
1992/07/31 14346.06 15321.48
1992/08/31 14554.75 15999.36
1992/09/30 14352.15 16102.36
1992/10/31 14258.85 15521.12
1992/11/30 14044.78 15122.74
1992/12/31 14226.63 15090.98
1993/01/31 14390.98 15296.97
1993/02/28 14612.59 15600.98
1993/03/31 14934.50 15988.47
1993/04/30 15076.52 16468.53
1993/05/31 15353.65 16768.46
1993/06/30 15661.89 16454.47
1993/07/31 15900.23 16466.26
1993/08/31 16301.89 17052.50
1993/09/30 16394.80 17340.62
1993/10/31 16819.50 17261.22
1993/11/30 16765.95 17181.81
1993/12/31 17343.18 17372.84
1994/01/31 17532.54 17448.16
1994/02/28 16578.00 17497.16
1994/03/31 15384.45 17710.42
1994/04/30 15081.49 17825.67
1994/05/31 15165.60 17586.10
1994/06/30 14512.21 18011.71
1994/07/31 14776.42 18057.99
1994/08/31 14959.96 17953.63
1994/09/30 14960.73 18309.36
1994/10/31 15028.90 18781.25
1994/11/30 15091.08 18403.74
1994/12/31 14514.25 18413.72
1995/01/31 14387.57 18814.83
1995/02/28 14346.92 19347.97
1995/03/31 14440.51 21072.19
1995/04/30 14684.03 21523.21
1995/05/31 15126.86 21993.28
1995/06/30 15268.57 22102.64
1995/07/31 15240.24 22219.70
1995/08/31 14769.51 20949.23
1995/09/30 15024.90 21565.86
1995/10/31 15209.19 21634.83
1995/11/30 15312.04 21824.04
1995/12/31 15480.34 22013.70
1996/01/31 15288.45 21525.93
1996/02/29 15295.17 21587.64
1996/03/31 15265.07 21640.73
1996/04/30 15210.48 21596.26
1996/05/31 15220.84 21606.24
1996/06/30 15308.28 21727.39
1996/07/31 15574.35 22327.69
1996/08/31 15600.61 22477.43
1996/09/30 15673.80 22435.23
1996/10/31 15907.05 22813.65
1996/11/30 16138.72 23075.00
1996/12/31 15998.67 22911.66
1997/01/31 15526.38 21980.58
1997/02/28 15424.48 21725.12
1997/03/31 15267.33 21586.73
1997/04/30 15152.31 21148.42
1997/05/31 15560.57 21926.58
1997/06/30 15714.86 22196.56
1997/07/31 15566.21 21617.13
1997/08/31 15515.84 21714.69
1997/09/30 15888.57 22243.30
1997/10/31 16128.27 22741.96
1997/11/30 15888.68 22158.90
1997/12/31 15804.73 21935.21
1998/01/31 15943.53 22083.58
1998/02/28 16074.54 22393.94
1998/03/31 16058.91 22025.50
1998/04/30 16274.54 22510.10
1998/05/31 16088.67 22473.34
1998/06/30 15936.00 22392.58
1998/07/31 15998.30 22419.35
1998/08/31 15075.53 23033.71
1998/09/30 15985.79 24544.67
1998/10/31 16416.18 25652.25
1998/11/30 16536.74 25129.54
1998/12/31 16805.09 25837.38
1999/01/31 16612.44 25432.19
1999/02/28 16239.95 24540.13
1999/03/31 16416.69 24587.32
1999/04/30 16792.07 24550.12
1999/05/31 16304.38 24140.84
1999/06/30 16226.08 23483.37
IMATRL PRASUN SHR__CHT 19990630 19990713 164659 R00000000000123

$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity International Bond Fund on June 30, 1989. As the
chart shows, by June 30, 1999, the value of the investment would have
grown to $16,226 - a 62.26% increase on the initial investment. For
comparison, look at how the Salomon Brothers Non-U.S. Dollar World
Government Bond Index, did over the same period. With dividends and
capital gains, if any, reinvested, the same $10,000 would have grown
to $23,483 - a 134.83% increase.

(checkmark)
UNDERSTANDING
PERFORMANCE

Many markets around the globe
offer the potential for significant
growth over time; however,
investing in foreign markets
means assuming greater risks
than investing in the United
States. Factors like changes in
a country's financial markets,
its local political and
economic climate, and the
fluctuating value of its currency
create these risks. For these
reasons an international fund's
performance may be more
volatile than a fund that invests
exclusively in the United
States.

DIVIDENDS AND YIELD

PERIODS ENDED JUNE 30, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR A

Dividends per share 3.85(cents) 24.90(cents) 52.38(cents)

Annualized dividend rate 5.45% 5.69% 5.92%

30-day annualized yield 4.15% - -

DIVIDENDS per share show the income paid by the fund for a set period.
If you annualize this number, based on the fund's average share price
of $8.59 over the past one month, $8.82 over the past six months and
$8.85 over the past one year, you can compare the fund's income over
these three periods. The 30-day annualized YIELD is a standard formula
for all bond funds based on the yields of the bonds in the fund,
averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It
also helps you compare funds from different companies on an equal
basis. It does not reflect the cost of hedging and other currency
gains and losses.

A NON-TAXABLE DIVIDENDS: DIVIDENDS PAID ARE BASED ON THE FUND'S
INVESTMENT INCOME AND DO NOT REFLECT CURRENCY-RELATED LOSSES. AS A
RESULT OF CURRENCY LOSSES, DIVIDENDS PAID DURING 1998 OF APPROXIMATELY
35(CENTS) PER SHARE WERE A NON-TAXABLE RETURN OF CAPITAL.

FUND TALK: THE MANAGERS' OVERVIEW

MARKET RECAP

Throughout much of the six-month
period ending June 30, 1999,
strong U.S. economic reports and
a buoyant U.S. stock market had
global bond investors concerned
about the implications of a U.S.
Federal Reserve intervention to boost
key interest rates. One side effect was
an increase in yields for U.S.
government securities. Bonds with
five-year and 10-year maturities
declined the most in price, leaving the
yield curve steeper at the shorter end.
A strong equity market and
consolidation in the
telecommunications sector helped
the high-yield market. However, by
mid-year some of this enthusiasm
was tempered by increased new
issuance and investors' focus on
interest rates. Emerging-market debt
enjoyed a favorable first half on the
back of stronger commodity prices,
especially oil. Higher oil prices
helped emerging-market countries
that are significant oil exporters as
well as high-yield energy
companies. Emerging-market debt
outperformed most other
fixed-income markets in the period.
With regard to non-U.S. developed
markets in local currency terms,
Japan posted the highest gain -
2.57%- while the U.K. had the
lowest return at -1.88%. The
majority of countries posted
negative returns in local currency
terms. A strong U.S. dollar detracted
further from this performance. The
euro lost 12.17% versus the U.S.
dollar, while the Japanese yen
declined 6.8%.

(photographs of John Carlson and Ian Spreadbury)

An interview with John Carlson (left photo), Lead Portfolio Manager of
Fidelity International Bond Fund and manager of the fund's
emerging-market investments; and Ian Spreadbury, manager of the fund's
investment-grade developed-market investments

Q. HOW DID THE FUND PERFORM IN THE FIRST HALF OF 1999, JOHN?

J.C. While the emerging-market subportfolio generated strong results
in the period, this was offset by the impact of a strong U.S. dollar
on returns in the non-U.S. developed market subportfolio. For the six
months ending June 30, 1999, the fund posted a return of -3.45 %. The
international income funds average, as tracked by Lipper Inc.,
returned -6.14% during the period. The Salomon Brothers Non-US Dollar
World Government Bond Index returned -9.11% during the same six-month
period. For the 12 months ending June 30, 1999, the fund posted a
return of 1.82%, while the Lipper peer group and Salomon Brothers
index returned 2.48% and 4.87%, respectively.

Q. IAN, HOW DID THE DEVELOPED MARKETS SUBPORTFOLIO FARE DURING THE
PERIOD? WHAT SORT OF STRATEGIES DID YOU IMPLEMENT DURING THE PERIOD
WITH RESPECT TO THE DEVELOPED MARKETS?

I.S. The rise in U.S. yields was mirrored in most developed markets
despite their weak Gross Domestic Product (GDP) growth and subdued
inflation. As a result, local currency returns were negative in all
main markets except Japan, where government buying held down yields.
In dollar terms, European markets were negatively impacted by the weak
euro, which fell approximately 13% against the dollar over the
reporting period. The only positive performer was Canada, helped by a
recovering currency. Our decision to underweight Japanese bonds when
10-year yields fell to 0.75% was vindicated when yields rose to 2.2%
on concern over a ballooning budget deficit. We sold off the Japanese
bond position as it became clear that the government would continue to
support the market. We also reduced exposure to euro-yen bonds in
anticipation of the removal of withholding tax on Japanese government
bonds later this year. In euros, which account for approximately
one-half of the subportfolio, we took a small position in corporate
bonds. The level of corporate issuance was very heavy (see callout box
on page 9) and this led to wider spreads. Aside from the above,
interest-rate and currency exposure was held approximately in line
with benchmark levels.

Q. JOHN, RUSSIA WAS THE MAJOR STORY IN EMERGING MARKETS LAST YEAR. HOW
HAS IT PERFORMED IN 1999 AND HOW DID IT INFLUENCE FUND PERFORMANCE?

J.C. Russian asset prices ended 1998 at deeply depressed levels. The
fund maintained its overweighted position in Russia as our team
believed assets had become significantly oversold. The fund's holdings
in Russia were also shifted to include more senior securities, which
is debt that has a higher standing in terms of repayment. This year,
Russian debt prices have rebounded, as stronger commodity prices,
particularly oil, helped. In addition, some stability returned to the
Russian economy. Russia was the top-performing country in the
emerging-markets benchmark this year and a top contributor to the
subportfolio.

Q. WHAT WERE THE OTHER KEY DRIVERS OF FUND PERFORMANCE?

J.C. Our decision to overweight Brazil in the emerging-market debt
subportfolio was beneficial to performance. In early January, we took
advantage of the oversold prices that resulted from investors'
anticipation of the country's currency devaluation. Brazilian debt
prices subsequently recovered in part due to better-than-expected
economic reports. With oil prices improving, the fund benefited from
its overweighting in Venezuela, one of the world's most important oil
producers. Differentiating among oil producers benefited fund
performance. Underweighting Ecuador also contributed to relative
performance. The fund did not own this position at the period's end.
Security selection - choosing the bonds with the best value in each
country - also was a key driver to fund performance, specifically
within countries with robust bond markets, such as Brazil, Mexico and
Argentina. The subportfolio did not have any significant performance
detractors in the period.

Q. WHAT IS YOUR MARKET OUTLOOK, JOHN?

J.C. I have a cautious outlook as we enter the second half. I am
keeping a careful watch on capital market liquidity. That being said,
we continue to see compelling opportunities in credit-spread markets
such as emerging markets given their absolute yield levels.

THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGERS ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.

(checkmark)
FUND FACTS

GOAL: high total investment return

FUND NUMBER: 451

TRADING SYMBOL: FGBDX

START DATE: December 30,
1986

SIZE: as of June 30, 1999,
more than $64 million

MANAGERS: John Carlson, lead
and emerging-markets manager,
since 1998; Ian Spreadbury,
manager, foreign
developed-market securities,
since 1996

JOHN CARLSON DISCUSSES THE EURO
AND CORPORATE DEBT ISSUANCE:

"The physical transition to the single
currency has proceeded relatively
smoothly, with all participating
government bonds redenominating to
euros at the beginning of 1999. Some
corporate bonds remain denominated
in legacy currencies - national
currencies replaced by the euro -
and will redenominate by the end of
2001.

"The introduction of the euro has
reduced the scope for international
investors to add value through
currency plays and, as a result, more
investors are turning to the credit
markets as a medium for adding value.

"In terms of economic
convergence, - the performance
of the euro-countries' national
economies - it is too early to judge
how things will develop. Certainly,
there is still a wide range of
economic performance with some
peripheral countries like Ireland
turning in very strong growth, while
the German economy, for example,
continues to struggle.

"Prior to this year, the corporate
markets hardly existed in Europe as
companies used banks as their main
source of debt finance. This year,
we have seen huge amounts of
corporate issuance as the banks
have come under increasing
competitive pressure and the
markets have enabled companies to
fund in large amounts and with more
flexibility. The issuance also has
been driven by an increased level of
merger and acquisition activity as
companies seek to establish
themselves across Europe."

INVESTMENT CHANGES

<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE COUNTRIES AS OF JUNE
30, 1999

(EXCLUDING CASH EQUIVALENTS) % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE COUNTRIES 6 MONTHS AGO

United Kingdom 15.1 16.5

Canada 14.7 12.9

Germany 14.4 15.2

Multi-National 12.3 7.6

France 8.5 11.7

</TABLE>

PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF OPEN FUTURES CONTRACTS, IF
APPLICABLE.

<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE HOLDINGS AS OF JUNE
30, 1999

(BY ISSUER, EXCLUDING CASH % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
EQUIVALENTS) THESE HOLDINGS 6 MONTHS AGO

United Kingdom, Great Britain 7.1 5.7
& Northern Ireland

Treuhandanstalt 7.0 0.0

Canadian Government 6.4 5.2

Ontario Province 6.2 5.4

International Bank for 6.1 1.4
Reconstruction & Development

</TABLE>

<TABLE>
<CAPTION>
<S> <C>
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)

AS OF JUNE 30, 1999 AS OF DECEMBER 31, 1998

Corporate Bonds 29.5% Corporate Bonds 27.4%

Government Obligations 52.9% Government Obligations 61.0%

Supranational Obligations 12.3% Supranational Obligations 7.6%

Other Investments 1.1% Other Investments 1.6%

Short-Term Investments 4.2% Short-Term Investments 2.4%

</TABLE>

Row: 1, Col: 1, Value: 29.5
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 52.9
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 12.3
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 1.1
Row: 1, Col: 8, Value: 4.2

Row: 1, Col: 1, Value: 27.4
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 61.0
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 7.6
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 1.6
Row: 1, Col: 8, Value: 2.4

INVESTMENTS JUNE 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS - 29.5%

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

CONVERTIBLE BONDS - 0.6%

MALAYSIA - 0.4%

Telekom Malaysia BHD 4% Baa3 $ 290,000 $ 250,125
10/3/04

MEXICO - 0.2%

Telefonos de Mexico SA de CV BB 140,000 144,550
4.25% 6/15/04

TOTAL CONVERTIBLE BONDS 394,675

NONCONVERTIBLE BONDS - 28.9%

ARGENTINA - 0.5%

Compania Internacional de BB ARS 440,000 341,046
Telecomunicaciones 10.375%
8/1/04 (Reg. S)

BRAZIL - 0.7%

Banco Nacional de
Desenvolvimento Economico e
Social:

13.64% 6/16/08 (h) B1 270,000 228,150

13.64% 6/16/08 (g)(h) B1 220,000 185,900

414,050

CANADA - 2.1%

Canada Trustco Mortgage Corp. - CAD 2,000,000 1,363,643
5.2% 9/13/00

FRANCE - 5.5%

Credit Local de France euro Aa1 ITL 5,500,000 3,527,410
8.125% 12/6/06 (e)

GERMANY - 3.7%

Depfa Bank AG 4.75% 3/20/03 Aaa EUR 2,200,000 2,340,111

GRAND CAYMAN ISLANDS - 1.6%

FSA Global Funding Ltd. euro - EUR 1,000,000 1,028,450
5.125% 7/22/09

MALAYSIA - 0.6%

Petroliam Nasional BHD
(Petronas):

7.625% 10/15/26 (Reg. S) A2 340,000 277,100

yankee 7.625% 10/15/26 (g) Baa3 100,000 81,500

358,600

MEXICO - 0.8%

Cemex SA 9.25% 6/17/02 Ba2 260,000 262,600

Petroleos Mexicanos:

9.25% 3/30/18 Ba2 70,000 58,450

9.5% 9/15/27 Ba2 220,000 209,275

530,325

CORPORATE BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

NONCONVERTIBLE BONDS -
CONTINUED

NETHERLANDS - 1.6%

Mannesmann Finance BV euro A2 EUR 1,000,000 $ 994,331
4.75% 5/27/09

TURKEY - 0.4%

Cellco Finance NV 15% 8/1/05 B2 260,000 267,800

UNITED KINGDOM - 6.4%

Argyll Group PLC euro 8.125% A- GBP 250,000 411,084
10/4/02

Punch Taverns Finance PLC Baa2 GBP 1,000,000 1,650,487
euro 7.567% 4/15/26

Tesco PLC euro 8.75% 2/20/03 Aa3 GBP 1,200,000 2,027,146

4,088,717

UNITED STATES OF AMERICA - 5.0%

AirTouch Communications, Inc. A2 DEM 2,000,000 1,071,347
euro 5.5% 7/24/08

Citicorp euro:

5.5% 6/30/10 A1 DEM 1,000,000 522,055

6.25% 9/19/09 A1 DEM 2,000,000 1,131,399

KFW International Finance, Aaa GBP 250,000 430,248
Inc. euro 10.625% 9/3/01

3,155,049

TOTAL NONCONVERTIBLE BONDS 18,409,532

TOTAL CORPORATE BONDS 18,804,207
(Cost $19,568,870)

GOVERNMENT OBLIGATIONS (I) -
53.0%

ARGENTINA - 2.6%

Argentinian Republic:

Brady par euro 6% 3/31/23 Ba3 990,000 633,600

9.75% 9/19/27 Ba3 900,000 691,875

City of Buenos Aires euro B1 ARS 450,000 362,299
10.5% 5/28/04

1,687,774

GOVERNMENT OBLIGATIONS -
CONTINUED

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

BRAZIL - 4.4%

Brazilian Federative Republic:

Brady:

capitalization bond 8% 4/15/14 B2 $ 1,087,705 $ 708,368

debt conversion bond euro B2 930,000 576,600
5.9375% 4/15/12 (h)

discount euro 5.875% 4/15/24 B2 610,000 388,875
(h)

new money bond L 5.9375% B2 1,000,000 701,250
4/15/09 (Bearer) (h)

global bond 10.125% 5/15/27 B2 530,000 399,488

2,774,581

BULGARIA - 0.6%

Bulgarian Republic Brady:

discount A 5.875% 7/28/24 (h) B2 450,000 307,688

FLIRB A 2.5% 7/28/12 (h) B2 90,000 55,350

363,038

CANADA - 12.6%

Canadian Government:

7% 12/1/06 Aa1 CAD 700,000 521,638

9% 6/1/25 Aa1 CAD 2,650,000 2,620,831

10% 5/1/02 Aa1 CAD 1,250,000 948,759

Ontario Province 9% 9/15/04 Aa3 CAD 5,000,000 3,917,105

8,008,333

COSTA RICA - 0.2%

Costa Rican Republic 9.335% Ba1 140,000 137,200
5/15/09 (g)

FRANCE - 3.0%

French Government OAT 9.5% Aaa EUR 1,700,000 1,925,980
1/25/01

GERMANY - 10.7%

German Federal Republic:

3.75% 1/4/09 Aaa EUR 1,000,000 974,452

5.625% 1/4/28 Aaa EUR 1,000,000 1,064,242

8.25% 9/20/01 Aaa EUR 300,000 342,144

Treuhandanstalt 6.625% 7/9/03 Aaa EUR 3,900,000 4,444,244

6,825,082

GOVERNMENT OBLIGATIONS -
CONTINUED

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

ITALY - 4.6%

Italian Republic:

3.5% 6/20/01 Aa3 JPY 220,000,000 $ 1,924,240

6% 11/1/07 Aa3 EUR 900,000 1,014,609

2,938,849

IVORY COAST - 0.1%

Ivory Coast Brady past due - 175,500 61,425
interest 2% 3/29/18 (h)

MALAYSIA - 0.4%

Malaysian Government yankee Baa3 220,000 222,356
8.75% 6/1/09

MEXICO - 2.0%

United Mexican States:

Brady par A 6.25% 12/31/19 Ba2 490,000 363,825
unit

global bond 11.5% 5/15/26 Ba2 520,000 579,800

10.375% 2/17/09 Ba2 130,000 132,763

warrants 2/17/00 (a)(j) - 3,500 222,250

1,298,638

NIGERIA - 0.2%

Central Bank of Nigeria:

6.25% 11/15/20 - 250,000 153,750

warrants 11/15/20 (a)(j) - 250 0

153,750

PERU - 0.3%

Peruvian Republic Brady:

FLIRB 3.75% 3/7/17 (h) Ba3 140,000 77,000

past due interest 4.5% 3/7/17 Ba3 170,000 104,975
(h)

181,975

POLAND - 0.1%

Polish Republic Brady par 3% Baa3 110,000 65,725
10/27/24 (f)

RUSSIA - 1.8%

Bank for Foreign Economic Ca 700,000 112,000
Affairs of Russia
(Vnesheconombank) interest
notes 6.0625% 12/15/15 (h)

Moscow City 9.5% 5/31/00 Caa1 380,000 234,650
(Reg.)

GOVERNMENT OBLIGATIONS -
CONTINUED

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

RUSSIA - CONTINUED

Russian Federation:

euro 12.75% 6/24/28 (Reg. S) B3 $ 650,000 $ 365,625

9.25% 11/27/01 B3 100,000 67,750

11% 7/24/18 (Reg. S) B3 670,000 335,000

Russian Federation Ministry Ca 120,000 28,200
of Finance 3% 5/14/03

1,143,225

TURKEY - 0.3%

Turkish Republic:

global 12.375% 6/15/09 B1 110,000 108,488

Treasury Bill 0% 1/19/00 (e) - TRL 35,116,000 54,433

162,921

UNITED KINGDOM - 7.1%

United Kingdom, Great Britain
& Northern Ireland:

6.75% 11/26/04 Aaa GBP 500,000 839,439

7.5% 12/7/06 Aaa GBP 700,000 1,244,553

8% 12/7/15 Aaa GBP 1,160,000 2,461,086

4,545,078

VENEZUELA - 2.0%

Venezuelan Republic:

Brady:

debt conversion bond euro B2 404,760 313,183
6.3125% 12/18/07 (h)

FLIRB A 6% 3/31/07 (h) B2 380,950 291,427

par W-B euro 6.75% 3/31/20 B2 280,000 195,300

global bond:

13.625% 8/15/18 B2 150,000 138,000

13.625% 8/15/18 B2 20,000 18,400

Oil recovery rights 3/31/20 - 1,400 0
(j)

9.25% 9/15/27 B2 510,000 339,150

1,295,460

TOTAL GOVERNMENT OBLIGATIONS 33,791,390
(Cost $34,902,517)

SUPRANATIONAL OBLIGATIONS -
12.3%

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

Eurofima euro11.125% 2/2/00 Aaa ITL 3,000,000 $ 1,673,324
(e)

Inter-American Development Aaa JPY 250,000,000 2,273,708
Bank 6.75% 2/20/01

International Bank for Aaa JPY 400,000,000 3,901,704
Reconstruction & Development
4.75% 12/20/04

TOTAL SUPRANATIONAL OBLIGATIONS 7,848,736
(Cost $8,709,135)

</TABLE>

COMMON STOCKS - 0.0%

UNITED STATES OF AMERICA - 0.0%

InterAmericas Communications 5,250 21,656
Corp. warrants 10/27/07 (a)
(Cost $1,916)

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SOVEREIGN LOAN PARTICIPATIONS
- - 1.1%

PRINCIPAL AMOUNT (D)

ALGERIA - 0.1%

Algerian Republic loan - $ 60,667 57,330
participation - The Chase
Manhattan Bank 7.3125%
3/4/00 (h)

MOROCCO - 0.4%

Moroccan Kingdom loan
participation:

Series A - ING Bank NV - 110,000 89,375
5.9063% 1/1/09 (h)

Series A - Paribas Capital - 152,857 124,196
Markets 5.9063% 1/1/09 (h)

213,571

RUSSIA - 0.6%

Bank for Foreign Economic
Affairs of Russia
(Vnesheconombank) loan
participation restructured
under 1997 Agreement:

- - BankBoston Corp. 6.0625% - 940,000 116,325
12/15/20 (c)(h)

- - Lehman Commercial Paper, - 790,000 97,763
Inc. 6.0625% 12/15/20 (c)(h)

- - Merrill Lynch, Pierce, - 550,000 68,063
Fenner & Smith, Inc. 6.0625%
12/15/20 (c)(h)

- - Morgan (J.P.) Securities, - 900,000 111,375
Inc. 6.0625% 12/15/20 (c)(h)

393,526

TOTAL SOVEREIGN LOAN 664,427
PARTICIPATIONS
(Cost $1,118,249)

COMMERCIAL PAPER - 1.6%

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

UNITED KINGDOM - 1.6%

Ford Credit Europe PLC 0% - EUR 1,000,000 $ 1,033,053
7/22/99 (Cost $1,041,301)

</TABLE>

CASH EQUIVALENTS - 2.5%

MATURITY AMOUNT

Investments in repurchase $ 1,605,216 1,605,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 4.84%,
dated 6/30/99 due 7/1/99
(Cost $1,605,000)

TOTAL INVESTMENT IN $ 63,768,469
SECURITIES - 100%
(Cost $66,946,988)

SECURITY TYPE ABBREVIATION

FLIRB - Front Loaded Interest
Reduction Bonds

CURRENCY ABBREVIATIONS

ARS - Argentine peso

CAD - Canadian dollar

DEM - German deutsche mark

EUR - European Monetary Unit

GBP - British pound

ITL - Italian lira

JPY - Japanese yen

TRL - Turkish lira

LEGEND

(a) Non-income producing

(b) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.

(c) Non-income producing - issuer filed for protection under the
Federal Bankruptcy Code or is in default of interest payment.

(d) Principal Amount is stated in United States dollars unless
otherwise noted.

(e) Principal Amount in thousands.

(f) Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date. The rate shown is the rate at
period end.

(g) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers. At the period end, the value of these securities
amounted to $404,600 or 0.6% of net assets.

(h) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.

(i) For foreign government obligations not individually rated by S&P
or Moody's, the ratings listed have been assigned by FMR, the fund's
investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.

(j) Quantity represents share amount.

OTHER INFORMATION

The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):

MOODY'S RATINGS S&P RATINGS

Aaa, Aa, A 69.6% AAA, AA, A 63.2%

Baa 3.6% BBB 3.6%

Ba 5.1% BB 7.2%

B 10.0% B 7.4%

Caa 0.4% CCC 0.4%

Ca, C 0.2% CC, C 1.2%

D 0.0%

The percentage not rated by Moody's or S&P amounted to 5.1%. FMR has
determined that unrated debt securities that are lower quality account
for 3.0% of the total value of investment in securities.

INCOME TAX INFORMATION

At June 30, 1999, the aggregate cost of investment securities for
income tax purposes was $67,046,251. Net unrealized depreciation
aggregated $3,277,782, of which $755,628 related to appreciated
investment securities and $4,033,410 related to depreciated investment
securities.

At December 31, 1998, the fund had a capital loss carryforward of
approximately $94,001,000 of which $81,207,000 and $12,794,000 will
expire on December 31, 2002 and 2003, respectively.

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)

ASSETS

Investment in securities, at $ 63,768,469
value (including repurchase
agreements of $1,605,000)
(cost $66,946,988) - See
accompanying schedule

Cash 924

Receivable for investments 1,700,494
sold

Receivable for fund shares 67,752
sold

Interest receivable 1,370,773

TOTAL ASSETS 66,908,412

LIABILITIES

Payable for investments $ 2,408,757
purchased

Payable for fund shares 94,783
redeemed

Accrued management fee 36,579

Other payables and accrued 25,699
expenses

TOTAL LIABILITIES 2,565,818

NET ASSETS $ 64,342,594

Net Assets consist of:

Paid in capital $ 164,157,183

Distributions in excess of (323,724)
net investment income

Accumulated undistributed net (96,223,012)
realized gain (loss) on
investments and foreign
currency transactions

Net unrealized appreciation (3,267,853)
(depreciation) on
investments and assets and
liabilities in foreign
currencies

NET ASSETS, for 7,518,513 $ 64,342,594
shares outstanding

NET ASSET VALUE, offering $8.56
price and redemption price
per share ($64,342,594
(divided by) 7,518,513
shares)

STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30,
1999 (UNAUDITED)

INVESTMENT INCOME $ 2,456,591
Interest

Less foreign taxes withheld (4,696)

TOTAL INCOME 2,451,895

EXPENSES

Management fee $ 237,827

Transfer agent fees 101,967

Accounting fees and expenses 30,354

Non-interested trustees' 1,284
compensation

Custodian fees and expenses 21,358

Registration fees 9,760

Audit 25,515

Legal 244

Total expenses before 428,309
reductions

Expense reductions (1,480) 426,829

NET INVESTMENT INCOME 2,025,066

REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:

Investment securities (1,811,361)

Foreign currency transactions (54,926) (1,866,287)

Change in net unrealized
appreciation (depreciation)
on:

Investment securities (2,555,963)

Assets and liabilities in (85,439) (2,641,402)
foreign currencies

NET GAIN (LOSS) (4,507,689)

NET INCREASE (DECREASE) IN $ (2,482,623)
NET ASSETS RESULTING FROM
OPERATIONS

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, 1998
1999 (UNAUDITED)

INCREASE (DECREASE) IN NET
ASSETS

Operations Net investment $ 2,025,066 $ 4,280,056
income

Net realized gain (loss) (1,866,287) (3,235,861)

Change in net unrealized (2,641,402) 3,545,506
appreciation (depreciation)

NET INCREASE (DECREASE) IN (2,482,623) 4,589,701
NET ASSETS RESULTING FROM
OPERATIONS

Distributions to shareholders (1,969,846) (1,417,935)
From net investment income

Return of capital - (2,893,391)

TOTAL DISTRIBUTIONS (1,969,846) (4,311,326)

Share transactions Net 12,968,926 46,704,839
proceeds from sales of shares

Reinvestment of distributions 1,773,941 3,897,316

Cost of shares redeemed (20,087,687) (55,122,986)

NET INCREASE (DECREASE) IN (5,344,820) (4,520,831)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) (9,797,289) (4,242,456)
IN NET ASSETS

NET ASSETS

Beginning of period 74,139,883 78,382,339

End of period (including $ 64,342,594 $ 74,139,883
distributions in excess of
net investment income of
$323,724 and $378,944,
respectively)

OTHER INFORMATION
Shares

Sold 1,462,894 5,204,600

Issued in reinvestment of 202,123 434,377
distributions

Redeemed (2,276,326) (6,129,140)

Net increase (decrease) (611,309) (490,163)

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SIX MONTHS ENDED JUNE 30, 1999 YEARS ENDED DECEMBER 31,

(UNAUDITED) 1998 1997 1996 1995

SELECTED PER-SHARE DATA

Net asset value, beginning of $ 9.120 $ 9.090 $ 9.710 $ 9.940 $ 9.880
period

Income from Investment .256 D .518 D .497 D .550 .745
Operations Net investment
income

Net realized and unrealized (.567) .034 (.621) (.234) (.109)
gain (loss)

Total from investment (.311) .552 (.124) .316 .636
operations

Less Distributions

From net investment income (.249) (.172) (.150) (.096) (.516)

In excess of net investment - - - - -
income

In excess of net realized - - - - -
gain

Return of capital - (.350) (.346) (.450) (.060)

Total distributions (.249) (.522) (.496) (.546) (.576)

Net asset value, end of $ 8.560 $ 9.120 $ 9.090 $ 9.710 $ 9.940
period

TOTAL RETURN B, C (3.45)% 6.33% (1.21)% 3.35% 6.66%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period $ 64,343 $ 74,140 $ 78,382 $ 113,631 $ 196,862
(000 omitted)

Ratio of expenses to average 1.24% A 1.26% 1.27% 1.22% 1.16%
net assets

Ratio of expenses to average 1.23% A, E 1.25% E 1.27% 1.22% 1.16%
net assets after expense
reductions

Ratio of net investment 5.84% A 5.75% 5.36% 6.09% 6.19%
income to average net assets

Portfolio turnover rate 173% A 246% 74% 91% 322%

</TABLE>

1994

SELECTED PER-SHARE DATA

Net asset value, beginning of $ 12.610
period

Income from Investment .569
Operations Net investment
income

Net realized and unrealized (2.589)
gain (loss)

Total from investment (2.020)
operations

Less Distributions

From net investment income (.225)

In excess of net investment (.054)
income

In excess of net realized (.020)
gain

Return of capital (.411)

Total distributions (.710)

Net asset value, end of $ 9.880
period

TOTAL RETURN B, C (16.31)%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period $ 382,803
(000 omitted)

Ratio of expenses to average 1.14%
net assets

Ratio of expenses to average 1.14%
net assets after expense
reductions

Ratio of net investment 6.50%
income to average net assets

Portfolio turnover rate 367%

</TABLE>

A ANNUALIZED

B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.

C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.

D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.

E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.

NOTES TO FINANCIAL STATEMENTS

For the period ended June 30, 1999 (Unaudited)

1. SIGNIFICANT ACCOUNTING POLICIES.

Fidelity International Bond Fund (the fund) is a fund of Fidelity
School Street Trust (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company organized as a Massachusetts business trust. The
financial statements have been prepared in conformity with generally
accepted accounting principles which require management to make
certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:

SECURITY VALUATION. Securities for which quotations are readily
available are valued at the last sale price, or if no sale price, at
the closing bid price in the principal market in which such securities
are normally traded. Securities (including restricted securities) for
which quotations are not readily available are valued primarily using
dealer-supplied valuations or at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are
not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.

FOREIGN CURRENCY TRANSLATION.

The accounting records of the fund are maintained in U.S. dollars.
Investment securities and other assets and liabilities denominated in
a foreign currency are translated into U.S. dollars at the prevailing
rates of exchange at period end. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars
at the prevailing exchange rate on the respective dates of the
transactions.

Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
and settlement date on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.

INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
U.S. federal income taxes to the extent that it distributes
substantially all of its taxable income for its fiscal year. The fund
may be subject to foreign taxes on income and gains on investments
which are accrued based upon the fund's understanding of the tax rules
and regulations that exist in the markets in which it invests. The
fund accrues such taxes as applicable. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."

INVESTMENT INCOME. Interest income, which includes accretion of
original issue discount, is accrued as earned. Interest income is
recorded net of foreign taxes withheld where recovery of such taxes is
uncertain. The fund may place a debt

1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

INVESTMENT INCOME - CONTINUED

obligation on non-accrual status and reduce related interest income by
ceasing current accruals and writing off interest receivables when the
collection of all or a portion of interest has become doubtful based
on consistently applied procedures, under the general supervision of
the Board of Trustees of the fund. A debt obligation is removed from
non-accrual status when the issuer resumes interest payments or when
collectibility of interest is reasonably assured.

EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.

DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income. Distributions to shareholders from
realized capital gains on investments, if any, are recorded on the
ex-dividend date.

Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for paydown gains/losses on certain securities, foreign
currency transactions, market discount, capital loss carryforwards and
losses deferred due to wash sales.

Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Distributions in excess of net investment income and accumulated
undistributed net realized gain (loss) on investments and foreign
currency transactions may include temporary book and tax basis
differences that will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the
following year.

For the period ended December 31, 1998, the fund's distributions
exceeded the aggregate amount of taxable income and net realized gains
resulting in a return of capital. This was due to certain foreign
currency losses which decreased taxable income available for
distribution after certain distributions had been made.

If the fund's dividends exceed its taxable income in any year, as a
result of currency losses or otherwise, all or a portion of the fund's
dividends may be treated as a return of capital. Any return of capital
will be reported to shareholders on the annual tax statement in
January.

SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.

2. OPERATING POLICIES.

FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual

2. OPERATING POLICIES - CONTINUED

FOREIGN CURRENCY CONTRACTS - CONTINUED

currency exchange rates established at the time of each trade.

JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other
affiliated entities of Fidelity Management & Research Company (FMR),
may transfer uninvested cash balances into one or more joint trading
accounts. These balances are invested in one or more repurchase
agreements for U.S. Treasury or Federal Agency obligations.

REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.

RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, the fund had no investments in restricted
securities (excluding 144A issues).

LOANS AND OTHER DIRECT DEBT INSTRUMENTS. The fund is permitted to
invest in loans and loan participations, trade claims or other
receivables. These investments may include standby financing
commitments that obligate the fund to supply additional cash to the
borrower on demand. Loan participations involve a risk of insolvency
of the lending bank or other financial intermediary. At the end of the
period, these investments amounted to $664,427 or 1.0% of net assets.

3. PURCHASES AND SALES OF INVESTMENTS.

Purchases and sales of securities, other than short-term securities,
aggregated $57,061,340 and $61,454,538, respectively.

4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.

MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .1100% to .3700% for the
period. The annual individual fund fee rate is .55%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they

4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED

MANAGEMENT FEE - CONTINUED

resulted in the same or a lower management fee. For the period, the
management fee was equivalent to an annualized rate of .68% of average
net assets.

SUB-ADVISER FEE. FMR, on behalf of the fund, entered into sub-advisory
agreements with Fidelity Management & Research (U.K.) Inc., Fidelity
Management & Research (Far East) Inc., Fidelity International
Investment Advisors (FIIA), and Fidelity Investments Japan Limited
(FIJ). In addition, FIIA entered into a sub-advisory agreement with
its subsidiary, Fidelity International Investment Advisors (U.K.)
Limited (FIIA(U.K.)L). Under the sub-advisory arrangements, FMR may
receive investment advice and research services and may grant the
sub-advisers investment management authority to buy and sell
securities. FMR pays its sub-advisers either a portion of its
management fee or a fee based on costs incurred for these services.
FIIA pays FIIA(U.K.)L a fee based on costs incurred for either
service.

TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the fund's transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. For the period, the transfer agent fees were
equivalent to an annualized rate of .29% of average net assets.

ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee
is based on the level of average net assets for the month plus
out-of-pocket expenses.

5. EXPENSE REDUCTIONS.

The fund has entered into arrangements with its custodian and transfer
agent whereby credits realized as a result of uninvested cash balances
were used to reduce a portion of the fund's expenses. During the
period, the fund's custodian and transfer agent fees were reduced by
$518 and $962, respectively, under these arrangements.

6. CREDIT RISK.

The fund's relatively large investment in countries with limited or
developing capital markets may involve greater risks than investments
in more developed markets and the prices of such investments may be
volatile. The yields of emerging market debt obligations reflect,
among other things, perceived credit risk. The consequences of
political, social or economic changes in these markets may have
disruptive effects on the market prices of the fund's investments and
the income they generate, as well as the fund's ability to repatriate
such amounts.

7. LITIGATION.

The fund is engaged in litigation against the obligor on the inflation
adjusted debt of Siderurgica Brasileiras SA, contesting the
calculation of the principal adjustment.

7. LITIGATION - CONTINUED

The probability of success of this litigation cannot be predicted and
the amount of recovery cannot be estimated. Any recovery from this
litigation would inure to the benefit of the fund. As of period end,
the fund no longer holds Siderurgica Brasileiras SA debt securities.

MANAGING YOUR INVESTMENTS

Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.

BY PHONE

Fidelity Automated Service Telephone provides a single toll-free
number to access account balances, positions, quotes and trading. It's
easy to navigate the service, and on your first call, the system will
help you create a personal identification number (PIN) for security.

(PHONE_GRAPHIC)
FIDELITY AUTOMATED
SERVICE TELEPHONE
1-800-544-5555

PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.

BY PC

Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.

(COMPUTER_GRAPHIC)
FIDELITY'S WEB SITE
WWW.FIDELITY.COM

If you are not currently on the Internet, call EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.

(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)

Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.

* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE
WILL ALSO VARY. THIS MEANS THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU
SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY MARKET FUNDS WILL
BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY
MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.

TO WRITE FIDELITY

If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and
send you written confirmation upon completion of your request.

(LETTER_GRAPHIC)
MAKING CHANGES
TO YOUR ACCOUNT

(such as changing name, address, bank, etc.)

Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002

(LETTER_GRAPHIC)
FOR NON-RETIREMENT
ACCOUNTS

BUYING SHARES

Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003

OVERNIGHT EXPRESS

Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048

SELLING SHARES

Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602

OVERNIGHT EXPRESS

Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75039-5517

GENERAL CORRESPONDENCE

Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500

(LETTER_GRAPHIC)
FOR RETIREMENT
ACCOUNTS

BUYING SHARES

Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003

SELLING SHARES

Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602

OVERNIGHT EXPRESS

Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75039-5517

GENERAL CORRESPONDENCE

Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500

TO VISIT FIDELITY

For directions and hours,
please call 1-800-544-9797.

ARIZONA

7373 N. Scottsdale Road
Scottsdale, AZ

CALIFORNIA

815 East Birch Street
Brea, CA

851 East Hamilton Avenue
Campbell, CA

527 North Brand Boulevard
Glendale, CA

19200 Von Karman Avenue
Irvine, CA

10100 Santa Monica Blvd.
Los Angeles, CA

251 University Avenue
Palo Alto, CA

1760 Challenge Way
Sacramento, CA

7676 Hazard Center Drive
San Diego, CA

455 Market Street
San Francisco, CA

950 Northgate Drive
San Rafael, CA

1400 Civic Drive
Walnut Creek, CA

6300 Canoga Avenue
Woodland Hills, CA

COLORADO

1625 Broadway
Denver, CO

CONNECTICUT

48 West Putnam Avenue
Greenwich, CT

265 Church Street
New Haven, CT

300 Atlantic Street
Stamford, CT

29 South Main Street
West Hartford, CT

DELAWARE

222 Delaware Avenue
Wilmington, DE

FLORIDA

4400 N. Federal Highway
Boca Raton, FL

90 Alhambra Plaza
Coral Gables, FL

4090 N. Ocean Boulevard
Ft. Lauderdale, FL

1907 West State Road 434
Longwood, FL

8880 Tamiami Trail, North
Naples, FL

2401 PGA Boulevard
Palm Beach Gardens, FL

8065 Beneva Road
Sarasota, FL

1502 N. Westshore Blvd.
Tampa, FL

GEORGIA

3445 Peachtree Road, N.E.
Atlanta, GA

1000 Abernathy Road
Atlanta, GA

ILLINOIS

One North Franklin Street
Chicago, IL

1415 West 22nd Street
Oak Brook, IL

1700 East Golf Road
Schaumburg, IL

3232 Lake Avenue
Wilmette, IL

INDIANA

4729 East 82nd Street
Indianapolis, IN

MAINE

3 Canal Plaza
Portland, ME

MARYLAND

7401 Wisconsin Avenue
Bethesda, MD

1 West Pennsylvania Ave.
Towson, MD

MASSACHUSETTS

470 Boylston Street
Boston, MA

155 Congress Street
Boston, MA

25 State Street
Boston, MA

300 Granite Street
Braintree, MA

44 Mall Road
Burlington, MA

416 Belmont Street
Worcester, MA

MICHIGAN

280 North Woodward Ave.
Birmingham, MI

29155 Northwestern Hwy.
Southfield, MI

MINNESOTA

7600 France Avenue South
Edina, MN

MISSOURI

700 West 47th Street
Kansas City, MO

8885 Ladue Road
Ladue, MO

200 North Broadway
St. Louis, MO

NEW JERSEY

150 Essex Street
Millburn, NJ

56 South Street
Morristown, NJ

501 Route 17, South
Paramus, NJ

NEW YORK

1055 Franklin Avenue
Garden City, NY

999 Walt Whitman Road
Melville, L.I., NY

1271 Avenue of the Americas
New York, NY

71 Broadway
New York, NY

350 Park Avenue
New York, NY

NORTH CAROLINA

4611 Sharon Road
Charlotte, NC

OHIO

600 Vine Street
Cincinnati, OH

28699 Chagrin Boulevard
Woodmere Village, OH

OREGON

16850 SW 72 Avenue
Tigard, OR

PENNSYLVANIA

1735 Market Street
Philadelphia, PA

439 Fifth Avenue
Pittsburgh, PA

TENNESSEE

6150 Poplar Road
Memphis, TN

TEXAS

10000 Research Boulevard
Austin, TX

4017 Northwest Parkway
Dallas, TX

1155 Dairy Ashford Street
Houston, TX

2701 Drexel Drive
Houston, TX

400 East Las Colinas Blvd.
Irving, TX

14100 San Pedro
San Antonio, TX

19740 IH 45 North
Spring, TX

UTAH

215 South State Street
Salt Lake City, UT

VIRGINIA

8180 Greensboro Drive
McLean, VA

WASHINGTON

411 108th Avenue, N.E.
Bellevue, WA

511 Pine Street
Seattle, WA

WASHINGTON, DC

1900 K Street, N.W.
Washington, DC

WISCONSIN

595 North Barker Road
Brookfield, WI

INVESTMENT ADVISER

Fidelity Management & Research Company
Boston, MA

INVESTMENT SUB-ADVISERS

Fidelity Management & Research
(U.K.) Inc., London, England

Fidelity Management & Research
(Far East) Inc., Tokyo, Japan

Fidelity International Investment
Advisors

Fidelity International Investment
Advisors (U.K.) Limited

Fidelity Investments Japan Limited

OFFICERS

Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
John H. Carlson, Vice President
Bart A. Grenier, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer

BOARD OF TRUSTEES

Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *

ADVISORY BOARD
J. Gary Burkhead
Abigail P. Johnson

* INDEPENDENT TRUSTEES

GENERAL DISTRIBUTOR

Fidelity Distributors Corporation
Boston, MA

TRANSFER AND SHAREHOLDER
SERVICING AGENT

Fidelity Service Company, Inc.
Boston, MA

CUSTODIAN

The Chase Manhattan Bank
New York, NY

FIDELITY'S TAXABLE BOND FUNDS

Capital & Income
Ginnie Mae
Government Income
High Income
Intermediate Bond
Intermediate Government Income
International Bond
Investment Grade Bond
New Markets Income
Short-Term Bond
Spartan(registered trademark) Government Income
Spartan Investment Grade Bond
Strategic Income
Target Timeline SM 1999, 2001 & 2003

THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE

Exchanges/Redemptions 1-800-544-7777

Account Assistance 1-800-544-6666

Product Information 1-800-544-8888

Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)

TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)

Fidelity Automated
Service Telephone (automated graphic) 1-800-544-5555
(automated graphic) AUTOMATED LINE FOR QUICKEST SERVICE

GLO-SANN-0899 82000
1.705749.101

(Fidelity Logo Graphic)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

SPARTAN(REGISTERED TRADEMARK)
INTERMEDIATE MUNICIPAL INCOME
FUND

SEMIANNUAL REPORT

JUNE 30, 1999

(2 FIDELITY LOGOS)

CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.

PERFORMANCE 4 How the fund has done over
time.

FUND TALK 7 The manager's review of fund
performance, strategy and
outlook.

INVESTMENT CHANGES 10 A summary of major shifts in
the fund's investments over
the past six months.

INVESTMENTS 11 A complete list of the fund's
investments with their
market values.

FINANCIAL STATEMENTS 31 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.

NOTES 35 Notes to the financial
statements.

Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.

Other third party marks appearing herein are the property of their
respective owners.

All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.

This report is printed on recycled paper using soy-based inks.

NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.

FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.

PRESIDENT'S MESSAGE

(PHOTO_OF_EDWARD_C_JOHNSON_3D)

DEAR SHAREHOLDER:

While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.

An intermediate-length fund could make sense if your investment
horizon is two to four years, while a short-term bond fund could be
the right choice if you need your money in one or two years.

Best regards,
Edward C. Johnson 3d

PERFORMANCE: THE BOTTOM LINE

CUMULATIVE TOTAL RETURNS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED JUNE 30, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS

SPARTAN INTERMEDIATE -0.89% 2.51% 35.59% 93.45%
MUNICIPAL INCOME

LB 1-17 Year Municipal Bond -0.61% 3.03% 36.74% n/a

Intermediate Municipal Debt -1.27% 1.95% 31.11% 84.27%
Funds Average

</TABLE>

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare the fund's returns to the performance
of the Lehman Brothers 1-17 Year Municipal Bond Index - a market
value-weighted index of investment-grade municipal bonds with
maturities between one and 17 years. To measure how the fund's
performance stacked up against its peers, you can compare it to the
intermediate municipal debt funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Inc. The past six months, one year average represents a peer group of
135 mutual funds. These benchmarks reflect reinvestment of dividends
and capital gains, if any, and exclude the effect of sales charges.

AVERAGE ANNUAL TOTAL RETURNS

PERIODS ENDED JUNE 30, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS

SPARTAN INTERMEDIATE 2.51% 6.28% 6.82%
MUNICIPAL INCOME

LB 1-17 Year Municipal Bond 3.03% 6.46% n/a

Intermediate Municipal Debt 1.95% 5.56% 6.30%
Funds Average

$10,000 OVER 10 YEARS

Spartan Int. Muni Income LB Municipal Bond
00036 LB015
1989/06/30 10000.00 10000.00
1989/07/31 10097.87 10136.10
1989/08/31 10045.62 10036.87
1989/09/30 10038.98 10006.96
1989/10/31 10126.37 10129.34
1989/11/30 10248.15 10306.61
1989/12/31 10326.12 10390.91
1990/01/31 10291.53 10341.77
1990/02/28 10368.85 10433.81
1990/03/31 10405.32 10436.94
1990/04/30 10315.30 10361.37
1990/05/31 10474.53 10587.56
1990/06/30 10554.70 10680.63
1990/07/31 10681.39 10837.63
1990/08/31 10660.68 10680.27
1990/09/30 10732.87 10686.36
1990/10/31 10841.76 10880.21
1990/11/30 10985.90 11099.01
1990/12/31 11045.40 11147.29
1991/01/31 11165.08 11296.89
1991/02/28 11273.40 11395.17
1991/03/31 11323.63 11399.27
1991/04/30 11445.34 11550.88
1991/05/31 11531.91 11653.57
1991/06/30 11534.92 11642.03
1991/07/31 11659.98 11783.83
1991/08/31 11772.14 11939.03
1991/09/30 11920.49 12094.47
1991/10/31 12031.84 12203.32
1991/11/30 12040.27 12237.37
1991/12/31 12281.03 12499.98
1992/01/31 12348.61 12528.48
1992/02/29 12393.76 12532.49
1992/03/31 12368.16 12537.13
1992/04/30 12472.19 12648.71
1992/05/31 12578.19 12797.58
1992/06/30 12720.55 13012.33
1992/07/31 13090.41 13402.44
1992/08/31 12993.22 13271.76
1992/09/30 13054.97 13358.56
1992/10/31 12875.28 13227.25
1992/11/30 13138.80 13464.15
1992/12/31 13284.09 13601.62
1993/01/31 13442.54 13759.80
1993/02/28 13928.14 14257.49
1993/03/31 13792.69 14106.79
1993/04/30 13923.55 14249.13
1993/05/31 14012.91 14329.21
1993/06/30 14200.30 14568.37
1993/07/31 14234.78 14587.45
1993/08/31 14525.64 14891.16
1993/09/30 14687.08 15060.77
1993/10/31 14707.79 15089.84
1993/11/30 14610.55 14956.90
1993/12/31 14910.08 15272.64
1994/01/31 15079.74 15447.05
1994/02/28 14732.56 15046.97
1994/03/31 14135.36 14434.26
1994/04/30 14214.95 14556.66
1994/05/31 14341.64 14682.87
1994/06/30 14267.45 14593.16
1994/07/31 14533.48 14860.65
1994/08/31 14585.18 14912.07
1994/09/30 14401.84 14693.16
1994/10/31 14204.84 14432.21
1994/11/30 13926.74 14171.27
1994/12/31 14200.01 14483.18
1995/01/31 14569.21 14897.11
1995/02/28 14916.66 15330.32
1995/03/31 15064.42 15506.46
1995/04/30 15067.58 15524.76
1995/05/31 15442.70 16020.16
1995/06/30 15363.78 15880.78
1995/07/31 15480.74 16031.33
1995/08/31 15696.01 16234.61
1995/09/30 15826.97 16337.37
1995/10/31 16009.28 16574.92
1995/11/30 16190.03 16849.90
1995/12/31 16307.73 17011.82
1996/01/31 16457.90 17140.26
1996/02/29 16405.23 17024.57
1996/03/31 16240.07 16806.99
1996/04/30 16208.20 16759.43
1996/05/31 16191.58 16752.73
1996/06/30 16327.39 16935.16
1996/07/31 16449.72 17089.27
1996/08/31 16452.07 17085.17
1996/09/30 16607.48 17324.36
1996/10/31 16800.31 17520.30
1996/11/30 17061.31 17840.92
1996/12/31 17030.96 17765.99
1997/01/31 17086.55 17799.57
1997/02/28 17223.78 17962.97
1997/03/31 17031.50 17723.52
1997/04/30 17139.85 17871.87
1997/05/31 17358.31 18140.66
1997/06/30 17538.43 18333.86
1997/07/31 17937.81 18841.71
1997/08/31 17812.26 18665.16
1997/09/30 18010.39 18886.72
1997/10/31 18120.87 19008.16
1997/11/30 18211.15 19119.93
1997/12/31 18432.98 19398.89
1998/01/31 18600.59 19599.08
1998/02/28 18606.90 19604.96
1998/03/31 18608.40 19622.21
1998/04/30 18550.57 19533.72
1998/05/31 18777.50 19842.94
1998/06/30 18870.36 19921.12
1998/07/31 18909.14 19971.12
1998/08/31 19177.17 20279.67
1998/09/30 19405.06 20532.36
1998/10/31 19424.07 20531.95
1998/11/30 19479.31 20604.02
1998/12/31 19518.03 20655.94
1999/01/31 19753.31 20901.54
1999/02/28 19653.15 20810.20
1999/03/31 19672.10 20839.12
1999/04/30 19708.04 20891.01
1999/05/31 19607.69 20770.05
1999/06/30 19344.80 20470.96
IMATRL PRASUN SHR__CHT 19990630 19990714 110743 R00000000000123

$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Spartan Intermediate Municipal Income Fund on June 30,
1989. As the chart shows, by June 30, 1999, the value of the
investment would have grown to $19,345 - a 93.45% increase on the
initial investment. For comparison, look at how the Lehman Brothers
Municipal Bond Index - a market value-weighted index of investment
grade municipal bonds with maturities of one year or more - did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 would have grown to $20,471 - a 104.71% increase.

(CHECKMARK)
UNDERSTANDING
PERFORMANCE

How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of interest
rates. In turn, the share price,
return and yield of a fund that
invests in bonds will vary. That
means if you sell your shares
during a market downturn, you
might lose money. But if you
can ride out the market's ups
and downs, you may have a
gain.

TOTAL RETURN COMPONENTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED JUNE 30, YEARS ENDED DECEMBER 31,

1999 1998 1997 1996 1995 1994

Dividend returns 2.29% 4.89% 5.22% 5.12% 5.83% 5.07%

Capital returns -3.18% 1.00% 3.01% -0.69% 9.01% -9.83%

Total returns -0.89% 5.89% 8.23% 4.43% 14.84% -4.76%

</TABLE>

TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
fund. A capital return reflects both the amount paid by the fund to
shareholders as capital gain distributions and changes in the fund's
share price. Both returns assume the dividends or capital gains, if
any, paid by the fund are reinvested.

DIVIDENDS AND YIELD

PERIODS ENDED JUNE 30, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR

Dividends per share 3.82(cents) 23.18(cents) 47.01(cents)

Annualized dividend rate 4.79% 4.72% 4.72%

30-day annualized yield 4.34% - -

30-day annualized 6.78% - -
tax-equivalent yield

DIVIDENDS per share show the income paid by the fund for a set period.
If you annualize this number, based on an average share price of $9.71
over the past one month, $9.91 over the past six months and $9.96 over
the past one year, you can compare the fund's income over these three
periods. The 30-day annualized YIELD is a standard formula for all
bond funds based on the yields of the bonds in the fund, averaged over
the past 30 days. This figure shows you the yield characteristics of
the fund's investments at the end of the period. It also helps you
compare funds from different companies on an equal basis. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 36%
federal tax bracket. A portion of the fund's income may be subject to
the federal alternative minimum tax.

FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP

Despite a surge in municipal bond
prices on the last day of the period
following the Federal Reserve Board's
widely anticipated quarter point
increase - from 4.75% to 5.00% -
in the federal funds rate, or overnight
bank-lending level, the municipal bond
market was hard-hit by a continuous
sell-off during the six-month period that
ended June 30, 1999. Although
retail investors provided support in
the municipal bond market with
periods of active buying, and
new-issue supply was down from last
year, institutional investors remained on
the sidelines, putting pressure on
prices, which move inversely to bond
yields. While municipal bonds
outperformed taxable bonds over the
six-month period, the Lehman Brothers
Municipal Bond Index - an index
of approximately 50,000
investment-grade, fixed-rate tax-exempt
bonds - declined 0.90%. In
comparison, the Lehman Brothers
Aggregate Bond Index - a widely
followed measure of taxable-bond
performance - fell 1.37%. In
general, the period was characterized
by uncertainty as investors adopted a
wait-and-see approach regarding
the Fed's next move and the release of
major economic reports that could
provide some clues about the future
direction of interest rates. Nevertheless,
municipal bond prices received a lift
on the last day of the period, as the Fed
shifted its monetary policy stance
from a tightening bias to a neutral
stance, meaning its next move is as
likely to keep interest rates unchanged
as it is to increase them.

(Photograph of Norm Lind)

An interview with Norm Lind, Portfolio Manager of Spartan Intermediate
Municipal Income Fund

Q. HOW DID THE FUND PERFORM, NORM?

A. Although rising interest rates curtailed the municipal bond
market's returns during the past six months, the fund outpaced its
peers. For the six-month period that ended June 30, 1999, the fund had
a total return of -0.89%. To get a sense of how the fund did relative
to its competitors, the intermediate municipal debt funds average
returned -1.27% for the same six-month period, according to Lipper
Inc. Additionally, the Lehman Brothers 1-17 Year Municipal Bond Index
- - which tracks the types of securities in which the fund invests -
returned -0.61% for the same six-month period. For the 12-month period
that ended June 30, 1999, the fund had a total return of 2.51%. That
return compared to the intermediate municipal debt funds average's
1.95% return and the Lehman Brothers index's 3.03% return for the same
12-month period.

Q. WHAT FACTORS LED TO THE FUND'S OUTPERFORMANCE COMPARED TO ITS PEERS
DURING THE PAST SIX MONTHS?

A. The fund had a larger-than-average stake in longer-term bonds -
with maturities beyond 15 years - which performed better than short-
and intermediate-term bonds during the past six months. That's because
longer-term bond yields rose less in response to rising interest
rates, and their prices - which move in the opposite direction of
their yields - fell less. By pushing short- and intermediate-bond
yields up more, investors were indicating that they were more worried
about higher interest rates over the short and intermediate term, but
less worried over the long term.

Q. WHAT EFFECT DID THE FUND'S FOCUS ON LONG-TERM BONDS HAVE ON THE
FUND'S DURATION - WHICH MEASURES ITS INTEREST-RATE SENSITIVITY?

A. I offset the fund's longer-term holdings with shorter-term
holdings, thereby keeping the fund's duration in line with the
intermediate municipal market as a whole as measured by the Lehman
Brothers 1-17 Year Municipal Bond Index. Toward the end of the period,
however, I sold some shorter- and longer-term holdings in favor of
intermediate-term securities, which I viewed as being priced more
attractively and offering the best potential for total return.

Q. WHAT WERE THE OTHER POSITIVES FOR THE FUND DURING THE PAST SIX
MONTHS?

A. The fund benefited from its relatively large position in premium
coupon bonds, which pay interest rates above prevailing market rates
and trade at prices that are above its face (par) value. The primary
reason why I favored them is because their premium gives them DE
MINIMIS protection. This protects the bonds' gains from unfavorable
tax treatment that can occur during particular market environments. In
addition, individual investors tend to shy away from premiums, so I'm
often able to buy them at attractive prices compared to similarly
rated, comparable maturity bonds with coupons at or below prevailing
rates.

Q. WHAT WERE THE DISAPPOINTMENTS DURING THE PERIOD?

A. The biggest disappointment was my decision to keep a relatively
light weighting in bonds issued in California. Job growth and economic
expansion fueled higher tax collections and revenues for the state's
municipal issuers, which ultimately translated into continued
improvement in their credit quality.

Q. WHAT'S AHEAD FOR THE MUNICIPAL MARKET AND THE FUND?

A. Supply and demand conditions - which can have a dramatic effect on
the municipal market's performance - appear favorable. In contrast to
last year, there has been a relatively light supply of municipal bonds
issued so far in 1999. In 1998, falling interest rates prompted a wave
of municipal bond refundings as issuers looked to refinance their debt
at lower interest rates. Those refundings made up more than one-third
of the total supply of municipal bonds issued last year. So far this
year, however, refunding issuance has slowed dramatically as interest
rates have risen. Meanwhile, demand has been firm. However, the
direction of interest rates will be the primary factor determining
municipal bond performance, and it's unclear whether the Federal
Reserve Board will continue to raise rates as it did on June 30.
Rather than trying to predict the direction of interest rates, I'll
continue to look for attractively priced bonds that I believe can
perform well in relation to other bonds, no matter where interest
rates end up.

THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.

(checkmark)
FUND FACTS

GOAL: to provide high current
income free from federal
income tax with
preservation of capital

FUND NUMBER: 036

TRADING SYMBOL: FLTMX

START DATE: April 15, 1977

SIZE: as of June 30, 1999,
more than $1.1 billion

MANAGER: Norm Lind, since
1998; manager, various
Fidelity and Spartan
municipal income funds;
joined Fidelity in 1986

NORM LIND ON Y2K AND ITS
POTENTIAL EFFECT ON
MUNICIPAL-BOND ISSUERS:

"I'm currently keeping an eye on
Y2K-related developments and
their potential effect on
municipal-bond issuers. How
individual issuers meet
challenges stemming from the
Y2K situation could have an
impact on their fiscal health and,
ultimately, their creditworthiness.
With the help of Fidelity's research
team, we're asking whether
problems that arise from Y2K will
compromise the operations of a
municipal issuer. I'll also be looking
at the extent to which municipal
issuers adequately budget for Y2K
fixes. That said, Y2K is only one of
the many factors I consider when
determining whether to buy or sell
securities for the fund."

INVESTMENT CHANGES

<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE STATES AS OF JUNE
30, 1999

% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE HOLDINGS 6 MONTHS AGO

Texas 15.7 15.0

New York 13.0 10.8

Massachusetts 9.9 10.3

Washington 6.3 6.6

California 5.7 7.9

TOP FIVE SECTORS AS OF JUNE
30, 1999

% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE SECTORS 6 MONTHS AGO

General Obligations 36.3 37.4

Electric Utilities 11.8 11.5

Health Care 10.6 11.9

Escrowed/Pre-Refunded 8.6 7.8

Transportation 8.2 8.2

AVERAGE YEARS TO MATURITY AS
OF JUNE 30, 1999

6 MONTHS AGO

Years 8.3 8.8

</TABLE>

AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY
DOLLAR AMOUNT.

DURATION AS OF JUNE 30, 1999

6 MONTHS AGO

Years 5.2 5.4

DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.

QUALITY DIVERSIFICATION
(MOODY'S RATINGS)

AS OF JUNE 30, 1999
Aaa 55.8%
Aa, A 31.1%
Baa 10.7%
Not Rated 1.7%
Short-term
investments 0.7%
Row: 1, Col: 1, Value: 55.4
Row: 1, Col: 2, Value: 31.1
Row: 1, Col: 3, Value: 10.7
Row: 1, Col: 4, Value: 2.0
Row: 1, Col: 5, Value: 1.0

AS OF DECEMBER 31, 1998
Aaa 53.5%
Aa, A 33.3%
Baa 10.9%
Not Rated 2.1%
Short-term
investments 0.2%
Row: 1, Col: 1, Value: 53.0
Row: 1, Col: 2, Value: 33.1
Row: 1, Col: 3, Value: 10.9
Row: 1, Col: 4, Value: 2.1
Row: 1, Col: 5, Value: 0.9

WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS.
AMOUNTS SHOWN ARE AS A PERCENTAGE OF THE FUND'S INVESTMENTS.

INVESTMENTS JUNE 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - 99.3%

MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)

ALABAMA - 1.2%

Alabama Gen. Oblig. Rfdg.
(Cap. Appreciation):

0% 3/1/01 Aa $ 10,000 $ 9,345

0% 9/1/01 Aa 5,000 4,578

13,923

ALASKA - 4.5%

Anchorage Hosp. Rev. Rfdg. A1 2,575 2,741
(Sisters of Providence
Proj.) Series 1991, 6.75%
10/1/02

North Slope Borough (Cap.
Appreciation):

Series A:

0% 6/30/01 (MBIA Insured) Aaa 12,000 11,035

0% 6/30/02 (MBIA Insured) Aaa 23,950 21,028

0% 6/30/03 (MBIA Insured) Aaa 11,500 9,617

Series B, 0% 1/1/02 (MBIA Aaa 8,500 7,626
Insured)

52,047

ARIZONA - 1.0%

Arizona Trans. Board Excise
Tax Rev.:

(Cap. Appreciation) (Maricopa Aaa 1,700 1,495
Reg'l. Road) Series A, 0%
7/1/02 (FGIC Insured)

Rfdg. (Maricopa County Reg'l.
Area):

Series A, 6.5% 7/1/04 (AMBAC Aaa 1,100 1,199
Insured)

Series B, 6.5% 7/1/04 (AMBAC Aaa 1,220 1,330
Insured)

Maricopa County Cmnty.
College District Series A:

6% 7/1/09 Aa1 90 95

6% 7/1/09 (Pre-Refunded to Aa1 1,910 2,033
7/1/03 @ 101) (g)

Phoenix Civic Impt. Corp. Aa 2,420 2,494
Exicise Tax Rev. Rfdg.
(Arpt. Impts.) Series A,
5.85% 7/1/01 (f)

Univ. of Arizona Univ. Rev. A1 2,100 2,250
Rfdg. (Univ. Rev. Sys.)
6.375% 6/1/05

10,896

ARKANSAS - 0.1%

Arkansas Gen. Oblig. (Cap.
Appreciation) (College
Savings Prog.):

0% 6/1/02 Aa3 705 624

0% 6/1/03 Aa3 1,190 1,005

1,629

MUNICIPAL BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)

CALIFORNIA - 5.7%

California Ed. Facilities AAA $ 3,000 $ 3,021
Auth. Rev. Rfdg. (Chapman
Univ.) 5.375% 10/1/16
(Connie Lee Insured)

California Health Facilities A+ 1,660 1,676
Fing. Auth. Rev. (Casa de
Las Campanas) Series A,
5.375% 8/1/10

California Hsg. Fin. Agcy.
Rev.:

(Cap. Appreciation) (Home Aa2 19,346 4,439
Mtg. Single Family) Series
1983 A, 0% 2/1/15

(Home Mtg.) Series G, 6% Aaa 2,000 2,063
2/1/10 (MBIA Insured) (f)

California Poll. Cont. Fing. Baa2 2,500 2,641
Auth. Resource Recovery Rev.
(Waste Mgmt., Inc.) Series
A, 7.15% 2/1/11 (f)

California Statewide Cmntys.
Dev. Auth. Rev. Ctfs. of
Prtn. Rfdg. (Triad
Healthcare Hosp.):

5.9% 8/1/01 (Escrowed to A+ 4,415 4,584
Maturity) (g)

6% 8/1/02 (Escrowed to A+ 4,145 4,367
Maturity) (g)

Carson Redev. Agcy. Rfdg.
(Redev. Proj. Area 2):

5.5% 10/1/02 Baa2 1,320 1,354

5.6% 10/1/03 Baa2 1,500 1,549

Central Valley Fing. Auth. BBB- 1,875 1,919
Cogeneration Proj. Rev.
(Carson Ice Gen. Proj.) 5.5%
7/1/01

East Bay Muni. Util. District Aaa 1,000 988
Wtr. Sys. Rev. Rfdg. 5%
6/1/13 (FGIC Insured)

Long Beach Hbr. Rev. Rfdg. Aaa 3,080 3,234
Series A, 5.5% 5/15/07 (FGIC
Insured) (f)

Los Angeles County Pub. Works Aaa 1,195 1,176
Fing. Auth. Lease Rev.
(Multiple Cap. Facilities
Proj. #4) 4.75% 12/1/10
(MBIA Insured)

Los Angeles Unified School Aaa 500 547
District Series A, 6%
7/1/13 (FGIC Insured)

Modesto Irrigation District Aaa 4,390 5,670
Elec. Rev. Series A, 9.625%
1/1/11 (Escrowed to
Maturity) (g)

Modesto Wastewtr. Treatment Aaa 8,705 8,916
Facilities Rev. 5.625%
11/1/17 (MBIA Insured)

Pleasanton Joint Powers Fing. Baa1 1,385 1,457
Auth. Rev. Reassessment
Series A, 6.15% 9/2/12

Sacramento Cogeneration Auth. BBB- 1,400 1,442
Cogeneration Proj. Rev.
(Proctor & Gamble Proj.)
5.8% 7/1/01

Sacramento Pwr. Auth.
Cogeneration Proj. Rev.:

6% 7/1/99 BBB- 3,000 3,000

MUNICIPAL BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)

CALIFORNIA - CONTINUED

Sacramento Pwr. Auth.
Cogeneration Proj. Rev.: -
continued

6% 7/1/00 BBB- $ 3,100 $ 3,166

6% 7/1/01 BBB- 3,300 3,411

6.5% 7/1/05 BBB- 2,000 2,182

6.5% 7/1/08 BBB- 2,000 2,157

San Francisco City & County Aaa 1,000 1,012
Arpt. Commission Int'l.
Arpt. Rev. 2nd Series Issue
9 B, 5.25% 5/1/12 (FGIC
Insured)

65,971

COLORADO - 5.5%

Arapaho County Cap. Impt. Aaa 52,100 8,143
Trust Fund Hwy. Rev. (Cap.
Appreciation) Series C, 0%
8/31/26 (Pre-Refunded to
8/31/05 @ 20.8626) (g)

Colorado Health Facilities Baa2 15,700 15,331
Auth. Rev. Rfdg. (Rocky
Mountain Adventist) 6.25%
2/1/04

Denver City & County Arpt.
Rev.:

(Cap. Appreciation):

Series A:

0% 11/15/04 (f) Baa1 2,070 1,566

0% 11/15/05 (MBIA Insured) (f) Aaa 2,250 1,657

Series D:

0% 11/15/03 (MBIA Insured) (f) Aaa 5,320 4,344

0% 11/15/05 (MBIA Insured) (f) Aaa 2,055 1,514

0% 11/15/06 (f) Baa1 4,500 3,033

Rfdg. Series E, 5.125% Aaa 15,000 14,631
11/15/15 (MBIA Insured)

Series A:

8.25% 11/15/02 (f) Baa1 730 779

8.5% 11/15/23 (f) Baa1 2,000 2,131

Series C, 6.55% 11/15/16 Aaa 2,660 2,868
(MBIA Insured) (f)

Series D, 7% 11/15/25 (f) Baa1 1,340 1,397

Jefferson County School
District # R-001 Series A:

5.5% 12/15/09 (FGIC Insured) Aaa 1,000 1,046

5.5% 12/15/14 (FGIC Insured) Aaa 5,000 5,126

63,566

MUNICIPAL BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)

CONNECTICUT - 0.1%

Connecticut Health & Edl. BBB- $ 1,100 $ 1,121
Facilities Auth. Rev. Rfdg.
(Quinnipiac College) Series
D, 5.625% 7/1/03

DISTRICT OF COLUMBIA - 2.5%

District of Columbia Gen.
Oblig.:

Rfdg.:

Series A 3:

5.3% 6/1/04 (AMBAC Insured) Aaa 735 758

5.3% 6/1/04 (AMBAC Insured) Aaa 40 41
(Escrowed to Maturity) (g)

5.4% 6/1/05 (AMBAC Insured) Aaa 625 648

5.4% 6/1/05 (AMBAC Insured) Aaa 35 36
(Escrowed to Maturity) (g)

Series A:

5.75% 6/1/03 (AMBAC Insured) Aaa 1,055 1,102

5.75% 6/1/03 (AMBAC Insured) Aaa 85 89
(Escrowed to Maturity) (g)

5.875% 6/1/05 (AMBAC Insured) Aaa 3,705 3,930

5.875% 6/1/05 (AMBAC Insured) Aaa 295 313
(Escrowed to Maturity) (g)

Series C:

5.75% 12/1/05 (AMBAC Insured) Aaa 1,895 2,005

5.75% 12/1/05 (AMBAC Insured) Aaa 260 277
(Pre-Refunded to 12/1/03 @
102) (g)

Series A:

5.25% 6/1/10 (MBIA Insured) Aaa 3,000 3,036

5.25% 6/1/11 (MBIA Insured) Aaa 3,905 3,916

Series E:

5% 6/1/04 (FGIC Insured) Aaa 960 978

5% 6/1/04 (FGIC Insured) Aaa 40 41
(Pre-Refunded to 6/1/03 @
102) (g)

District of Columbia Hosp.
Rev. Rfdg. (Medlantic
Healthcare Group/Washington
Hosp. Ctr.):

Series A, 6.8% 8/15/99 A3 2,600 2,609
(Escrowed to Maturity) (g)

Series B:

6.125% 8/15/99 (Escrowed to A3 4,520 4,532
Maturity) (g)

6.25% 8/15/00 (Escrowed to A3 4,805 4,923
Maturity) (g)

29,234

MUNICIPAL BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)

FLORIDA - 1.3%

Alachua County Health Baa1 $ 1,645 $ 1,716
Facilities Auth. Health
Facilities Rev. Rfdg.
(Avmed/Santa Fe Health Sys.
Proj.) 6% 11/15/09 (Escrowed
to Maturity) (g)

Broward County Resource A3 3,565 3,719
Recovery Rev. (SES Broward
Co. LP South Proj.) 7.95%
12/1/08

Florida Div. Board Fin. Dept. Aaa 1,655 1,634
Gen. Svcs. Rev. (Dept., of
Envir. Preservation 2000
Proj.) Series A, 5% 7/1/12
(AMBAC Insured)

Hillsborough County Port Aaa 2,000 2,114
District Spl. Refing. Rev.
Rfdg. (Tampa Port Auth.)
6.5% 6/1/02 (FSA Insured) (f)

Lee County Ind. Dev. Auth. BBB- 1,800 1,845
Health Care Facilities Rev.
Rfdg. (Shell Point Village
Proj.) Series A, 5.75%
11/15/12

Miami Beach Health Facilities BBB 1,800 1,664
Auth. Hosp. Rev. (Mount
Sinai Med. Ctr.) 5.375%
11/15/28

Pasco County Solid Waste Aaa 2,000 2,136
Disp. & Resource Recovery
Sys. Rev. Rfdg. 6% 4/1/10
(AMBAC Insured) (f)

14,828

GEORGIA - 0.6%

Atlanta Gen. Oblig. Rfdg. 5% Aa3 3,550 3,536
12/1/10

Fulton County School District Aa2 3,805 3,852
Rfdg. 5.375% 1/1/18

7,388

IDAHO - 0.5%

Idaho Falls Gen. Oblig. Rfdg. Aaa 7,000 5,378
0% 4/1/05 (FGIC Insured)

ILLINOIS - 2.6%

Chicago Midway Arpt. Rev.:

Series A, 5.5% 1/1/29 (MBIA Aaa 4,000 3,983
Insured)

Series B:

6% 1/1/09 (MBIA Insured) (f) Aaa 2,000 2,114

6.125% 1/1/12 (MBIA Insured) Aaa 2,740 2,919
(f)

Chicago O'Hare Int'l. Arpt. Aaa 9,820 10,592
Rev. Rfdg. (Gen. Arpt.
Proj.) Series A, 6.25%
1/1/08 (AMBAC Insured) (f)

MUNICIPAL BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)

ILLINOIS - CONTINUED

Lake County Forest Aa1 $ 5,850 $ 4,551
Preservation District (Cap.
Appreciation) 0% 12/1/04

Rolling Meadows Multi-Family A 5,000 5,251
Mtg. Rev. Rfdg. (Woodfield
Garden Apts. Proj.) 7.75%
2/1/04, LOC Banque Paribas

29,410

INDIANA - 1.6%

Indiana Employment Dev. - 5,000 5,019
Commission Poll. Cont. Rev.
(Chrysler Corp. Proj.) 5.7%
10/1/99

Indianapolis Resource
Recovery Rev. Rfdg. (Ogden
Martin Sys., Inc. Proj.):

6.75% 12/1/04 (AMBAC Insured) Aaa 3,520 3,890

6.75% 12/1/05 (AMBAC Insured) Aaa 8,185 9,098

Marion County Ind. Hosp. Aaa 800 806
Auth. Hosp. Facilities Rev.
Rfdg. (Univ. Heights Hosp.)
8.625% 10/1/99 (AMBAC
Insured)

18,813

KANSAS - 0.9%

Kansas City Util. Sys. Rev.
(Cap. Appreciation):

0% 3/1/04 (AMBAC Insured) Aaa 3,735 3,021

0% 3/1/04 (AMBAC Insured) Aaa 5,015 4,049
(Escrowed to Maturity) (g)

Kansas Dev. Fin. Auth. Rev.
(Sisters of Charity
Leavenworth Health Svc. Co.):

5.125% 12/1/18 (MBIA Insured) Aaa 1,000 957

5.25% 12/1/10 (MBIA Insured) Aaa 1,000 1,016

5.25% 12/1/11 (MBIA Insured) Aaa 1,805 1,824

10,867

LOUISIANA - 1.2%

Louisiana Pub. Facilities
Auth. Rfdg. (Student Ln.)
Sr. Series A 1:

6.1% 3/1/00 Aaa 1,240 1,256

6.1% 9/1/00 Aaa 2,490 2,541

New Orleans Gen. Oblig. Rfdg. Aaa 13,500 10,145
(Cap. Appreciation) 0%
9/1/05 (AMBAC Insured)

13,942

MUNICIPAL BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)

MARYLAND - 0.2%

Prince George's County Rev. Baa1 $ 1,130 $ 1,103
Rfdg. (Dimensions Health
Corp. Proj.) 5% 7/1/05

Prince George's County Hosp.
Rev. (Dimensions Health
Corp. Proj.):

7% 7/1/01 Baa1 970 986

7.2% 7/1/06 Baa1 305 327

2,416

MASSACHUSETTS - 9.9%

Boston Gen. Oblig. Rev. Aaa 2,000 2,113
(Boston City Hosp.) Series
A, 7.625% 2/15/21
(Pre-Refunded to 8/15/00 @
102) (g)

Boston Wtr. & Swr. Commission Aaa 4,000 3,841
Rev. Senior Series C, 5.2%
11/1/21 (FGIC Insured)

Massachusetts Gen. Oblig.:

(Consolidated Ln.) Series C, Aaa 2,500 2,653
5.625% 8/1/13 (MBIA Insured)
(Pre-Refunded to 8/1/05 @
101) (g)

Rfdg.:

Series A, 5.5% 2/1/11 Aa3 2,755 2,812

Series C, 4.7% 8/1/02 Aa3 3,000 3,036

Series C, 6.5% 8/1/11 Aa3 720 762

Massachusetts Health & Edl.
Facilities Auth. Rev.:

(Lawrence Gen. Hosp.) Series Baa2 4,430 4,571
B, 7.25% 7/1/01

(Waltham-Weston Hosp. & Med. Baa 2,100 2,211
Ctr.) Series B, 8% 7/1/02
(Pre-Refunded to 7/1/00 @
102) (g)

Rfdg. (Fairview Extended Aaa 1,400 1,400
Care) Series B, 4.55% 1/1/21
(MBIA Insured), LOC
BankBoston NA

Massachusetts Ind. Fin. Agcy.
Rev. (Cap. Appreciation)
(Massachusetts Biomedical):

Series A 1:

0% 8/1/01 A1 10,800 9,882

0% 8/1/02 A1 5,700 4,963

Series A 2:

0% 8/1/04 A1 10,800 8,558

0% 8/1/05 A1 5,100 3,825

0% 8/1/07 A+ 5,800 3,902

MUNICIPAL BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)

MASSACHUSETTS - CONTINUED

Massachusetts Muni. Wholesale Baa2 $ 3,610 $ 3,844
Elec. Co. Pwr. Supply Sys.
Rev. Rfdg. Series A, 6.75%
7/1/05

Massachusetts Tpk. Auth. Aaa 12,120 12,124
Western Tpk. Rev. Series A,
5.55% 1/1/17 (MBIA Insured)

Massachusetts Wtr. Poll.
Abatement Trust Rev. (MWRA
Ln. Prog.) Series A:

5.25% 8/1/13 Aa1 220 221

5.25% 8/1/14 Aa1 800 801

New England Ed. Ln. Marketing
Corp. Stud. Ln. Rev. Rfdg.
(Senior Issue):

Series A, 6.5% 9/1/02 Aaa 28,215 29,836

Series D:

6.2% 9/1/00 Aaa 3,000 3,071

6.3% 9/1/02 Aaa 7,815 8,226

Univ. of Lowell Bldg. Auth. Aaa 1,705 1,902
Rfdg. Fifth Series A, 6.75%
11/1/05 (AMBAC Insured)

114,554

MICHIGAN - 3.7%

Detroit Convention Facilities A 22,300 21,812
Rev. Rfdg. (Cobo Hall
Expansion Proj.) 5.25%
9/30/12

Michigan Hosp. Fin. Auth. Rev.:

(Mercy Health Svcs., Inc.) Aaa 1,195 1,276
Series Q, 6% 8/15/09 (AMBAC
Insured)

Rfdg.:

(Genesys Reg'l. Hosp.) Series Baa2 2,000 1,852
A, 5.5% 10/1/27

(McLaren Health Care Corp.) A1 8,000 7,266
Series A, 5% 6/1/19

Michigan Muni. Bond Auth. Aaa 1,000 1,099
Rfdg. (Local Govt. Ln.
Prog.) Series G, 6.3%
11/1/05 (AMBAC Insured)

Michigan Strategic Fund Ltd. Aaa 4,000 3,859
Oblig. Rev. Rfdg. (Detroit
Edison Co. Proj.) Series A,
5.55% 9/1/29 (MBIA Insured)
(c)(f)

Michigan Strategic Fund Poll. - 5,000 5,018
Cont. Rev. (Chrysler Corp.
Proj.) 5.7% 10/1/99

42,182

MUNICIPAL BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)

MINNESOTA - 1.3%

Minneapolis Gen. Oblig. (Cap.
Appreciation) Series B:

0% 12/1/03 Aaa $ 300 $ 248

0% 12/1/04 Aaa 440 346

Rochester Health Care AA+ 14,500 14,551
Facilities Rev. (Mayo
Foundation) Series A, 5.5%
11/15/27

15,145

NEBRASKA - 0.9%

American Pub. Energy Agcy.
Nebraska Gas Supply Rev.
(Nebraska Pub. Gas Agcy.
Proj.) Series A:

5% 6/1/07 (AMBAC Insured) Aaa 1,500 1,515

5.25% 6/1/11 (AMBAC Insured) Aaa 5,000 5,051

Nebraska Invt. Fin. Auth. Aaa 2,000 2,125
Hosp. Rev. (Nebraska
Methodist Health Sys.) 6.85%
3/1/02 (MBIA Insured)
(Pre-Refunded to 3/1/01 @
102) (g)

Nebraska Pub. Pwr. District A1 2,000 2,089
Rev. Rfdg. (Pwr. Supply
Sys.) Series B, 5.25% 1/1/13
(Pre-Refunded to 1/1/03 @
102) (g)

10,780

NEVADA - 0.4%

Clark County School District Aaa 6,195 4,751
(Cap. Appreciation) Series
B, 0% 3/1/05 (FGIC Insured)

NEW HAMPSHIRE - 0.4%

New Hampshire Higher Edl. & Baa1 4,145 4,207
Health Facilities Auth. Rev.
Rfdg. (Frisbee Memorial
Hosp.) 5.7% 10/1/04

NEW JERSEY - 1.3%

New Jersey Econ. Dev. Auth. Aaa 5,000 5,463
Market Transition Facilities
Rev. (Senior Lien) Series A,
7% 7/1/03 (MBIA Insured)

New Jersey Health Care
Facilities Fing. Auth. Rev.
Rfdg. (Atlantic City Med.
Ctr.) Series C:

6.55% 7/1/03 A3 2,200 2,341

6.8% 7/1/05 A3 3,500 3,713

Passaic County Util. Auth. Aaa 3,380 3,011
Solid Waste Disp. Rev.
Rfdg. (Cap. Appreciation) 0%
3/1/02 (MBIA Insured)

14,528

MUNICIPAL BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)

NEW MEXICO - 0.8%

Albuquerque Arpt. Rev. Rfdg. Aaa $ 1,400 $ 1,539
6.5% 7/1/07 (AMBAC Insured)
(f)

Farmington Poll. Cont. Rev. Aaa 1,260 1,262
(Tucson Gas & Elec. Co.)
Series A, 6.1% 1/1/08 (MBIA
Insured)

New Mexico Edl. Assistance Aaa 4,135 4,333
Foundation Student Ln. Rev.
Senior Series IV A1, 7.05%
3/1/10 (f)

Rio Rancho Wtr. & Wastewtr. Aaa 1,420 1,631
Sys. Rev. Series A, 8%
5/15/04 (FSA Insured)

8,765

NEW YORK - 13.0%

Long Island Pwr. Auth. Elec. Baa1 3,000 3,010
Sys. Rev. 4.25% 4/1/00

Metro. Trans. Auth. Commuter Aaa 7,305 7,683
Facilities Rev. Series E,
5.625% 7/1/08 (AMBAC Insured)

Metro. Trans. Auth. Svc. Baa1 5,280 5,420
Contract Trans. Facilities
Rfdg. Series 7, 5.2% 7/1/04

Muni. Assistance Corp. for
New York City Rfdg. Series E:

6% 7/1/04 Aa2 4,000 4,266

6% 7/1/05 Aa2 1,500 1,608

Nassau County Gen. Impt. Aaa 3,860 3,917
Series Y, 4.9% 3/1/02 (FGIC
Insured)

New York City Gen. Oblig.:

Rfdg. Series A, 5.25% 8/1/06 A3 11,535 11,835

Series B:

7.5% 2/1/04 A3 5,000 5,419

7.5% 2/1/05 A3 2,030 2,199

7.5% 2/1/05 (Pre-Refunded to A3 590 644
2/1/02 @ 101.5) (g)

Series C:

6.4% 8/1/03 A3 3,000 3,202

6.5% 8/1/07 A3 1,630 1,732

6.5% 8/1/07 (Pre-Refunded to A3 370 398
8/1/02 @ 101.5) (g)

Series H, 7% 2/1/06 A3 360 385

New York City Transitional
Fin. Auth. Rev. (Future Tax
Secured):

Series A:

5% 8/15/11 Aa3 8,000 7,861

5% 8/15/14 (MBIA Insured) Aaa 21,245 20,625

5.125% 11/15/14 Aa3 5,000 4,892

MUNICIPAL BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)

NEW YORK - CONTINUED

New York City Transitional
Fin. Auth. Rev. (Future Tax
Secured): - continued

Series B:

4.75% 11/1/23 Aa3 $ 12,725 $ 11,327

4.75% 11/15/23 Aa3 3,000 2,670

New York State Dorm. Auth.
Rev.:

(City Univ. Sys. Consolidated):

Series A, 5.75% 7/1/13 Baa1 3,000 3,134

Series C, 7.5% 7/1/10 Baa1 2,500 2,887

Series D, 8.75% 7/1/02 Baa1 1,700 1,902

(Ithaca College) 5.25% 7/1/10 Aaa 1,670 1,697
(AMBAC Insured)

(New York Univ.) Series A, Aaa 3,235 3,364
5.5% 7/1/10 (MBIA Insured)

(State Univ. Edl. Facilities)
Series C:

5.2% 5/15/04 A3 4,185 4,299

5.2% 5/15/06 A3 2,000 2,048

Rfdg.:

(City Univ. Sys. Baa1 1,080 1,136
Consolidated) Series B,
5.75% 7/1/06

(New York & Presbyterian Aaa 5,000 4,796
Hosp.) 4.4% 8/1/13 (AMBAC
Insured) (FHA Insured)

(State Univ. Edl. Facilities) A3 2,000 2,013
Series B, 5.25% 5/15/11

New York State Envir.
Facilities Corp. Clean Wtr.
& Drinking Wtr. Rev. Series F:

4.875% 6/15/18 Aa1 1,900 1,772

4.875% 6/15/20 Aa1 3,600 3,301

5% 6/15/15 Aa1 1,800 1,740

New York State Local Govt. A3 2,500 2,655
Assistance Corp. Series B,
6% 4/1/18 (Pre-Refunded to
4/1/02 @ 102) (g)

New York State Thruway Auth.
Hwy. & Bridge Trust Fund:

Series A, 5.8% 4/1/04 A3 3,000 3,213
(Pre-Refunded to 4/1/04 @
102) (g)

Series B, 5.25% 4/1/13 (FGIC Aaa 4,350 4,365
Insured)

MUNICIPAL BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)

NEW YORK - CONTINUED

New York State Urban Dev.
Corp. Rev.:

(Sports Fac. Assistance Aaa $ 3,990 $ 4,113
Prog.) Series A, 5.5% 4/1/10
(MBIA Insured)

Rfdg. (Correctional Cap. Baa1 1,785 1,910
Facilities) Series A, 6.4%
1/1/04

149,438

NORTH CAROLINA - 2.0%

North Carolina Eastern Muni.
Pwr. Agcy. Pwr. Sys. Rev.
Rfdg.:

Series B:

5.625% 1/1/03 Baa3 1,000 1,013

6% 1/1/06 Baa3 6,750 6,935

Series C:

5.25% 1/1/04 Baa1 9,340 9,321

5.5% 1/1/07 Baa1 500 497

5.5% 1/1/07 (MBIA Insured) Aaa 2,340 2,435

North Carolina Edl. AAA 1,000 1,056
Facilities Fin. Agcy. Rev.
Rfdg. (Elon College Proj.)
6.375% 1/1/07 (Connie Lee
Insured)

North Carolina Muni. Pwr. Baa1 2,000 2,043
Agcy. #1 Catawba Elec. Rev.
Rfdg. 5.9% 1/1/03

23,300

OHIO - 1.8%

Butler County Trans. Impt. Aaa 2,000 2,064
District Series A, 5.5%
4/1/09 (FSA Insured)

Cincinnati Student Ln. Fdg. Aaa 815 839
Corp. Student Ln. Rev. Rfdg.
Series C, 6.2% 7/1/03 (f)

Franklin County Gen. Oblig.
Rev. (Online Computer
Library Ctr., Inc. Proj.):

Series 1991:

6.6% 7/15/99 - 895 896

6.7% 7/15/00 - 960 990

6.8% 7/15/01 - 800 840

5.65% 4/15/01 - 840 857

5.75% 4/15/02 - 1,030 1,060

5.9% 4/15/04 - 500 520

6% 4/15/09 - 4,500 4,600

Lake County Hosp. Impt. Aaa 3,800 4,220
Facilities Rev. (Lake Hosp.
Sys., Inc.) 6.875% 8/15/11
(AMBAC Insured) (Escrowed to
Maturity) (g)

MUNICIPAL BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)

OHIO - CONTINUED

Ohio Bldg. Auth. Facilities Aa2 $ 2,000 $ 2,153
(Administration Bldg. Fund
Proj.) Series A, 6.3%
10/1/11 (Pre-Refunded to
10/1/02 @ 102) (g)

Ohio Tpk. Commission Tpk. Aaa 1,250 1,293
Rev. Series A, 5.6% 2/15/12
(MBIA Insured)

20,332

OKLAHOMA - 0.2%

Tulsa Ind. Auth. Hosp. Rev. AAA 2,080 2,252
(Tulsa Reg'l. Med. Ctr.) 7%
6/1/06 (Pre-Refunded to
6/1/03 @ 102) (g)

OREGON - 0.4%

Clackamas County School Aaa 1,630 1,632
District #12 (North
Clackamas Proj.) 5.25%
6/1/13 (FGIC Insured)

Washington, Multnomah &
Yamhill County School
District No. 1J:

5.25% 6/1/12 Aa3 1,000 1,005

5.25% 6/1/13 Aa3 1,795 1,797

4,434

PENNSYLVANIA - 4.2%

Allegheny County (Cap. Aaa 21,000 23,120
Appreciation) Series C 34,
8.5% 2/15/02 (MBIA Insured)

Allegheny County Hosp. Dev.
Auth. Rev. (Univ. of
Pittsburgh Med. Ctr.) Series
B:

5% 7/1/16 (MBIA Insured) Aaa 2,500 2,379

5.25% 7/1/06 (MBIA Insured) Aaa 3,335 3,427

Delaware County Gen. Oblig. Aa3 5,500 4,522
Rfdg. (Cap. Apprecation) 0%
11/15/03

Northampton County Hosp. BBB 1,475 1,513
Auth. Rev. Rfdg. (Easton
Hosp.) Series B, 6.9% 1/1/02

Philadelphia Gen. Oblig. Aaa 3,610 3,987
6.25% 5/15/12 (MBIA
Insured) (Pre-Refunded to
5/15/06 @ 102) (g)

Philadelphia Hosp. & Higher Baa1 2,675 2,694
Ed. Facilities Auth. Hosp.
Rev. Rfdg. (Temple Univ.
Hosp.) Series A, 5.75%
11/15/99

MUNICIPAL BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)

PENNSYLVANIA - CONTINUED

Philadelphia Wtr. & Wastewtr. Aaa $ 3,300 $ 3,425
Rev. Rfdg. 5.5% 6/15/03
(FGIC Insured)

Wilkens Area Ind. Dev. Auth. Aaa 3,765 3,747
Rev. Rfdg. (Fairview
Extended Care) Series B,
4.55% 1/1/21 (MBIA Insured),
LOC BankBoston NA

48,814

RHODE ISLAND - 0.2%

Rhode Island Student Ln. A 2,340 2,363
Auth. Student Ln. Rev. Rfdg.
Series A, 6.4% 12/1/99

SOUTH CAROLINA - 0.3%

South Carolina Ed. Assistance A 2,000 2,071
Auth. Rev. Rfdg. (Student
Ln.) Series B, 5.7% 9/1/05
(f)

South Carolina Gen. Oblig. Aaa 1,000 1,049
(State Hwy.) Series B,
5.625% 7/1/11

3,120

SOUTH DAKOTA - 0.5%

South Dakota Student Ln. A+ 5,000 5,273
Fing. Corp. Student Ln. Rev.
Rfdg. Series A, 6.15% 8/1/03
(Pre-Refunded to 8/1/01 @
102) (f)(g)

TENNESSEE - 0.7%

Memphis-Shelby County Arpt.
Auth. Arpt. Rev. Rfdg.
Series A:

5.5% 2/15/03 (MBIA Insured) Aaa 2,405 2,478
(f)

6% 2/15/06 (MBIA Insured) (f) Aaa 2,000 2,126

Montgomery County Health Edl. Baa2 2,130 1,933
& Hsg. Facilities Board
Hosp. Rev. Rfdg. & Impt.
(Clarksville Reg'l. Health
Sys.) 5.375% 1/1/28

Shelby County Gen. Oblig. Aa3 2,200 1,161
Series A, 0% 5/1/11
(Pre-Refunded to 5/1/05 @
69.562) (g)

7,698

TEXAS - 15.7%

Alief Independent School
District:

7% 2/15/03 Aaa 1,125 1,221

7% 2/15/04 Aaa 1,125 1,241

Allen Independent School Aaa 1,370 993
District Rfdg. (Cap.
Appreciation) 0% 2/15/06

Arlington Independent School
District:

Rfdg. 5.25% 2/15/15 Aaa 2,795 2,765

MUNICIPAL BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)

TEXAS - CONTINUED

Arlington Independent School
District: - continued

Rfdg. & Impt.:

(Cap. Appreciation) 0% 2/15/07 Aaa $ 1,570 $ 1,076

6.5% 2/15/03 Aaa 1,500 1,603

Austin Combined Util. Sys. Aaa 16,130 14,239
Rev. Rfdg. (Cap.
Appreciation) Series A, 0%
5/15/02 (MBIA Insured)

Austin Independent School
District Rfdg.:

5.7% 8/1/11 Aaa 1,070 1,112

5.7% 8/1/11 (Pre-Refunded to Aaa 2,430 2,575
8/1/06 @ 100) (g)

Brazos Higher Ed. Auth., Inc.
Student Ln. Rev. Rfdg.
Series C 1:

5.6% 6/1/03 (f) Aaa 6,515 6,682

5.7% 6/1/04 (f) Aaa 2,410 2,488

Brazosport Independent School Aaa 1,290 1,308
District (School House)
5.4% 2/15/13

Cedar Hill Independent School
District Rfdg. (Cap.
Appreciation):

0% 8/15/05 Aaa 2,830 2,115

0% 8/15/07 Aaa 1,465 968

Conroe Independent School Aaa 500 343
District Rfdg. (Cap.
Appreciation) Series B, 0%
2/15/07

Dallas County Gen. Oblig.
Rfdg. (Cap. Appreciation)
Series A:

0% 8/15/05 Aaa 7,125 5,356

0% 8/15/06 Aaa 6,700 4,774

0% 8/15/07 Aaa 3,605 2,430

Del Valle Independent School Aaa 10,575 9,916
District Rfdg. 5% 2/1/18

Eanes Independent School Aaa 2,005 1,581
District Rfdg. (Cap.
Appreciation) 0% 8/1/04

Fort Worth Independent School
District:

Rfdg. 5% 2/15/12 Aaa 4,615 4,520

Rfdg. & Impt. 5.125% 2/15/10 Aaa 5,555 5,588

Garland Independent School Aaa 3,505 2,902
District Series A, 4% 2/15/17

Harris County Gen. Oblig.:

(Cap. Appreciation) (Toll Aaa 3,045 2,653
Road Sub-Lien Rev.) 0%
8/15/02 (MBIA Insured)

MUNICIPAL BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)

TEXAS - CONTINUED

Harris County Gen. Oblig.: -
continued

Rfdg. (Cap. Appreciation)
(Toll Road Sub-Lien Rev.):

Series 1991, 0% 8/1/03 Aa2 $ 12,570 $ 10,430

0% 8/1/02 Aa2 8,485 7,433

0% 8/1/05 Aa2 16,275 12,205

0% 8/1/06 Aa2 13,000 9,235

Humble Independent School Aaa 1,300 1,515
District 8% 2/15/05

Irving Independent School Aaa 4,000 3,914
District (Cap. Appreciation)
0% 2/15/00

Katy Independent School Aaa 2,550 1,748
District Rfdg. (Cap.
Appreciation) Series A, 0%
2/15/07

Keller Independent School Aaa 1,590 789
District Rfdg. (Cap.
Appreciation) Series A, 0%
8/15/12

Laredo Gen. Oblig. Rfdg.:

5.125% 8/15/11 (FGIC Insured) Aaa 2,225 2,225

5.25% 2/15/13 (FGIC Insured) Aaa 1,335 1,333

Leander Independent School
District:

7.5% 8/15/04 Aaa 500 568

7.5% 8/15/05 Aaa 600 691

7.5% 8/15/06 Aaa 800 933

7.5% 8/15/07 Aaa 800 944

Lewisville Independent School Aaa 5,000 3,110
District Rfdg. (Cap.
Appreciation) (School Bldg.)
0% 8/15/08

Lower Colorado River Auth.
Rev.:

Rfdg. (Cap. Appreciation) 0% Aaa 615 381
1/1/09 (MBIA Insured)
(Escrowed to Maturity) (g)

5% 1/1/11 (FSA Insured) Aaa 1,000 988

Midlothian Independent School Aaa 1,905 1,381
District Rfdg. (Cap.
Appreciation) 0% 2/15/06

Northside Independent School
District Rfdg. (Cap.
Appreciation):

0% 2/15/02 Aaa 1,000 891

0% 2/15/03 Aaa 1,230 1,044

0% 2/1/05 Aaa 6,155 4,718

Round Rock Independent School
District:

Rfdg. (Cap. Appreciation) 0% Aaa 7,645 5,241
2/15/07

Series B, 7% 8/1/03 Aaa 1,325 1,452

San Antonio Elec. & Gas Rev. Aa1 5,655 5,809
5.75% 2/1/11

San Antonio Gen. Oblig.:

Rfdg. 5.5% 8/1/04 Aa2 2,745 2,875

MUNICIPAL BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)

TEXAS - CONTINUED

San Antonio Gen. Oblig.: -
continued

Series 2000:

5% 2/1/13 (c) Aa2 $ 1,535 $ 1,473

5% 2/1/14 (c) Aa2 2,250 2,155

Socorro Independent School Aaa 3,000 2,356
District Rfdg. (Cap.
Appreciation) 0% 9/1/04

Spring Independent School Aaa 5,900 4,045
District Rfdg. (Cap.
Appreciation) 0% 2/15/07

Texas Gen. Oblig.:

(College Student Ln.) 5.8% Aa1 2,350 2,424
8/1/05 (f)

(Pub. Fin. Auth.) Series A, Aa1 3,375 3,293
5% 10/1/14

Univ. of Texas Permanent Aaa 2,495 2,488
Univ. Fund Rfdg. 5% 7/1/10

Yselta Independent School Aaa 1,100 579
District Rfdg. (Cap.
Appreciation) 0% 8/15/11

181,115

UTAH - 3.1%

Intermountain Pwr. Agcy. Pwr.
Supply Rev. Rfdg.:

Series A:

5.25% 7/1/12 (MBIA Insured) Aaa 2,605 2,608

6.5% 7/1/10 (AMBAC Insured) Aaa 1,000 1,123

Series B, 5.75% 7/1/16 (MBIA Aaa 1,000 1,032
Insured)

Series D, 5% 7/1/21 (MBIA Aaa 3,000 2,806
Insured)

Series G, 0% 7/1/12 Aaa 17,000 19,447
(Pre-Refunded to 1/1/03 @
101) (b)(g)

Jordan School District 7.625% Aa3 1,000 1,137
6/15/04

Salt Lake County Wtr. Aaa 3,500 2,477
Conservancy District Rev.
Rfdg. (Cap. Appreciation)
Series A, 0% 10/1/06 (AMBAC
Insured)

Utah Board of Regents Student Aaa 4,900 5,096
Ln. Rev. Series A, 7.6%
11/1/00 (AMBAC Insured)

35,726

VIRGINIA - 2.7%

Arlington County Ind. Dev. Aaa 2,965 3,005
Auth. Resource Recovery Rev.
(Ogden Martin Sys. of
Alexandria) 5.375% 1/1/11
(FSA Insured) (f)

Chesapeake Gen. Oblig. Pub. Aa3 2,400 2,566
Impt. 6% 5/1/11 (MBIA
Insured)

Fairfax County Pub. Impt. Aaa 11,000 11,231
Rev. Rfdg. Series A, 5%
6/1/07

MUNICIPAL BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)

VIRGINIA - CONTINUED

Henrico County Wtr. & Swr. Aa2 $ 3,630 $ 3,459
Rev. Rfdg. 5% 5/1/22

Pocahontas Parkway Assoc. Baa3 4,000 3,811
Toll Road Rev. Senior Series
A, 5% 8/15/11

Virginia Hsg. Dev. Auth.
Multi-family Hsg. Rev.
Series I:

5.75% 5/1/07 (f) Aa1 1,380 1,433

5.85% 5/1/08 (f) Aa1 1,370 1,426

Virginia Trans. Board Trans.
Contract Rev. (Northern
Virginia Trans. District)
Series A:

6.75% 5/15/03 Aa2 1,895 2,053

6.75% 5/15/04 Aa2 2,020 2,218

31,202

WASHINGTON - 6.3%

Grant County Pub. Util. Aaa 1,235 1,193
District #2 Wanapum Hydro
Elec. Rev. Rfdg. Second
Series B, 5.25% 1/1/14
(MBIA Insured) (c)(f)

King County Gen. Oblig.
Series B:

5.75% 12/1/11 Aaa 6,000 6,359

5.85% 12/1/13 Aaa 13,480 14,282

Washington Gen. Oblig. Rfdg. Aa1 1,450 1,527
Series R 93A, 5.625% 9/1/05

Washington Health Care Aaa 3,000 3,073
Facilities Auth. Rev. Rfdg.
(Swedish Health Svcs.) 5.5%
11/15/12 (AMBAC Insured)

Washington Pub. Pwr. Supply
Sys. Nuclear Proj. #2 Rev.
Rfdg.:

Series A, 5% 7/1/09 (MBIA Aaa 5,000 4,997
Insured)

Series C, 7.5% 7/1/03 Aa1 1,000 1,067
(Pre-Refunded to 1/1/01 @
102) (g)

Washington Pub. Pwr. Supply
Sys. Nuclear Proj. #3 Rev.
Rfdg.:

(Cap. Appreciation) Series B:

0% 7/1/07 Aa1 15,000 10,093

0% 7/1/10 Aa1 16,000 9,034

Series B:

0% 7/1/04 (MBIA Insured) Aaa 5,450 4,342

0% 7/1/05 (MBIA Insured) Aaa 10,000 7,555

MUNICIPAL BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)

WASHINGTON - CONTINUED

Washington Pub. Pwr. Supply
Sys. Nuclear Proj. #3 Rev.
Rfdg.: - continued

0% 7/1/10 Aa1 $ 2,250 $ 1,270

Series C, 7.5% 7/1/08 (MBIA Aaa 6,940 8,241
Insured)

73,033

TOTAL MUNICIPAL BONDS 1,144,441
(Cost $1,118,863)

</TABLE>

CASH EQUIVALENTS - 0.7%

Municipal Central Cash Fund 7,900,833 7,901
(d)(e) (Cost $7,901)

TOTAL INVESTMENT IN $ 1,152,342
SECURITIES - 100%
(Cost $1,126,764)

LEGEND

(a) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.

(b) Debt obligation initially issued in zero coupon form which
converts to coupon form at a specified rate and date. The rate shown
is the rate at period end.

(d) Information in this report regarding holdings by state and
security types does not reflect the holdings of the Municipal Central
Cash Fund. A listing of the Municipal Central Cash Fund's holdings as
of its most recent fiscal period end is available upon request.

(e) At the period end, the seven-day yield of the Municipal Central
Cash Fund was 3.43%. The yield refers to the income earned by
investing in the fund over the seven-day period, expressed as an
annual percentage.

(f) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.

(g) Security collateralized by an amount sufficient to pay interest
and principal.

OTHER INFORMATION

The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):

MOODY'S RATINGS S&P RATINGS

Aaa, Aa, A 80.9% AAA, AA, A 76.9%

Baa 8.7% BBB 9.8%

Ba 0.0% BB 0.0%

B 0.0% B 0.0%

Caa 0.0% CCC 0.0%

Ca, C 0.0% CC, C 0.0%

D 0.0%

The percentage not rated by Moody's or S&P amounted to 1.7%.
The distribution of municipal securities by revenue source, as a
percentage of total value of investments in securities, is as follows:

General Obligations 36.3%

Electric Utilities 11.8

Health Care 10.6

Escrowed/Pre-Refunded 8.6

Transportation 8.2

Special Tax 8.1

Education 7.3

Others (individually less 9.1
than 5%)

100.0%

INCOME TAX INFORMATION

At June 30, 1999, the aggregate cost of investment securities for
income tax purposes was $1,126,764,000. Net unrealized appreciation
aggregated $25,578,000, of which $34,954,000 related to appreciated
investment securities and $9,376,000 related to depreciated investment
securities.

At December 31, 1998, the fund had a capital loss carryforward of
approximately $5,889,000 of which $592,000 and $5,297,000 will expire
on December 31, 2002 and 2003, respectively. All of the loss
carryforward was acquired in the merger and is available to offset
future capital gains of the fund to the extent provided by
regulations.

At December 31, 1998 the fund was required to defer approximately
$3,439,000 of losses on futures contracts and options.

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT
PER-SHARE AMOUNT) JUNE 30,
1999 (UNAUDITED)

ASSETS

Investment in securities, at $ 1,152,342
value (cost $1,126,764) -
See accompanying schedule

Receivable for investments 8,447
sold

Receivable for fund shares 2,297
sold

Interest receivable 14,931

TOTAL ASSETS 1,178,017

LIABILITIES

Payable for investments $ 8,988
purchased on a delayed
delivery basis

Payable for fund shares 1,298
redeemed

Distributions payable 202

Accrued management fee 356

Other payables and accrued 141
expenses

TOTAL LIABILITIES 10,985

NET ASSETS $ 1,167,032

Net Assets consist of:

Paid in capital $ 1,149,003

Accumulated undistributed net (7,549)
realized gain (loss) on
investments

Net unrealized appreciation 25,578
(depreciation) on investments

NET ASSETS, for 120,774 $ 1,167,032
shares outstanding

NET ASSET VALUE, offering $9.66
price and redemption price
per share ($1,167,032
(divided by) 120,774 shares)

STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS SIX
MONTHS ENDED JUNE 30, 1999
(UNAUDITED)

INTEREST INCOME $ 29,525

EXPENSES

Management fee $ 2,070

Transfer agent fees 491

Accounting fees and expenses 138

Non-interested trustees' 2
compensation

Custodian fees and expenses 30

Registration fees 30

Audit 21

Legal 10

Total expenses before 2,792
reductions

Expense reductions (2) 2,790

NET INTEREST INCOME 26,735

REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:

Investment securities 1,172

Futures contracts 971 2,143

Change in net unrealized
appreciation (depreciation)
on:

Investment securities (40,811)

Futures contracts (190) (41,001)

NET GAIN (LOSS) (38,858)

NET INCREASE (DECREASE) IN $ (12,123)
NET ASSETS RESULTING FROM
OPERATIONS

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, 1998
1999 (UNAUDITED)

INCREASE (DECREASE) IN NET
ASSETS

Operations Net interest income $ 26,735 $ 51,682

Net realized gain (loss) 2,143 9,759

Change in net unrealized (41,001) 1,438
appreciation (depreciation)

NET INCREASE (DECREASE) IN (12,123) 62,879
NET ASSETS RESULTING FROM
OPERATIONS

Distributions to shareholders (26,735) (51,682)
From net interest income

From net realized gain (352) (6,394)

TOTAL DISTRIBUTIONS (27,087) (58,076)

Share transactions Net 194,935 244,699
proceeds from sales of shares

Net asset value of shares - 196,898
issued in exchange for the
net assets of the former
Spartan Intermediate
Municipal Income Fund

Reinvestment of distributions 20,596 44,103

Cost of shares redeemed (163,302) (251,231)

NET INCREASE (DECREASE) IN 52,229 234,469
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) 13,019 239,272
IN NET ASSETS

NET ASSETS

Beginning of period 1,154,013 914,741

End of period $ 1,167,032 $ 1,154,013

OTHER INFORMATION
Shares

Sold 19,617 24,546

Issued in exchange for - 19,829
shares of the former Spartan
Intermediate Municipal
Income Fund

Issued in reinvestment of 2,082 4,424
distributions

Redeemed (16,502) (25,225)

Net increase (decrease) 5,197 23,574

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED JUNE 30, 1999 YEARS ENDED DECEMBER 31,

(UNAUDITED) 1998 1997 1996 1995 1994

SELECTED PER-SHARE DATA

Net asset value, beginning
of $ 9.980 $ 9.940 $ 9.700 $ 9.800 $ 8.990 $ 9.990
period

Income from Investment .232 .474 .485 .488 .497 .512
Operations Net interest
income

Net realized and unrealized (.317) .097 .290 (.069) .810 (.980)
gain (loss)

Total from investment (.085) .571 .775 .419 1.307 (.468)
operations

Less Distributions

From net interest income (.232) (.474) (.485) (.488) (.497) (.512)

From net realized gain (.003) (.057) (.050) (.031) - (.010)

In excess of net realized - - - - - (.010)
gain

Total distributions (.235) (.531) (.535) (.519) (.497) (.532)

Net asset value, end of $ 9.660 $ 9.980 $ 9.940 $ 9.700 $ 9.800 $ 8.990
period

TOTAL RETURN B (0.89)% 5.89% 8.23% 4.43% 14.84% (4.76)%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period
(in $ 1,167 $ 1,154 $ 915 $ 904 $ 943 $ 878
millions)

Ratio of expenses to average .47% A .50% .55% .56% .57% .56%
net assets

Ratio of net interest income 4.54% A 4.58% 4.97% 5.06% 5.25% 5.42%
to average net assets

Portfolio turnover rate 17% A 18% C 22% 27% 31% 30%

</TABLE>

A ANNUALIZED

B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.

C THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.

NOTES TO FINANCIAL STATEMENTS

For the period ended June 30, 1999 (Unaudited)

1. SIGNIFICANT ACCOUNTING POLICIES.

Spartan Intermediate Municipal Income Fund (the fund) is a fund of
Fidelity School Street Trust (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company organized as a Massachusetts business trust. The
financial statements have been prepared in conformity with generally
accepted accounting principles which require management to make
certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:

SECURITY VALUATION. Securities are valued based upon a computerized
matrix system and/or appraisals by a pricing service, both of which
consider market transactions and dealer-supplied valuations.
Securities for which quotations are not readily available are valued
at their fair value as determined in good faith under consistently
applied procedures under the general supervision of the Board of
Trustees. Short-term securities with remaining maturities of sixty
days or less for which quotations are not readily available are valued
at amortized cost or original cost plus accrued interest, both of
which approximate current value.

INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."

INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as
earned.

EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.

DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and
paid monthly from net interest income. Distributions from realized
gains, if any, are recorded on the ex-dividend date.

Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for futures transactions, market discount, capital loss
carryforwards and losses deferred due to futures. The fund also
utilized earnings and profits distributed to shareholders on
redemption of shares as a part of the dividends paid deduction for
income tax purposes.

Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and
may affect the per-share allocation between net interest income and
realized and unrealized gain (loss). Accumulated undistributed net
realized gain (loss) on investments may include temporary book and tax
basis differences that will reverse

1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED

in a subsequent period. Any taxable gain remaining at fiscal year end
is distributed in the following year.

SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.

2. OPERATING POLICIES.

MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission, the fund may invest in the
Municipal Central Cash Fund (the Cash Fund) managed by Fidelity
Investments Money Management, Inc. (FIMM), an affiliate of Fidelity
Management & Research Company (FMR). The Cash Fund is an open-end
money market fund available only to investment companies and other
accounts managed by FMR and its affiliates. The Cash Fund seeks
preservation of capital, liquidity, and current income by investing in
high-quality, short-term municipal securities of various states and
municipalities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
earned by the fund are recorded as interest income in the accompanying
financial statements.

WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place a month or more
after the date of the transaction. The price of the underlying
securities is fixed at the time the transaction is negotiated. The
market values of the securities purchased on a when-issued or forward
commitment basis are identified as such in the fund's schedule of
investments. The fund may receive compensation for interest forgone in
the purchase of a when-issued security. With respect to purchase
commitments, the fund identifies securities as segregated in its
records with a value at least equal to the amount of the commitment.
Losses may arise due to changes in the market value of the underlying
securities, if the counterparty does not perform under the contract,
or if the issuer does not issue the securities due to political,
economic, or other factors.

FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the bond market and to fluctuations in interest rates.
Buying futures tends to increase the fund's exposure to the underlying
instrument, while selling futures tends to decrease the fund's
exposure to the underlying instrument or hedge other fund investments.
Losses may arise from changes in the value of the underlying
instruments or if the counterparties do not perform under the
contracts' terms. Gains (losses) are realized upon the expiration or
closing of the futures contracts. Futures contracts are valued at the
settlement price established each day by the board of trade or
exchange on which they are traded.

3. PURCHASES AND SALES OF INVESTMENTS.

Purchases and sales of securities, other than short-term securities,
aggregated $249,832,000 and $100,231,000, respectively.

The market value of futures contracts opened and closed during the
period amounted to $40,605,000 and $58,824,000, respectively.

4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.

MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee computed daily and paid monthly, based on the fund's gross
income at the rate of 5% of the gross income and .10% of average net
assets. Gross income includes interest accrued less amortization of
premium excluding accretion of discount. For the period, the
management fee was equivalent to an annualized rate of .35% of average
net asset.

SUB-ADVISER FEE. FMR, on behalf of the fund, has entered into a
sub-advisory agreement(effective January 1, 1999) with FIMM, a wholly
owned subsidiary of FMR. For its services, FIMM receives a fee from
FMR of 50% of the management fee payable to FMR. The fee is paid prior
to any voluntary expense reimbursements which may be in effect.

TRANSFER AGENT AND ACCOUNTING FEES. Effective June 14, 1999 Citibank,
N.A. (Citibank) replaced UMB Bank, n.a. as the custodian, transfer
agent and shareholder servicing agent for the fund. Citibank has
entered into a sub-contract with Fidelity Service Company, Inc. (FSC),
an affiliate of FMR, under which FSC performs the activities
associated with the fund's transfer and shareholder servicing agent
and accounting functions. The fund pays account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. The accounting fee is based on the level of
average net assets for the month plus out-of-pocket expenses.

For the period, the transfer agent fees were equivalent to an
annualized rate of .08% of average net assets.

5. EXPENSE REDUCTIONS.

The fund has entered into arrangements with its custodian and transfer
agent whereby credits realized as a result of uninvested cash balances
were used to reduce a portion of the fund's expenses. During the
period, the fund's custodian and transfer agent fees were reduced by
$1,000 and $1,000, respectively, under these arrangements.

6. MERGER INFORMATION.

On March 19, 1998, Fidelity Limited Term Municipal Income
Fund(currently Spartan Intermediate Municipal Income Fund) acquired
all of the assets and assumed all of the liabilities of the former
Spartan Intermediate Municipal Income Fund. The acquisition, which was
approved by the shareholders of the former Spartan Intermediate
Municipal Income Fund on March 9, 1998, was accomplished by an
exchange of 19,828,609 shares (each valued at $9.93) of Fidelity
Limited Term

6. MERGER INFORMATION - CONTINUED

Municipal Income Fund (currently Spartan Intermediate Municipal Income
Fund) for the 18,663,326 shares then outstanding (each valued at
$10.55) of the former Spartan Intermediate Municipal Income Fund.
Based on the opinion of fund counsel, the reorganization qualified as
a tax-free reorganization for federal income tax purposes with no gain
or loss recognized to the funds or their shareholders. The former
Spartan Intermediate Municipal Income Fund's net assets, including
$9,378,552 of unrealized appreciation, were combined with Fidelity
Limited Term Municipal Income Fund (currently Spartan Intermediate
Municipal Income Fund) for total net assets after the acquisition of
$1,132,856,426.

MANAGING YOUR INVESTMENTS

BY PHONE

(PHONE_GRAPHIC)
FIDELITY AUTOMATED
SERVICE TELEPHONE
1-800-544-5555

PRESS

1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.

BY PC

Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.

(COMPUTER_GRAPHIC)
FIDELITY'S WEB SITE
WWW.FIDELITY.COM

(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)

INVESTMENT ADVISER

Fidelity Management & Research Company
Boston, MA

INVESTMENT SUB-ADVISER

Fidelity Investment Money
Management, Inc. (FIMM),
Merrimack, NH

OFFICERS

Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
Norman U. Lind, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
Stanley N. Griffith, Assistant Vice President
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer

BOARD OF TRUSTEES

GENERAL DISTRIBUTOR

Fidelity Distributors Corporation
Boston, MA

* INDEPENDENT TRUSTEES

TRANSFER AND SHAREHOLDER
SERVICING AGENT

Citibank, N.A.
New York, NY

Fidelity Service Company, Inc.
Boston, MA

CUSTODIAN

Citibank, N.A.
New York, NY

FIDELITY'S MUNICIPAL BOND FUNDS

Spartan(registered trademark) Arizona Municipal Income
Spartan California Municipal Income
Spartan Connecticut Municipal Income
Spartan Florida Municipal Income
Spartan Intermediate Municipal Income
Spartan Maryland Municipal Income
Spartan Massachusetts Municipal Income
Spartan Michigan Municipal Income
Spartan Minnesota Municipal Income
Spartan Municipal Income
Spartan New Jersey Municipal Income
Spartan New York Municipal Income
Spartan Ohio Municipal Income
Spartan Pennsylvania Municipal Income
Spartan Short-Intermediate
Municipal Income

THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE

Exchanges/Redemptions 1-800-544-7777

Account Assistance 1-800-544-6666

Product Information 1-800-544-8888

Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)

TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)

Fidelity Automated
Service Telephone (AUTOMATED GRAPHIC) 1-800-544-5555
(AUTOMATED GRAPHIC) AUTOMATED LINE FOR QUICKEST SERVICE

LIM-SANN-0899 82083
1.706327.101

(Fidelity Logo Graphic)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

FIDELITY
NEW MARKETS INCOME
FUND

SEMIANNUAL REPORT

JUNE 30, 1999

(2 FIDELITY LOGOS)

CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.

PERFORMANCE 4 How the fund has done over
time.

FUND TALK 7 The manager's review of fund
performance, strategy and
outlook.

INVESTMENT CHANGES 10 A summary of major shifts in
the fund's investments over
the past six months.

INVESTMENTS 11 A complete list of the fund's
investments with their
market values.

FINANCIAL STATEMENTS 18 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.

NOTES 22 Notes to the financial
statements.

Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.

Other third party marks appearing herein are the property of their
respective owners.

All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.

This report is printed on recycled paper using soy-based inks.

NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.

FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.

PRESIDENT'S MESSAGE

(PHOTO_OF_EDWARD_C_JOHNSON_3D)

DEAR SHAREHOLDER:

While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.

An intermediate-length fund could make sense if your investment
horizon is two to four years, while a short-term bond fund could be
the right choice if you need your money in one or two years.

Best regards,
Edward C. Johnson 3d

PERFORMANCE: THE BOTTOM LINE

There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). You can also look at the fund's income, as
reflected in the fund's yield, to measure performance. If Fidelity had
not reimbursed certain fund expenses, the past five year and life of
fund total returns and dividends would have been lower.

CUMULATIVE TOTAL RETURNS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED JUNE 30, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS LIFE OF FUND

FIDELITY NEW MARKETS INCOME 18.46% -6.42% 82.64% 91.13%

JP EMBI Plus 10.57% -4.26% 94.38% n/a

Emerging Markets Debt Funds 9.72% -10.63% 63.27% n/a
Average

</TABLE>

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on May 4, 1993. For example, if you
had invested $1,000 in a fund that had a 5% return over the past year,
the value of your investment would be $1,050. You can compare the
fund's returns to the performance of the J.P. Morgan Emerging Markets
Bond Index Plus - a market value-weighted index of U.S. dollar and
other external currency-denominated Brady bonds, loans, Eurobonds, and
local instruments traded in emerging markets. To measure how the
fund's performance stacked up against its peers, you can compare it to
the emerging markets debt funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper,
Inc. The past six months average represents a peer group of 52 mutual
funds. These benchmarks reflect reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.

AVERAGE ANNUAL TOTAL RETURNS

PERIODS ENDED JUNE 30, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND

FIDELITY NEW MARKETS INCOME -6.42% 12.80% 11.09%

JP EMBI Plus -4.26% 14.22% n/a

Emerging Markets Debt Funds -10.63% 10.12% n/a
Average

$10,000 OVER LIFE OF FUND

New Markets Income JP Emg Mkt Bond Index
00331 JP001
1993/05/04 10000.00 10000.00
1993/05/31 10300.87 10333.23
1993/06/30 10710.66 10694.64
1993/07/31 11253.11 11140.58
1993/08/31 11586.74 11364.17
1993/09/30 11955.99 11513.02
1993/10/31 12900.58 12483.31
1993/11/30 13042.02 12358.35
1993/12/31 13883.68 13113.02
1994/01/31 14404.11 13148.55
1994/02/28 12954.23 12054.52
1994/03/31 11006.80 10675.65
1994/04/30 10542.95 10680.55
1994/05/31 11095.86 11418.07
1994/06/30 10464.54 10498.62
1994/07/31 10752.29 10756.51
1994/08/31 11938.20 11525.27
1994/09/30 12528.12 11638.59
1994/10/31 12291.04 11309.04
1994/11/30 12238.94 11424.20
1994/12/31 11585.89 10663.40
1995/01/31 10244.50 10294.64
1995/02/28 9514.84 9758.04
1995/03/31 9213.43 9482.39
1995/04/30 9862.05 10500.46
1995/05/31 10518.02 11425.42
1995/06/30 10659.69 11647.17
1995/07/31 10678.43 11655.74
1995/08/31 11026.21 11930.78
1995/09/30 11455.38 12341.81
1995/10/31 11377.65 12215.01
1995/11/30 11743.18 12642.57
1995/12/31 12509.53 13600.61
1996/01/31 13426.92 14798.16
1996/02/29 12701.78 13758.65
1996/03/31 12839.61 14111.49
1996/04/30 13515.35 14821.44
1996/05/31 13894.84 15005.82
1996/06/30 14254.79 15421.13
1996/07/31 14387.90 15538.74
1996/08/31 14906.81 16042.88
1996/09/30 16125.36 17021.13
1996/10/31 16574.14 17089.13
1996/11/30 17521.71 18045.94
1996/12/31 17687.29 18246.86
1997/01/31 18443.09 18905.97
1997/02/28 18765.22 19245.33
1997/03/31 18014.98 18494.33
1997/04/30 18635.49 19122.21
1997/05/31 19470.77 19890.35
1997/06/30 20091.13 20352.83
1997/07/31 20976.37 21334.15
1997/08/31 20850.07 21124.04
1997/09/30 21518.36 21831.42
1997/10/31 19407.58 19481.84
1997/11/30 20139.53 20516.75
1997/12/31 20786.22 21194.30
1998/01/31 20807.27 21241.78
1998/02/28 21380.86 21765.15
1998/03/31 21984.44 22305.54
1998/04/30 22010.98 22318.35
1998/05/31 21099.35 21652.31
1998/06/30 20423.58 21141.81
1998/07/31 20743.69 21420.95
1998/08/31 13300.13 15930.35
1998/09/30 14462.48 17271.73
1998/10/31 15447.22 18274.55
1998/11/30 16603.01 19447.66
1998/12/31 16134.28 18854.70
1999/01/31 15704.44 17884.84
1999/02/28 15988.18 18245.88
1999/03/31 17385.61 19854.15
1999/04/30 19225.18 20953.63
1999/05/31 18200.62 19540.03
1999/06/30 19112.87 20217.40
IMATRL PRASUN SHR__CHT 19990630 19990716 100512 R00000000000077

$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity New Markets Income Fund on May 4, 1993 when the
fund started. As the chart shows, by June 30, 1999, the value of the
investment would have grown to $19,113 - a 91.13% increase on the
initial investment. For comparison, look at how the J.P. Morgan
Emerging Markets Bond Index did over the same period. (The JP Morgan
Emerging Markets Bond Index Plus does not extend as far back as the
fund's start date, and therefore, is not appropriate for this
comparison). With dividends and capital gains, if any, reinvested, the
same $10,000 would have grown to $20,217 - a 102.17% increase.

(CHECKMARK)
UNDERSTANDING
PERFORMANCE

DIVIDENDS AND YIELD

PERIODS ENDED JUNE 30, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR A

Dividends per share 6.12(cents) 38.37(cents) 97.29(cents)

Annualized dividend rate 7.46% 8.14% 10.22%

30-day annualized yield 8.62% - -

DIVIDENDS per share show the income paid by the fund for a set period.
If you annualize this number, based on the fund's average share price
of $9.98 over the past one month, $9.50 over the past six months and
$9.52 over the past one year, you can compare the fund's income over
these three periods. The 30-day annualized YIELD is a standard formula
for all bond funds based on the yields of the bonds in the fund,
averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It
also helps you compare funds from different companies on an equal
basis. It does not reflect the cost of hedging and other currency
gains and losses.

A NON-TAXABLE DIVIDENDS: DIVIDENDS PAID ARE BASED ON THE FUND'S
INVESTMENT INCOME AND DO NOT REFLECT CURRENCY RELATED LOSSES. AS A
RESULT OF CURRENCY LOSSES, DIVIDENDS OF APPROXIMATELY 19.5(CENTS) PER
SHARE PAID DURING 1998 WERE A NON-TAXABLE RETURN OF CAPITAL.

FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP

Despite rising U.S. interest rates,
emerging-market debt enjoyed
positive performance in the first half
of 1999, as the J.P. Morgan
Emerging Markets Bond Index
Plus - which tracks total returns for
traded external debt instruments in
the emerging markets - returned
10.57% for the six months ending
June 30, 1999. The market's
positive performance was a
continuation of the rally that began
late last fall in the aftermath of
Russia's devaluation and default on
its local currency-denominated
debt. Several factors were
responsible for the rally. First,
emerging markets enjoyed a
technical rebound from the
dramatically oversold conditions
that existed last fall. Russian debt,
the primary victim of last year's
rout, enjoyed this year's largest
rebound. Brazilian debt prices
also rallied significantly despite a
devaluation of its currency - the
real - in January. The Brazilian
recovery was driven by a much
milder-than-expected recession and
a muted inflationary response from
the devaluation. Another important
development was the dramatic
increase in the price of oil, which
benefited Venezuela, the
second-best performing country
year-to-date, as well as Russia and
Mexico. The only country with
significantly negative returns was
Ecuador, which suffered from
investors' negative sentiment about
its creditworthiness, a stagnant
economy, high deficits and a very
weak banking sector.

(PHOTOGRAPH OF JOHN CARLSON)

An interview with John Carlson, Portfolio Manager of Fidelity
New Markets Income Fund

Q. HOW DID THE FUND PERFORM IN THE FIRST HALF OF 1999, JOHN?

A. The fund generated favorable performance in the first half. For the
six months ending June 30, 1999, the fund posted a return of 18.46%.
The emerging market debt funds average, as tracked by Lipper Inc.,
returned 9.72% during the period. The J.P. Morgan Emerging Markets
Bond Index Plus returned 10.57%. For the 12 months ending June 30,
1999, the fund posted a return of -6.42%. The Lipper peer group and
J.P. Morgan index returned -10.63% and -4.26%, respectively.

Q. RUSSIA WAS THE MAJOR STORY IN EMERGING MARKETS LAST YEAR. HOW HAS
IT PERFORMED IN 1999 AND HOW DID IT INFLUENCE FUND PERFORMANCE?

A. Russian asset prices ended 1998 at deeply depressed levels after
the government devalued its currency and defaulted on local
currency-denominated debt. In addition, the themes of de-leveraging
and deflation throughout global capital markets further contributed to
the crisis. The fund maintained its overweighted position in Russia as
our team believed assets had become significantly oversold. The fund's
holdings in Russia were also shifted to include more U.S.
dollar-denominated eurobonds, which we perceived to be more
creditworthy than debt that had evolved from the former Soviet Union.
So far this year, Russian debt prices have rebounded. Stronger
commodity prices, particularly oil, helped. In addition, some
stability returned to the Russian economy. The Russians appear to be
succeeding at drawing a distinction between their willingness to
service Russian debt, while seeking to restructure Soviet-era debt.
The result has been that Russia is the top-performing country in the
benchmark this year and a top contributor to the fund.

Q. WHAT'S BEEN THE MAJOR EVENT SO FAR IN 1999?

A. If Russia was 1998's big story, Brazil has been the major story
thus far in 1999. Brazil devalued its currency, the real, in January
of this year. However, unlike Russia, the perception is that the
Brazil devaluation was one of the most widely anticipated
emerging-market crises in recent memory. In light of this, our
research team studied all the major emerging-market currency
devaluations of the 1990s and concluded that Brazilian assets already
reflected the turmoil that typically follows such an event. As a
result of this and other factors, the fund overweighted Brazil.
Brazilian debt prices subsequently recovered. Most importantly, the
economy contracted less than was expected and inflation has been
surprisingly tame. In addition, the newly appointed Central Bank
Governor, Arminio Fraga, was able to convince major banks to extend
credit lines to Brazil. This action helped mitigate Brazil's growing
liquidity crisis.

Q. WHAT HAVE BEEN THE OTHER KEY DRIVERS OF FUND PERFORMANCE?

A. One of the key trends in the first half of 1999 was the resurgence
in oil prices. The price of West Texas Intermediate crude oil rose
from approximately $12 per barrel in January to over $18 per barrel by
the end of June. Relative to its benchmark, the fund benefited from
its overweighting in Venezuela, one of the world's most important oil
producers. In addition, differentiating among oil producers benefited
fund performance. Our analysts believed, by itself, higher oil prices
would not be enough to help Ecuador, a deteriorating credit. As a
result, the fund maintained an underweighted position relative to the
benchmark, and held no positions in this country at the end of the
period. It is also important to recognize that while country selection
is the more talked-about aspect of our investment process, security
selection - choosing the bonds with the best value in each country -
was a key driver of fund performance. Specifically, security selection
within countries with robust bond markets, such as Brazil, Mexico and
Argentina, contributed to performance. The fund did not have any
significant performance detractors in the period.

Q. JOHN, WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?

A. I'm cautious. Looking forward, I think it is critical that global
economic growth expands, particularly outside of the U.S. Our research
has found that long-term economic growth is the key variable for
emerging-country creditworthiness. Coincident with this, it is also
important that commodity prices stay stable or increase. I will watch
closely the level and consistency of credit extended by banks to
emerging-market countries. Lastly, we are monitoring the potential for
China to devalue its currency and considering the possible fallout
from such an event.

(CHECKMARK)

FUND FACTS

GOAL: a high level of current
income; as a secondary
objective, the fund seeks
capital appreciation

FUND NUMBER: 331

TRADING SYMBOL: FNMIX

START DATE: May 4, 1993

SIZE: as of June 30, 1999,
more than $209 million

MANAGER: John Carlson,
since 1995; also lead
manager, Fidelity
International Bond Fund
and Fidelity Strategic Income
Fund, since 1998; joined
Fidelity in 1995.

JOHN CARLSON TALKS ABOUT
ESTIMATING COUNTRY RISK:

"I have found when investing in
emerging markets that it is
critical to combine quantitative
analysis of countries with a
qualitative, hands-on assessment.

"The two main sources of risk for an
emerging-markets debt fund are the
overall market risk and each
country's individual risk. We have
created a proprietary tool to help
us assign a risk score to each
country in our investment
universe. One of the models we use
to reach this score looks at the
debt-servicing capacity of each
country. It is akin to the credit
scores used by banks as an aid in
deciding to whom to lend.

"The macroeconomic variables
we have found to be highly
significant in explaining the
occurrence of debt defaults are: 1)
liquidity, the gross borrowing
requirements of the country as
a percentage of foreign currency
reserves; and 2) leverage, the
country's external debt as a
percentage of exports of goods and
services. Additionally, two economic
performance variables are included
on the premise that even large
liquidity requirements can be
managed provided policies are right
and the economy is experiencing
robust, non-inflationary growth.
These variables are average
growth and inflation."

INVESTMENT CHANGES

<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE COUNTRIES AS OF JUNE
30, 1999

(EXCLUDING CASH EQUIVALENTS) % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE COUNTRIES 6 MONTHS AGO

Brazil 21.1 15.3

Mexico 15.5 22.5

Argentina 14.5 18.9

Russia 12.2 6.8

Venezuela 9.6 12.6

</TABLE>

TOP COUNTRIES ARE BASED UPON LOCATION OF ISSUER OF EACH SECURITY,
INCLUDING WHERE THE FUND IS EXPOSED TO POTENTIAL POLITICAL AND CREDIT
RISKS.

<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE HOLDINGS AS OF JUNE
30, 1999

(BY ISSUER, EXCLUDING CASH % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
EQUIVALENTS) THESE HOLDINGS 6 MONTHS AGO

Brazilian Federative Republic 12.8 5.9

Argentinian Republic 10.3 13.2

Venezuelan Republic 9.6 12.6

United Mexican States 8.9 16.8

Russian Federation 5.6 1.0

</TABLE>

<TABLE>
<CAPTION>
<S> <C>
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)

AS OF JUNE 30, 1999 AS OF DECEMBER 31, 1998

Corporate Bonds 19.5% Corporate Bonds 15.6%

Government Obligations 62.1% Government Obligations 67.0%

Stocks 5.1% Stocks 6.9%

Other Investments 6.5% Other Investments 4.6%

Short-Term Investments 6.8% Short-Term Investments 5.9%

</TABLE>

Row: 1, Col: 1, Value: 19.5
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 62.1
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 5.1
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 6.5
Row: 1, Col: 8, Value: 6.8

Row: 1, Col: 1, Value: 15.6
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 67.0
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 6.9
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 4.6
Row: 1, Col: 8, Value: 5.9

INVESTMENTS JUNE 30, 1999 (UNAUDITED)

Showing Percentage of Total Value of Investment in Securities

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS - 19.5%

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

CONVERTIBLE BONDS - 3.0%

MALAYSIA - 1.9%

Telekom Malaysia BHD 4% Baa3 $ 4,420,000 $ 3,812,250
10/3/04

MEXICO - 1.1%

Telefonos de Mexico SA de CV BB 2,070,000 2,137,275
4.25% 6/15/04

TOTAL CONVERTIBLE BONDS 5,949,525

NONCONVERTIBLE BONDS - 16.5%

ARGENTINA - 2.2%

Compania Internacional de BB ARS 5,790,000 4,487,856
Telecomunicaciones 10.375%
8/1/04 (Reg. S)

BRAZIL - 4.9%

Banco Nacional de
Desenvolvimento Economico e
Social:

13.64% 6/16/08 (h) B1 8,700,000 7,351,500

13.64% 6/16/08 (g)(h) B1 2,830,000 2,391,350

9,742,850

MALAYSIA - 3.0%

Petroliam Nasional BHD
(Petronas):

7.625% 10/15/26 (Reg. S) A2 6,120,000 4,987,800

yankee 7.625% 10/15/26 (g) Baa3 1,330,000 1,083,950

6,071,750

MEXICO - 4.3%

Cemex SA 9.25% 6/17/02 Ba2 3,890,000 3,928,900

Petroleos Mexicanos:

9.25% 3/30/18 Ba2 1,670,000 1,394,450

9.5% 9/15/27 Ba2 3,350,000 3,186,688

8,510,038

TURKEY - 2.1%

Cellco Finance NV 15% 8/1/05 B2 4,100,000 4,223,000

TOTAL NONCONVERTIBLE BONDS 33,035,494

TOTAL CORPORATE BONDS 38,985,019
(Cost $36,410,917)

GOVERNMENT OBLIGATIONS (I) -
62.6%

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

ARGENTINA - 12.3%

Argentinian Republic:

Brady par euro 6% 3/31/23 Ba3 $ 16,260,000 $ 10,406,395

9.75% 9/19/27 Ba3 13,330,000 10,247,438

City of Buenos Aires euro B1 ARS 4,840,000 3,896,726
10.5% 5/28/04

24,550,559

BRAZIL - 12.8%

Brazilian Federative Republic:

Brady:

debt conversion bond euro B2 10,510,000 6,516,200
5.9375% 4/15/12 (h)

discount euro 5.875% 4/15/24 B2 7,180,000 4,577,250
(h)

new money bond L:

5.9375% 4/15/09 (Bearer) (h) B2 6,765,000 4,743,956

5.9375% 4/15/09 (Reg.) (h) B2 5,530,000 3,877,913

global bond 10.125% 5/15/27 B2 7,670,000 5,781,263

25,496,582

BULGARIA - 2.7%

Bulgarian Republic Brady:

discount A 5.875% 7/28/24 (h) B2 6,720,000 4,594,800

FLIRB A 2.5% 7/28/12 (h) B2 1,220,000 750,300

5,345,100

COSTA RICA - 1.3%

Banco Central Costa Rica Ba1 900,000 787,500
Series A, 6.25% 5/21/10

Costa Rican Republic 9.335% Ba1 1,830,000 1,793,400
5/15/09 (g)

2,580,900

IVORY COAST - 0.7%

Ivory Coast Brady past due - 4,143,750 1,450,313
interest 2% 3/29/18 (h)

MALAYSIA - 1.5%

Malaysian Government yankee Baa3 3,010,000 3,042,237
8.75% 6/1/09

MEXICO - 8.9%

United Mexican States:

Brady par A 6.25% 12/31/19 Ba2 4,750,000 3,526,875
unit

Brady par B 6.25% 12/31/19 Ba2 2,060,000 1,529,550
unit

global bond 11.5% 5/15/26 Ba2 7,150,000 7,972,250

GOVERNMENT OBLIGATIONS (I) -
CONTINUED

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

MEXICO - CONTINUED

United Mexican States: -
continued

value recovery rights 6/30/03:

discount A (a)(j) - $ 1,000 $ 0

discount C (a)(j) - 1,000 0

10.375% 2/17/09 Ba2 2,100,000 2,144,625

warrants 2/17/00 (a)(j) - 42,100 2,673,350

17,846,650

NIGERIA - 1.1%

Central Bank of Nigeria:

6.25% 11/15/20 - 3,750,000 2,306,250

warrants 11/15/20 (a)(j) - 3,750 0

2,306,250

PERU - 1.1%

Peruvian Republic Brady:

FLIRB 3.75% 3/7/17 (h) Ba3 1,580,000 869,000

past due interest 4.5% 3/7/17 Ba3 2,160,000 1,333,800
(h)

2,202,800

POLAND - 0.5%

Polish Republic Brady par 3% Baa3 1,650,000 985,875
10/27/24 (f)

RUSSIA - 8.8%

Bank for Foreign Economic Ca 10,820,000 1,731,200
Affairs of Russia
(Vnesheconombank) interest
notes 6.0625% 12/15/15 (h)

Moscow City 9.5% 5/31/00 Caa1 6,840,000 4,223,700
(Reg.)

Russian Federation:

euro 12.75% 6/24/28 (Reg. S) B3 8,800,000 4,950,000

9.25% 11/27/01 B3 1,580,000 1,070,450

11% 7/24/18 (Reg. S) B3 10,370,000 5,185,000

Russian Federation Ministry Ca 1,870,000 439,450
of Finance 3% 5/14/03

17,599,800

TURKEY - 1.3%

Turkish Republic:

global 12.375% 6/15/09 B1 1,660,000 1,637,175

Treasury Bill 0% 1/19/00 (e) - TRL 567,459,000 879,609

2,516,784

GOVERNMENT OBLIGATIONS (I) -
CONTINUED

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

VENEZUELA - 9.6%

Venezuelan Republic:

Brady:

debt conversion bond euro B2 $ 9,714,240 $ 7,516,393
6.3125% 12/18/07 (h)

FLIRB A 6% 3/31/07 (h) B2 2,666,650 2,039,987

par W-B euro 6.75% 3/31/20 B2 4,260,000 2,971,350

global bond:

13.625% 8/15/18 B2 930,000 855,600

13.625% 8/15/18 B2 1,850,000 1,702,000

Oil recovery rights 3/31/20 - 46,315 0
(j)

9.25% 9/15/27 B2 6,120,000 4,069,800

19,155,130

TOTAL GOVERNMENT OBLIGATIONS 125,078,980
(Cost $114,482,429)

</TABLE>

COMMON STOCKS - 5.1%

BRAZIL - 3.4%

Telebras sponsored:

ADR 115,700 7,231

ADR (PFD) 75,800 6,836,213

6,843,444

MEXICO - 1.2%

Cemex SA Series B 287,000 1,430,406

Fomento Economico Mexicano SA 26,700 1,064,663
de CV sponsored ADR

2,495,069

SINGAPORE - 0.5%

Pacific Internet Ltd. 19,000 900,125

UNITED STATES OF AMERICA - 0.0%

Paging Brazil Holding Co. LLC 1,700 0
Class B (a)

TOTAL COMMON STOCKS 10,238,638
(Cost $8,681,044)

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SOVEREIGN LOAN PARTICIPATIONS
- - 6.5%

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

ALGERIA - 0.4%

Algerian Republic loan - $ 880,000 $ 831,600
participation - The Chase
Manhattan Bank 7.3125%
3/4/00 (h)

ANGOLA - 0.5%

Banco Nacional de Angola loan - 4,922,048 1,082,851
participation - Societe
Generale

CAMEROON - 0.3%

Cameroon Republic:

loan participation - Societe - FRF 6,240,000 147,551
Generale (a)

loan participation - Societe - DEM 4,510,000 357,662
Generale (a)

505,213

CONGO - 0.2%

Congo Republic loan - 2,758,208 358,567
participation - Societe
Generale (a)

MOROCCO - 1.7%

Moroccan Kingdom loan
participation:

Series A - ING Bank NV - 1,510,000 1,226,875
5.9063% 1/1/09 (h)

Series A - Merrill Lynch, - 885,713 719,642
Pierce, Fenner & Smith, Inc.
5.9063% 1/1/09 (h)

Series A - Morgan Guaranty - 638,568 518,837
Trust Co. 5.9063% 1/1/09 (h)

Series A - Paribas Capital - 1,150,000 934,375
Markets 5.9063% 1/1/09 (h)

3,399,729

RUSSIA - 3.4%

Bank for Foreign Economic
Affairs of Russia
(Vnesheconombank) loan
participation restructured
under 1997 Agreement:

- - BankBoston Corp. 6.0625% - 1,080,000 133,650
12/15/20 (c)(h)

- - Deutsche Bank 6.0625% - 7,050,000 872,438
12/15/20 (c)(h)

- - Donald, Lufkin & Jenrette - 2,450,000 303,188
Securities Corp. 6.0625%
12/15/20 (c)(h)

- - Lehman Commercial Paper, - 810,000 100,238
Inc. 6.0625% 12/15/20 (c)(h)

- - Merrill Lynch, Pierce, - 5,400,000 668,250
Fenner & Smith, Inc. 6.0625%
12/15/20 (c)(h)

- - ING Bank NV 6.0625% - 2,900,000 358,875
12/15/20 (c)(h)

SOVEREIGN LOAN PARTICIPATIONS
- - CONTINUED

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

RUSSIA - CONTINUED

Bank for Foreign Economic
Affairs of Russia
(Vnesheconombank) loan
participation restructured
under 1997 Agreement: -
continued

- - Morgan (J.P.) Securities, - $ 22,850,000 $ 2,827,688
Inc. 6.0625% 12/15/20 (c)(h)

- - Paribus Capital Markets - 3,270,000 404,663
6.0625% 12/15/20 (c)(h)

- - The Chase Manhattan Bank - 9,870,000 1,221,413
6.0625% 12/15/20 (c)(h)

6,890,403

TOTAL SOVEREIGN LOAN 13,068,363
PARTICIPATIONS
(Cost $15,668,675)

</TABLE>

CASH EQUIVALENTS - 6.3%

MATURITY AMOUNT

Investments in repurchase $ 12,514,681 12,513,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 4.84%,
dated 6/30/99 due 7/1/99
(Cost $12,513,000)

TOTAL INVESTMENT IN $ 199,884,000
SECURITIES - 100%
(Cost $187,756,065)

SECURITY TYPE ABBREVIATION

FLIRB - Front Loaded Interest
Reduction Bonds

CURRENCY ABBREVIATIONS

ARS - Argentine peso

DEM - German deutsche mark

FRF - French franc

TRL - Turkish lira

LEGEND

(a) Non-income producing

(b) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.

(c) Non-income producing - issuer filed for protection under the
Federal Bankruptcy Code or is in default of interest payment.

(d) Principal amount is stated in United States dollars unless
otherwise noted.

(e) Principal amount in thousands.

(f) Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date. The rate shown is the rate at
period end.

(g) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
At the period end, the value of these securities amounted to
$5,268,700 or 2.5% of net assets.

(h) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.

(j) Quantity represents share amount.

OTHER INFORMATION

The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows:

MOODY'S RATINGS S&P RATINGS

Aaa, Aa, A 2.5% AAA, AA, A 0.0%

Baa 4.4% BBB 4.4%

Ba 24.6% BB 35.7%

B 40.5% B 27.1%

Caa 2.1% CCC 2.1%

Ca, C 0.9% CC, C 5.6%

D 0.0%

The percentage not rated by Moody's or S&P amounted to 8.4%. FMR has
determined that unrated debt securities that are lower quality account
for 8.4% of the total value of investment in securities.

INCOME TAX INFORMATION

At June 30, 1999, the aggregate cost of investment securities for
income tax purposes was $190,220,138. Net unrealized appreciation
aggregated $9,663,862, of which $17,943,300 related to appreciated
investment securities and $8,279,438 related to depreciated investment
securities.

At December 31, 1998, the fund had a capital loss carryforward of
approximately $50,343,000, all of which will expire on December 31,
2006.

The fund intends to elect to defer to its fiscal year ending December
31, 1999 approximately $12,702,000 of losses recognized during the
period November 1, 1998 to December 31, 1998.

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)

ASSETS

Investment in securities, at $ 199,884,000
value (including repurchase
agreements of $12,513,000)
(cost $187,756,065) - See
accompanying schedule

Receivable for investments 15,373,588
sold

Receivable for fund shares 130,395
sold

Dividends receivable 297,100

Interest receivable 3,411,214

Redemption fees receivable 631

TOTAL ASSETS 219,096,928

LIABILITIES

Payable for investments $ 8,443,796
purchased

Payable for fund shares 235,925
redeemed

Foreign tax payable 551,756

Distributions payable 163,954

Accrued management fee 116,233

Other payables and accrued 115,998
expenses

TOTAL LIABILITIES 9,627,662

NET ASSETS $ 209,469,266

Net Assets consist of:

Paid in capital $ 266,408,030

Undistributed net investment 154,531
income

Accumulated undistributed net (69,218,410)
realized gain (loss) on
investments and foreign
currency transactions

Net unrealized appreciation 12,125,115
(depreciation) on
investments and assets and
liabilities in foreign
currencies

NET ASSETS, for 20,473,653 $ 209,469,266
shares outstanding

NET ASSET VALUE, offering $10.23
price and redemption price
per share ($209,469,266
(divided by) 20,473,653
shares)

STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30,
1999 (UNAUDITED)

INVESTMENT INCOME $ 398,986
Dividends

Interest 10,768,932

11,167,918

Less foreign taxes withheld (39,975)

TOTAL INCOME 11,127,943

EXPENSES

Management fee $ 680,025

Transfer agent fees 242,108

Accounting fees and expenses 55,371

Non-interested trustees' 1,035
compensation

Custodian fees and expenses 39,541

Registration fees 25,258

Audit 33,114

Legal 362

Total expenses before 1,076,814
reductions

Expense reductions (3,106) 1,073,708

NET INVESTMENT INCOME 10,054,235

REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:

Investment securities 123,009

Foreign currency transactions 96,687 219,696

Change in net unrealized
appreciation (depreciation)
on:

Investment securities 22,130,507

Assets and liabilities in 9,156 22,139,663
foreign currencies

NET GAIN (LOSS) 22,359,359

NET INCREASE (DECREASE) IN $ 32,413,594
NET ASSETS RESULTING FROM
OPERATIONS

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, 1998
1999 (UNAUDITED)

INCREASE (DECREASE) IN NET
ASSETS

Operations Net investment $ 10,054,235 $ 29,296,821
income

Net realized gain (loss) 219,696 (66,312,156)

Change in net unrealized 22,139,663 (19,967,848)
appreciation (depreciation)

NET INCREASE (DECREASE) IN 32,413,594 (56,983,183)
NET ASSETS RESULTING FROM
OPERATIONS

Distributions to shareholders (8,108,864) (25,046,743)
From net investment income

Return of capital - (4,765,993)

TOTAL DISTRIBUTIONS (8,108,864) (29,812,736)

Share transactions Net 32,810,117 124,884,456
proceeds from sales of shares

Reinvestment of distributions 6,772,023 26,508,421

Cost of shares redeemed (62,445,270) (237,972,754)

NET INCREASE (DECREASE) IN (22,863,130) (86,579,877)
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS

Redemption fees 185,810 382,995

TOTAL INCREASE (DECREASE) 1,627,410 (172,992,801)
IN NET ASSETS

NET ASSETS

Beginning of period 207,841,856 380,834,657

End of period (including $ 209,469,266 $ 207,841,856
under (over) distribution
of net investment income of
$154,531 and $(1,790,840),
respectively)

OTHER INFORMATION
Shares

Sold 3,409,776 11,840,971

Issued in reinvestment of 712,617 2,410,872
distributions

Redeemed (6,774,793) (20,498,133)

Net increase (decrease) (2,652,400) (6,246,290)

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SIX MONTHS ENDED JUNE 30, 1999 YEARS ENDED DECEMBER 31,

(UNAUDITED) 1998 1997 1996 1995

SELECTED PER-SHARE DATA

Net asset value, beginning of $ 8.990 $ 12.970 $ 12.960 $ 9.950 $ 10.190
period

Income from Investment .476 D 1.201 D 1.065 D .866 1.222
Operations Net investment
income

Net realized and unrealized 1.139 (3.980) 1.105 3.035 (.583)
gain (loss)

Total from investment 1.615 (2.779) 2.170 3.901 .639
operations

Less Distributions

From net investment income (.384) (1.022) (1.318) (.932) (.916)

In excess of net investment - - - - -
income

From net realized gain - - (.870) - -

Return of capital - (.195) - - -

Total distributions (.384) (1.217) (2.188) (.932) (.916)

Redemption fees added to paid .009 .016 .028 .041 .037
in capital

Net asset value, end of $ 10.230 $ 8.990 $ 12.970 $ 12.960 $ 9.950
period

TOTAL RETURN B, C 18.46% (22.38)% 17.52% 41.39% 7.97%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period $ 209,469 $ 207,842 $ 380,835 $ 310,145 $ 176,499
(000 omitted)

Ratio of expenses to average 1.09% A 1.13% 1.08% 1.09% 1.17%
net assets

Ratio of expenses to average 1.08% A, F 1.13% 1.08% 1.09% 1.17%
net assets after expense
reductions

Ratio of net investment 10.14% A 10.50% 7.56% 7.68% 9.51%
income to average net assets

Portfolio turnover rate 351% A 488% 656% 405% 306%

</TABLE>

1994

SELECTED PER-SHARE DATA

Net asset value, beginning of $ 13.070
period

Income from Investment .573
Operations Net investment
income

Net realized and unrealized (2.687)
gain (loss)

Total from investment (2.114)
operations

Less Distributions

From net investment income (.529)

In excess of net investment (.057)
income

From net realized gain (.180)

Return of capital -

Total distributions (.766)

Redemption fees added to paid -
in capital

Net asset value, end of $ 10.190
period

TOTAL RETURN B, C (16.55)%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period $ 179,114
(000 omitted)

Ratio of expenses to average 1.28% E
net assets

Ratio of expenses to average 1.28%
net assets after expense
reductions

Ratio of net investment 5.87%
income to average net assets

Portfolio turnover rate 409%

</TABLE>

A ANNUALIZED

B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.

C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.

D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.

E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.

F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.

NOTES TO FINANCIAL STATEMENTS

For the period ended June 30, 1999 (Unaudited)

1. SIGNIFICANT ACCOUNTING POLICIES.

Fidelity New Markets Income Fund (the fund) is a fund of Fidelity
School Street Trust (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company organized as a Massachusetts business trust. The
financial statements have been prepared in conformity with generally
accepted accounting principles which require management to make
certain estimates and assumptions at the date of the financial
statements.

FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.

INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend

1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

INVESTMENT INCOME - CONTINUED

income, if any, are recorded at the fair market value of the
securities received. Interest income, which includes accretion of
original issue discount, is accrued as earned. Investment income is
recorded net of foreign taxes withheld where recovery of such taxes is
uncertain. The fund may place a debt obligation on non-accrual status
and reduce related interest income by ceasing current accruals and
writing off interest receivables when the collection of all or a
portion of interest has become doubtful based on consistently applied
procedures, under the general supervision of the Board of Trustees of
the fund. A debt obligation is removed from non-accrual status when
the issuer resumes interest payments or when collectibility of
interest is reasonably assured.

EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.

DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and
paid monthly from net investment income. Distributions from realized
gains, if any, are recorded on the ex-dividend date.

Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for foreign currency transactions, market discount and
losses deferred due to wash sales and excise tax regulations.

Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.

SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the fund less
than 180 days are subject to a short-term trading fee equal to 1% of
the proceeds of the redeemed shares. The fee, which is retained by the
fund, is accounted for as an addition to paid in capital.

SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.

2. OPERATING POLICIES.

FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes

2. OPERATING POLICIES - CONTINUED

FOREIGN CURRENCY CONTRACTS - CONTINUED

in the value of the foreign currency or if the counterparties do not
perform under the contracts' terms. The U.S. dollar value of foreign
currency contracts is determined using contractual currency exchange
rates established at the time of each trade.

OPTIONS. The fund may use options to manage its exposure to the bond
market and to fluctuations in interest rates and currency values.
Writing puts and buying calls tend to increase the fund's exposure to
the underlying instrument. Buying puts and writing calls tend to
decrease the fund's exposure to the underlying instrument, or hedge
other fund investments. Losses may arise from changes in the value of
the underlying instruments, if there is an illiquid secondary market
for the contracts, or if the counterparties do not perform under the
contracts' terms. Gains and losses are realized upon the expiration or
closing of the options. Realized gains (losses) on purchased options
are included in realized gains (losses) on investment securities,
except purchased options on foreign currency which are included in
realized gains (losses) on foreign currency transactions.

Exchange-traded options are valued using the last sale price or, in
the absence of a sale, the last offering price. Options traded
over-the-counter are valued using dealer-supplied valuations.

2. OPERATING POLICIES - CONTINUED

3. PURCHASES AND SALES OF INVESTMENTS.

Purchases and sales of securities, other than short-term securities,
aggregated $325,026,071 and $345,850,198, respectively.

4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.

ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee
is based on the level of average net assets for the month plus
out-of-pocket expenses.

5. EXPENSE REDUCTIONS.

FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $1,383 under this arrangement.

In addition, the fund has entered into arrangements with its custodian
and transfer agent whereby credits realized as a result of uninvested
cash balances were used to reduce a portion of the fund's expenses.
During the period, the fund's custodian and transfer agent fees were
reduced by $1,410 and $313, respectively, under these arrangements.

6. CREDIT RISK.

7. LITIGATION.

The fund is engaged in litigation against the obligor on the inflation
adjusted debt of Siderurgica Brasileiras SA, contesting the
calculation of the principal adjustment. The probability of success of
this litigation cannot be predicted and the amount of recovery cannot
be estimated. Any recovery from this litigation would inure to the
benefit of the fund. As of period end, the fund no longer holds
Siderurgica Brasileiras SA debt securities.

MANAGING YOUR INVESTMENTS

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ARIZONA

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CALIFORNIA

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851 East Hamilton Avenue
Campbell, CA

527 North Brand Boulevard
Glendale, CA

19200 Von Karman Avenue
Irvine, CA

10100 Santa Monica Blvd.
Los Angeles, CA

251 University Avenue
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1760 Challenge Way
Sacramento, CA

7676 Hazard Center Drive
San Diego, CA

455 Market Street
San Francisco, CA

950 Northgate Drive
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1400 Civic Drive
Walnut Creek, CA

6300 Canoga Avenue
Woodland Hills, CA

COLORADO

1625 Broadway
Denver, CO

CONNECTICUT

48 West Putnam Avenue
Greenwich, CT

265 Church Street
New Haven, CT

300 Atlantic Street
Stamford, CT

29 South Main Street
West Hartford, CT

DELAWARE

222 Delaware Avenue
Wilmington, DE

FLORIDA

4400 N. Federal Highway
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90 Alhambra Plaza
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4090 N. Ocean Boulevard
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1907 West State Road 434
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8880 Tamiami Trail, North
Naples, FL

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GEORGIA

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1000 Abernathy Road
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ILLINOIS

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Chicago, IL

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1700 East Golf Road
Schaumburg, IL

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Wilmette, IL

INDIANA

4729 East 82nd Street
Indianapolis, IN

MAINE

3 Canal Plaza
Portland, ME

MARYLAND

7401 Wisconsin Avenue
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1 West Pennsylvania Ave.
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MASSACHUSETTS

470 Boylston Street
Boston, MA

155 Congress Street
Boston, MA

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Boston, MA

300 Granite Street
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44 Mall Road
Burlington, MA

416 Belmont Street
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MICHIGAN

280 North Woodward Ave.
Birmingham, MI

29155 Northwestern Hwy.
Southfield, MI

MINNESOTA

7600 France Avenue South
Edina, MN

MISSOURI

700 West 47th Street
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8885 Ladue Road
Ladue, MO

200 North Broadway
St. Louis, MO

NEW JERSEY

150 Essex Street
Millburn, NJ

56 South Street
Morristown, NJ

501 Route 17, South
Paramus, NJ

NEW YORK

1055 Franklin Avenue
Garden City, NY

999 Walt Whitman Road
Melville, L.I., NY

1271 Avenue of the Americas
New York, NY

71 Broadway
New York, NY

350 Park Avenue
New York, NY

NORTH CAROLINA

4611 Sharon Road
Charlotte, NC

OHIO

600 Vine Street
Cincinnati, OH

28699 Chagrin Boulevard
Woodmere Village, OH

OREGON

16850 SW 72 Avenue
Tigard, OR

PENNSYLVANIA

1735 Market Street
Philadelphia, PA

439 Fifth Avenue
Pittsburgh, PA

TENNESSEE

6150 Poplar Road
Memphis, TN

TEXAS

10000 Research Boulevard
Austin, TX

4017 Northwest Parkway
Dallas, TX

1155 Dairy Ashford Street
Houston, TX

2701 Drexel Drive
Houston, TX

400 East Las Colinas Blvd.
Irving, TX

14100 San Pedro
San Antonio, TX

19740 IH 45 North
Spring, TX

UTAH

215 South State Street
Salt Lake City, UT

VIRGINIA

8180 Greensboro Drive
McLean, VA

WASHINGTON

411 108th Avenue, N.E.
Bellevue, WA

511 Pine Street
Seattle, WA

WASHINGTON, DC

1900 K Street, N.W.
Washington, DC

WISCONSIN

595 North Barker Road
Brookfield, WI

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INVESTMENT SUB-ADVISERS

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Advisors

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Advisors (U.K.) Limited

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OFFICERS

BOARD OF TRUSTEES

ADVISORY BOARD

J. Gary Burkhead
Abigail P. Johnson

GENERAL DISTRIBUTOR

Fidelity Distributors Corporation
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* INDEPENDENT TRUSTEES

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SERVICING AGENT

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Boston, MA

CUSTODIAN

The Chase Manhattan Bank
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FIDELITY
STRATEGIC INCOME
FUND

SEMIANNUAL REPORT

JUNE 30, 1999

(2 FIDELITY LOGO GRAPHICS)

CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.

PERFORMANCE 4 How the fund has done over
time.

FUND TALK 7 The manager's review of fund
performance, strategy and
outlook.

INVESTMENT CHANGES 11 A summary of major shifts in
the fund's investments over
the past six months.

INVESTMENTS 12 A complete list of the fund's
investments with their
market values.

FINANCIAL STATEMENTS 28 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.

NOTES 32 Footnotes to the financial
statements.

Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.

Other third party marks appearing herein are the property of their
respective owners.

All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.

This report is printed on recycled paper using soy-based inks.

NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.

FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.

PRESIDENT'S MESSAGE

(PHOTO_OF_EDWARD_C_JOHNSON_3D)

DEAR SHAREHOLDER:

While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.

An intermediate-length fund could make sense if your investment
horizon is two to four years, while a short-term bond fund could be
the right choice if you need your money in one or two years.

Best regards,
Edward C. Johnson 3d

PERFORMANCE: THE BOTTOM LINE

There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). You can also look at income, as reflected in its
yield, to measure performance. If Fidelity had not reimbursed certain
fund expenses, the fund's total returns would have been lower.

CUMULATIVE TOTAL RETURNS

PERIODS ENDED JUNE 30, 1999 PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND

FIDELITY STRATEGIC INCOME 2.86% 3.97% 2.99%

Fidelity Strategic Income 0.54% 2.37% 2.30%
Composite

JP EMBI Plus 10.57% -4.26% -10.51%

LB Government Bond -2.27% 3.05% 5.23%

ML High Yield Master II 2.49% 0.90% 1.96%

SB Non-US Dollar World Govt -9.11% 4.87% 3.94%
Bond

ML High Yield Master 1.76% 0.94% 2.08%

Multi-Sector Income Funds 0.82% -0.62% n/a
Average

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year or since
the fund started on May 1, 1998. For example, if you had invested
$1,000 in a fund that had a 5% return over the past year, the value of
your investment would be $1,050. You can compare the fund's returns to
the Merrill Lynch High Yield Master Index - a market value-weighted
index of all domestic and yankee high-yield bonds. You can also
compare the fund's returns to the performance of the Fidelity
Strategic Income Composite Index, a hypothetical combination of
unmanaged indices. The composite index combines the total returns of
the J.P. Morgan Emerging Markets Bond Index Plus, the Lehman Brothers
Government Bond Index, the Merrill Lynch High Yield Master II Index
and the Salomon Brothers Non-U.S. Dollar World Government Bond Index
weighted according to the fund's neutral mix. To measure how the
fund's performance stacked up against its peers, you can compare it to
the multi-sector income funds average, which reflects the performance
of mutual funds with similar objectives tracked by Lipper Inc. The
past six months average represents a peer group of 105 mutual funds.
These benchmarks listed in the table above include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.

AVERAGE ANNUAL TOTAL RETURNS

PERIODS ENDED JUNE 30, 1999 PAST 1 YEAR LIFE OF FUND

FIDELITY STRATEGIC INCOME 3.97% 2.57%

Fidelity Strategic Income 2.37% 1.97%
Composite

AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year.

$10,000 OVER LIFE OF FUND
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Strategic Income FID Strategic Inc Comp. ML High Yield Master II
00368 F0086 ML012
1998/05/01 10000.00 10000.00 10000.00
1998/05/31 9906.11 9986.53 10054.02
1998/06/30 9906.23 9992.65 10105.95
1998/07/31 9999.96 10034.75 10170.36
1998/08/31 9282.03 9519.05 9656.96
1998/09/30 9621.91 9839.36 9682.10
1998/10/31 9669.33 9907.35 9473.17
1998/11/30 10026.54 10171.06 9966.97
1998/12/31 10012.62 10175.37 9949.11
1999/01/31 10110.36 10167.39 10081.51
1999/02/28 10016.64 10035.57 10014.78
1999/03/31 10240.60 10210.76 10131.11
1999/04/30 10521.10 10394.76 10316.47
1999/05/31 10270.87 10214.27 10221.83
1999/06/30 10299.44 10229.91 10196.50
IMATRL PRASUN SHR__CHT 19990630 19990719 163527 R00000000000017
</TABLE>

$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Strategic Income Fund on May 1, 1998, when the
fund started. As the chart shows, by June 30, 1999, the value of the
investment would have grown to $10,299 - a 2.99% increase on the
initial investment. For comparison, look at how the Merrill Lynch High
Yield Master II Index - a market value-weighted index of all domestic
and yankee high-yield bonds, including deferred interest bonds and
payment-in-kind securities - did over the same period. Issues included
in the index have maturities of one year or more and have a credit
rating lower than BBB-/Baa3, but are not in default. With dividends
and capital gains, if any, reinvested, the same $10,000 investment
would have grown to $10,196 - a 1.96% increase. You can also look at
how the Fidelity Strategic Income Composite Index - a hypothetical
combination of unmanaged indices that is more representative of the
fund's investable universe - did over the same period. This index
combines returns from the J.P. Morgan Emerging Markets Bond Index Plus
(-10.51%), Lehman Brothers Government Bond Index (5.23%), Merrill
Lynch High Yield Master II Index (1.96%), and Salomon Brothers
Non-U.S. Dollar World Government Bond Index (3.94%), according to the
fund's neutral mix *, and assumes monthly rebalancing of the mix. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $10,230 - a 2.30% increase. Beginning
with this report, the fund will compare its performance to that of the
Merrill Lynch High Yield Master II Index rather than the Merrill Lynch
High Yield Master Index. The Merrill Lynch High Yield Master II Index
contains deferred interest bonds and payment-in-kind securities and
there is therefore a better representation of the high-yield bond
universe.

* CURRENTLY 40% HIGH-YIELD, 30% U.S. GOVERNMENT AND INVESTMENT-GRADE
BONDS, 15% EMERGING-MARKETS, AND 15% FOREIGN DEVELOPED-MARKETS.

TOTAL RETURN COMPONENTS

SIX MONTHS ENDED JUNE 30, 1999 MAY 1, 1998 (COMMENCEMENT OF
OPERATIONS) TO DECEMBER 31,
1998

Dividend returns 3.28% 4.93%

Capital returns -0.42% -4.80%

Total returns 2.86% 0.13%

DIVIDENDS AND YIELD

PERIODS ENDED JUNE 30, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR

Dividends per share 5.65(cents) 31.12(cents) 69.83(cents)

Annualized dividend rate 7.28% 6.56% 7.32%

30-day annualized yield 7.42% - -

DIVIDENDS per share show the income paid by the fund for a set period.
If you annualize this number, based on an average share price of $9.44
over the past one month, $9.57 over the past six months and $9.54 over
the life of fund, you can compare the fund's income over these three
periods. The past one year dividends per share include additional
distributions required by federal tax regulations. These distributions
may not be reflected in future monthly dividends. The 30-day
annualized YIELD is a standard formula for all bond funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments
at the end of the period. It also helps you compare funds from
different companies on an equal basis. If Fidelity had not reimbursed
certain fund expenses during the period, the yield would have been
7.29%.

(CHECKMARK)
UNDERSTANDING
PERFORMANCE

How a fund did yesterday is
no guarantee of how it will do
tomorrow. If you sell your
shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.

FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP

Throughout much of the six-month
period ending June 30, 1999,
strong U.S. economic reports and
a buoyant U.S. stock market had
global bond investors concerned
about the implications of a U.S.
Federal Reserve Board intervention
to boost key interest rates. One side
effect was an increase in yields for
U.S. government securities. Bonds
with five-year and 10-year maturities
declined the most in price, leaving
the yield curve steeper at the shorter
end. A strong equity market and
consolidation in the
telecommunications sector helped the
high-yield market. However, by
mid-year some of this enthusiasm
was tempered by increased new
issuance and investors' focus on
interest rates. Emerging-market
debt enjoyed a favorable first half
on the back of stronger commodity
prices, especially oil. Higher oil
prices helped emerging-market
countries that are significant oil
exporters as well as high-yield
energy companies. Emerging-market
debt outperformed most other
fixed-income markets in the period.
With regard to non-U.S. developed
markets in local currency terms,
Japan posted the highest gain -
2.57% - while the U.K. had the
lowest return at -1.88%. The majority
of countries posted negative returns
in local currency terms. A strong U.S.
dollar detracted further from
this performance. The euro lost
12.17% versus the U.S. dollar,
while the Japanese yen declined
6.8%.

(PHOTOGRAPH OF JOHN CARLSON)

An interview with John Carlson, Lead Portfolio Manager of
Fidelity Strategic Income Fund

Q. HOW DID THE FUND PERFORM, JOHN?

A. For the six months ending June 30, 1999, the fund returned 2.86%.
The multi-sector income funds average, as tracked by Lipper Inc.,
returned 0.82%. The Merrill Lynch High Yield Master Index returned
1.76%, while the fund's new benchmark, the Merrill Lynch High Yield
Master II Index, returned 2.49% during the same six-month period. For
the 12 months ending June 30, 1999, the fund returned 3.97%. The
Lipper peer group index returned -0.62%, and the Merrill Lynch High
Yield Master and Master II indexes returned 0.94% and 0.90%,
respectively, for the one-year period.

Q. WHY DID THE FUND CHANGE ITS BENCHMARK INDEX?

A. The fund changed its benchmark because the Merrill Lynch High Yield
Master Index does not include deferred-interest bonds (DIBs) and
pay-in-kind securities (PIKs), which have emerged as an important
component of the market in recent years. Deferred-interest bonds do
not pay cash interest for a set period of the bond's life, typically
for three to five years, and therefore sell at a significant discount.
At the end of the deferred-interest period, the interest accrues and
begins to be paid (it is a variation on the zero coupon bond
structure). PIKs pay interest in the form of additional bonds or
preferred stock. As of June 30, 1999, DIBs and PIKs represented
approximately 17% of the fund's new benchmark, the Merrill Lynch High
Yield Master II Index.

Q. HOW DID THE HIGH-YIELD PORTION OF THE FUND FARE IN THE FIRST HALF
OF 1999?

A. The high-yield market was strong from January through March as it
recovered from the relatively wide spreads reached in October 1998.
However, in the second quarter, fears that the strong economy might
lead to higher inflation drove Treasury yields higher and the market
gave back some of its earlier gains. Industry selection was favorable;
overweighting cable and telecommunications and underweighting the
health care industry contributed positively to the fund's return.
Individual security selection within the fund's high-yield
subportfolio - managed by Mark Notkin - continued to be the major
driver of performance. Although it's no longer in the fund, Pathmark
was a strong contributor after Royal Ahold, the world's sixth-largest
supermarket operator, announced its intention to purchase the company.
Securities of Nextel, a national wireless operator, appreciated as the
company continued to build out its national network and add customers
at a rapid pace. Also, several of the fund's CLEC (competitive local
exchange carrier) positions, such as ICG Services, performed well,
gaining market share in the large and growing domestic
telecommunications industry. Performance detractors included
DecisionOne, as well as Iridium, which the fund no longer held at the
end of the period.

Q. IN WHICH SECTORS OF THE MARKET DID THE INVESTMENT-GRADE PORTION OF
THE FUND INVEST, AND HOW DID THESE SECTORS PERFORM?

A. The U.S. investment-grade fixed-income portion of the fund - as
overseen by Kevin Grant - is managed in keeping with the overall
interest-rate sensitivity of the Lehman Brothers Government Bond
Index, and was invested exclusively in U.S. Treasury securities during
the period. A majority of the fund's Treasury holdings represented
seasoned, higher-coupon issues offering a slight yield advantage over
their newer issue counterparts. Treasury returns were dampened during
the period by the impact of rising interest rates. In the first half
of 1999, interest rates in the intermediate portion of the Treasury
yield curve increased by a larger margin than both short-term and
long-term rates. Overall, the performance of Treasury securities
varied inversely with maturity as longer issues produced negative
total returns linked to a decrease in bond prices. Strong economic
growth, coupled with an expectation that the Federal Reserve would
tighten monetary policy during the period, contributed to negative
market sentiment. In fact, the Federal Reserve Board voted to increase
the federal funds rate by 25 basis points to 5.00% on June 30, in an
effort to mitigate the effects of a potential increase in the rate of
inflation.

Q. HOW DID THE NON-U.S. DEVELOPED MARKETS FARE?

A. The rise in U.S. yields was mirrored in most developed markets
despite their weak Gross Domestic Product (GDP) growth and subdued
inflation. As a result, local currency returns were negative in all
main markets except Japan, where government buying held down yields.
In dollar terms, European markets were negatively impacted by the weak
euro, which fell approximately 13% against the dollar over the
reporting period. The only positive performer was Canada, helped by a
recovering currency. Our decision to underweight in Japanese bonds
when 10-year yields fell to 0.75% was vindicated when yields rose to
2.2% on concern over a ballooning budget deficit. Ian Spreadbury - who
manages the fund's foreign developed market subportfolio - closed the
Japanese bond position as it became clear the government would
continue to support the market. We also reduced exposure to euro-yen
bonds - yen-denominated bonds issued by European countries that are
both paid for and repaid in yen - in anticipation of the removal of
withholding tax on Japanese government bonds later this year. In
euros, which account for approximately one half of the subportfolio,
we took a small position in corporate bonds. The level of corporate
issuance was very heavy (see callout box on page 10) and this led to
wider spreads.

Q. WHAT WERE THE KEY DRIVERS TO THE EMERGING-MARKET SUBPORTFOLIO
PERFORMANCE?

A. Russian asset prices ended 1998 at deeply depressed levels, but the
fund maintained its overweighted position in Russia as our team
believed assets had become significantly oversold. The fund's holdings
in Russia were also shifted to include more senior securities, which
is debt that has a higher standing in terms of repayment. This year,
Russian debt prices have rebounded, helped by stronger commodity
prices, particularly oil. In addition, some stability returned to the
Russian economy. Russia was the top-performing country in the
emerging-markets benchmark this year and a top contributor to the
subportfolio. Our decision to overweight Brazil also helped
performance. In early January, we took advantage of the oversold
prices that resulted from investors' anticipation of the country's
currency devaluation. Brazilian debt prices subsequently recovered in
part due to better-than-expected economic reports. With oil prices
improving, the fund further benefited from its overweighting in
Venezuela, one of the world's most important oil producers.
Underweighting Ecuador also contributed to relative performance.
Finally, security selection was a key driver of fund performance,
specifically in countries with robust bond markets, such as Brazil,
Mexico and Argentina.

Q. JOHN, WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?

A. I have a cautious outlook as we enter the second half. I am keeping
a careful watch on capital market liquidity. That being said, we
continue to see compelling opportunities in credit spread markets such
as high-yield and emerging markets given their absolute yield levels.

(CHECKMARK)
FUND FACTS

GOAL: high current
income with the potential
for capital appreciation

FUND NUMBER: 368

TRADING SYMBOL: FSICX

START DATE: May 1, 1998

SIZE: as of June 30, 1999,
more than $32 million

MANAGER: John Carlson,
since inception; manager,
Fidelity International Bond
Fund, since 1998; Fidelity
Advisor Strategic Income
Fund, since 1995; Fidelity
New Markets Income Fund
and Fidelity Advisor
Emerging Markets Income
Fund, since 1995; joined
Fidelity in 1995

JOHN CARLSON DISCUSSES
THE EURO AND CORPORATE
DEBT ISSUANCE:

"The physical transition to the
single currency has proceeded
relatively smoothly, with all
participating government bonds
redenominating to euros at the
beginning of 1999. Some corporate
bonds remain denominated in
legacy currencies - national
currencies replaced by the euro
- - and will redenominate by the
end of 2001.

"The introduction of the euro has
reduced the scope for international
investors to add value through
currency plays and, as a result,
more investors are turning to the
credit markets as a medium for
adding value.

"In terms of economic
convergence - the performance
of the euro-countries' national
economies - it is too early to judge
how things will develop. Certainly
there is still a wide range of
economic performance with some
peripheral countries like Ireland
turning in very strong growth while
the German economy for example,
continues to struggle.

"Prior to this year, the corporate
markets hardly existed in Europe
as companies used banks as their
main source of debt finance. This
year, we have seen huge amounts of
corporate issuance as the banks
have come under increasing
competitive pressure and the
markets have enabled companies to
finance themselves to a larger extent
and with more flexibility. The
issuance also has been driven by an
increased level of merger and
acquisition activity as companies
seek to establish themselves
across Europe."

INVESTMENT CHANGES

<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE HOLDINGS AS OF JUNE
30, 1999

(BY ISSUER, EXCLUDING CASH % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
EQUIVALENTS) THESE HOLDINGS 6 MONTHS AGO

U.S. Treasury Obligations 27.2 23.5

German Federal Republic 3.7 5.5

Brazilian Federative Republic 3.1 1.5

Treuhandanstalt 2.5 2.0

United Kingdom, Great Britain 2.4 1.9
& Northern Ireland

TOP FIVE MARKET SECTORS AS OF
JUNE 30, 1999

% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE MARKET SECTORS 6
MONTHS AGO

MEDIA & LEISURE 14.6 10.9

UTILITIES 10.5 15.2

BASIC INDUSTRIES 3.9 0.2

TECHNOLOGY 2.1 0.5

ENERGY 1.9 2.5

QUALITY DIVERSIFICATION AS OF
JUNE 30, 1999

(MOODY'S RATINGS) % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS 6
MONTHS AGO

Aaa, Aa, A 39.0 36.7

Baa 1.4 0.4

Ba 8.1 9.7

B 31.8 24.4

Caa, Ca, C 5.4 7.3

Not Rated 2.9 2.2

</TABLE>

TABLE EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P (registered trademark) RATINGS. UNRATED
DEBT SECURITIES THAT ARE EQUIVALENT TO BA AND BELOW AT JUNE 30, 1999
AND DECEMBER 31, 1998 ACCOUNT FOR 2.9% AND 2.2% RESPECTIVELY, OF THE
FUND'S INVESTMENTS.

<TABLE>
<CAPTION>
<S> <C>
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)

AS OF JUNE 30, 1999 * AS OF DECEMBER 31, 1998 **

Corporate Bonds 37.6% Corporate Bonds 32.6%

U.S. Government and U.S. Government and
Government Agency Government Agency
Obligations 27.2% Obligations 23.5%

Foreign Government & Foreign Government &
Government Agency Government Agency
Obligations 21.8% Obligations 23.7%

Stocks 3.8% Stocks 5.5%

Other Investments 2.3% Other Investments 1.2%

Short-Term Investments 7.3% Short-Term Investments 13.5%

* FOREIGN INVESTMENTS 30.6% ** FOREIGN INVESTMENTS

</TABLE>

Row: 1, Col: 1, Value: 37.6
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 27.3
Row: 1, Col: 4, Value: 21.7
Row: 1, Col: 5, Value: 3.8
Row: 1, Col: 6, Value: 2.3
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 7.3

Row: 1, Col: 1, Value: 32.6
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 23.5
Row: 1, Col: 4, Value: 23.7
Row: 1, Col: 5, Value: 5.5
Row: 1, Col: 6, Value: 1.2
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 13.5

INVESTMENTS JUNE 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS - 37.6%

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

CONVERTIBLE BONDS - 1.5%

HEALTH - 0.3%

MEDICAL FACILITIES MANAGEMENT
- - 0.3%

Total Renal Care Holdings, B1 $ 100,000 $ 81,000
Inc. 7% 5/15/09 (g)

MEDIA & LEISURE - 0.5%

LODGING & GAMING - 0.2%

Signature Resorts, Inc. 5.75% Caa1 100,000 71,000
1/15/07

RESTAURANTS - 0.3%

CKE Restaurants, Inc. 4.25% B1 120,000 90,000
3/15/04

TOTAL MEDIA & LEISURE 161,000

RETAIL & WHOLESALE - 0.2%

RETAIL & WHOLESALE,
MISCELLANEOUS - 0.2%

Sunglass Hut International, B3 70,000 60,900
Inc. 5.25% 6/15/03

UTILITIES - 0.5%

TELEPHONE SERVICES - 0.5%

Telefonos de Mexico SA de CV BB 60,000 61,950
4.25% 6/15/04

Telekom Malaysia BHD 4% Baa3 130,000 112,125
10/3/04

174,075

TOTAL CONVERTIBLE BONDS 476,975

NONCONVERTIBLE BONDS - 36.1%

BASIC INDUSTRIES - 3.9%

CHEMICALS & PLASTICS - 2.7%

Berry Plastics Corp. 11% B3 70,000 70,875
7/15/07 (g)

Geo Specialty Chemicals, Inc. B3 50,000 47,625
10.125% 8/1/08

Huntsman Corp. 9.5% 7/1/07 (g) B2 150,000 142,875

Huntsman ICI Chemicals LLC B2 140,000 141,225
10.125% 7/1/09 (g)

Lyondell Chemical Co.:

9.625% 5/1/07 (g) Ba3 110,000 112,475

9.875% 5/1/07 (g) Ba3 120,000 122,100

10.875% 5/1/09 (g) B2 130,000 134,225

Philipp Brothers Chemicals, B3 80,000 73,600
Inc. 9.875% 6/1/08

845,000

CORPORATE BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

NONCONVERTIBLE BONDS -
CONTINUED

BASIC INDUSTRIES - CONTINUED

IRON & STEEL - 0.2%

WHX Corp. 10.5% 4/15/05 B3 $ 70,000 $ 66,500

METALS & MINING - 0.1%

Kaiser Aluminum & Chemical B3 30,000 30,525
Corp. 12.75% 2/1/03

PACKAGING & CONTAINERS - 0.8%

Gaylord Container Corp. Caa1 110,000 103,675
9.375% 6/15/07

Packaging Corp. of America B3 155,000 157,713
9.625% 4/1/09 (g)

261,388

PAPER & FOREST PRODUCTS - 0.1%

Florida Coast Paper Co. Ca 40,000 18,000
LLC/Florida Coast Paper
Finance Corp. Series B,
12.75% 6/1/03 (c)

TOTAL BASIC INDUSTRIES 1,221,413

CONSTRUCTION & REAL ESTATE -
0.5%

BUILDING MATERIALS - 0.4%

Cemex SA 9.25% 6/17/02 Ba2 110,000 111,100

ENGINEERING - 0.1%

Anteon Corp. 12% 5/15/09 (g) B3 40,000 39,400

TOTAL CONSTRUCTION & REAL 150,500
ESTATE

DURABLES - 1.0%

AUTOS, TIRES, & ACCESSORIES -
0.2%

Blue Bird Body Co. 10.75% B2 70,000 74,200
11/15/06

CONSUMER DURABLES - 0.2%

Corning Consumer Products Co. B3 70,000 60,725
9.625% 5/1/08

HOME FURNISHINGS - 0.6%

Omega Cabinets Ltd. 10.5% B3 90,000 90,000
6/15/07

Sealy Mattress Co. 9.875% B3 20,000 19,600
12/15/07

Simmons Co. 10.25% 3/15/09 (g) B3 60,000 61,050

170,650

TOTAL DURABLES 305,575

CORPORATE BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

NONCONVERTIBLE BONDS -
CONTINUED

ENERGY - 1.9%

ENERGY SERVICES - 0.8%

Petroliam Nasional BHD Baa3 $ 100,000 $ 81,500
(Petronas) yankee 7.625%
10/15/26 (g)

R&B Falcon Corp. 12.25% Ba3 60,000 62,100
3/15/06 (g)

RBF Finance Co.:

11% 3/15/06 (g) Ba3 50,000 51,500

11.375% 3/15/09 (g) Ba3 50,000 51,750

246,850

OIL & GAS - 1.1%

Chesapeake Energy Corp. B3 70,000 65,450
9.625% 5/1/05

Comstock Resources, Inc. B2 80,000 81,800
11.25% 5/1/07 (g)

Cross Timbers Oil Co. 8.75% B2 70,000 66,150
11/1/09

Ocean Energy, Inc.:

8.875% 7/15/07 B1 10,000 9,850

10.375% 10/15/05 B2 10,000 10,475

Petroleos Mexicanos 9.5% Ba2 90,000 85,613
9/15/27

Snyder Oil Corp. 8.75% 6/15/07 Ba3 20,000 19,850

339,188

TOTAL ENERGY 586,038

FINANCE - 1.1%

BANKS - 0.5%

Banco Nacional de
Desenvolvimento Economico e
Social:

13.64% 6/16/08 (h) B1 120,000 101,400

13.64% 6/16/08 (g)(h) B1 80,000 67,600

169,000

CREDIT & OTHER FINANCE - 0.6%

AMRESCO, Inc. 9.875% 3/15/05 Caa3 50,000 38,250

Cellco Finance NV 15% 8/1/05 B2 100,000 103,000

Macsaver Financial Services,
Inc.:

7.6% 8/1/07 Ba1 10,000 8,225

7.875% 8/1/03 Ba1 50,000 42,625

192,100

TOTAL FINANCE 361,100

CORPORATE BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

NONCONVERTIBLE BONDS -
CONTINUED

HEALTH - 1.4%

DRUGS & PHARMACEUTICALS - 0.2%

Global Health Sciences, Inc. Caa1 $ 60,000 $ 45,150
11% 5/1/08

MEDICAL FACILITIES MANAGEMENT
- - 1.2%

Everest Healthcare Services, B3 50,000 48,188
Inc. 9.75% 5/1/08

Hanger Orthopedic Group, Inc. B3 60,000 60,900
11.25% 6/15/09 (g)

Integrated Health Services, B2 48,000 33,600
Inc. 9.25% 1/15/08

Mariner Post-Acute Network, B3 116,000 18,560
Inc. 9.5% 11/1/07

Oxford Health Plans, Inc. 11% Caa1 150,000 151,500
5/15/05 (g)

Tenet Healthcare Corp. 8.125% Ba3 70,000 66,150
12/1/08

378,898

TOTAL HEALTH 424,048

INDUSTRIAL MACHINERY &
EQUIPMENT - 1.8%

ELECTRICAL EQUIPMENT - 0.5%

Juno Lighting, Inc. 11.875% B3 40,000 40,500
7/1/09 (g)

Motors & Gears, Inc. 10.75% B3 120,000 120,600
11/15/06

161,100

INDUSTRIAL MACHINERY &
EQUIPMENT - 1.2%

Applied Power, Inc. 8.75% B1 130,000 126,100
4/1/09

Dunlop Standard Aero Holdings B3 60,000 60,900
PLC 11.875% 5/15/09 (g)

Thermadyne Manufacturing LLC B3 130,000 114,725
9.875% 6/1/08

Tokheim Corp. 11.375% 8/1/08 B3 70,000 66,850
(g)

368,575

POLLUTION CONTROL - 0.1%

Safety-Kleen Corp. 9.25% B3 40,000 40,300
5/15/09 (g)

TOTAL INDUSTRIAL MACHINERY & 569,975
EQUIPMENT

MEDIA & LEISURE - 13.4%

BROADCASTING - 9.9%

ACME Television LLC/ACME B3 100,000 82,000
Financial Corp. 0% 9/30/04
(e)

CORPORATE BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

NONCONVERTIBLE BONDS -
CONTINUED

MEDIA & LEISURE - CONTINUED

BROADCASTING - CONTINUED

Adelphia Communications Corp. B1 $ 40,000 $ 41,750
9.875% 3/1/07

Ascent Entertainment Group, B3 20,000 14,400
Inc. 0% 12/15/04 (e)

Benedek Communications Corp. B3 150,000 124,500
0% 5/15/06 (e)

CapStar Broadcasting B2 110,000 112,338
Partners, Inc. 9.25% 7/1/07

Century Communications Corp.:

8.75% 10/1/07 Ba3 30,000 29,700

9.5% 3/1/05 Ba3 20,000 20,600

Series B, 0% 1/15/08 Ba3 400,000 176,000

Chancellor Media Corp.:

8% 11/1/08 Ba2 200,000 196,000

8.125% 12/15/07 B1 80,000 77,400

Charter Communications
Holdings LLC/Charter
Communications Holdings
Capital Corp.:

0% 4/1/11 (e)(g) B2 160,000 98,400

8.625% 4/1/09 (g) B2 105,000 100,406

Citadel Broadcasting Co.:

9.25% 11/15/08 B3 210,000 216,825

10.25% 7/1/07 B3 10,000 10,775

Comcast UK Cable Partners B2 40,000 35,600
Ltd. 0% 11/15/07 (e)

Diamond Cable Communications B3 110,000 96,525
PLC yankee 0% 12/15/05 (e)

EchoStar DBS Corp. 9.375% B2 250,000 253,125
2/1/09 (g)

Emmis Broadcasting B2 120,000 114,000
Communications Corp. 8.125%
3/15/09 (g)

Falcon Holding Group
LP/Falcon Funding Corp.:

0% 4/15/10 (e) B2 340,000 237,575

8.375% 4/15/10 B2 50,000 49,750

Golden Sky DBS, Inc. 0% Caa1 90,000 52,200
3/1/07 (e)(g)

Intermedia Capital Partners B2 20,000 22,100
IV LP / Intermedia Partners
IV Capital Corp. 11.25%
8/1/06

Lenfest Communications, Inc. B1 20,000 20,350
8.25% 2/15/08

LIN Holdings Corp. 0% 3/1/08 B3 73,000 48,728
(e)

NTL Communications Corp.:

0% 10/1/08 (e) B3 350,000 239,750

CORPORATE BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

NONCONVERTIBLE BONDS -
CONTINUED

MEDIA & LEISURE - CONTINUED

BROADCASTING - CONTINUED

NTL Communications Corp.: -
continued

11.5% 10/1/08 B3 $ 180,000 $ 197,100

NTL, Inc.:

0% 4/1/08 (e) B3 60,000 40,200

10% 2/15/07 B3 40,000 41,000

Olympus Communications B1 10,000 10,950
LP/Olympus Capital Corp.
10.625% 11/15/06

Satelites Mexicanos SA de CV B3 120,000 94,800
10.125% 11/1/04

Susquehanna Media Co. 8.5% B1 20,000 19,800
5/15/09 (g)

TeleWest Communications PLC:

0% 4/15/09 (e)(g) B1 50,000 33,500

11.25% 11/1/08 B1 40,000 45,200

United International B3 230,000 152,950
Holdings, Inc. 0% 2/15/08 (e)

3,106,297

ENTERTAINMENT - 1.1%

Jupiters Ltd. 8.5% 3/1/06 (g) Ba1 50,000 49,250

Mohegan Tribal Gaming Ba3 100,000 99,500
Authority 8.75% 1/1/09

Premier Parks, Inc.:

0% 4/1/08 (e) B3 140,000 92,750

9.25% 4/1/06 B3 120,000 118,800

360,300

LODGING & GAMING - 1.9%

Circus Circus Enterprises,
Inc.:

7.625% 7/15/13 Ba2 60,000 52,800

9.25% 12/1/05 Ba2 40,000 40,600

Florida Panthers Holdings, B2 110,000 103,675
Inc. 9.875% 4/15/09

Horseshoe Gaming LLC:

8.625% 5/15/09 (g) B2 40,000 38,700

9.375% 6/15/07 B2 100,000 102,000

Signature Resorts, Inc.:

9.25% 5/15/06 B2 60,000 57,600

CORPORATE BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

NONCONVERTIBLE BONDS -
CONTINUED

MEDIA & LEISURE - CONTINUED

LODGING & GAMING - CONTINUED

Signature Resorts, Inc.: -
continued

9.75% 10/1/07 B3 $ 100,000 $ 90,000

Station Casinos, Inc. 8.875% B2 100,000 97,500
12/1/08

582,875

RESTAURANTS - 0.5%

Domino's, Inc. 10.375% 1/15/09 B3 110,000 111,100

NE Restaurant, Inc. 10.75% B3 50,000 45,750
7/15/08

156,850

TOTAL MEDIA & LEISURE 4,206,322

NONDURABLES - 0.6%

FOODS - 0.5%

Aurora Foods, Inc. 8.75% B1 20,000 19,650
7/1/08

Del Monte Corp. 12.25% 4/15/07 B3 41,000 46,125

Del Monte Foods Co. 0% Caa2 112,000 82,600
12/15/07 (e)

148,375

HOUSEHOLD PRODUCTS - 0.1%

Revlon Consumer Products B3 50,000 46,750
Corp. 8.625% 2/1/08

TOTAL NONDURABLES 195,125

RETAIL & WHOLESALE - 1.3%

GROCERY STORES - 1.1%

Jitney-Jungle Stores of
America, Inc.:

10.375% 9/15/07 Caa1 70,000 25,200

12% 3/1/06 B3 70,000 57,050

Pueblo Xtra International,
Inc.:

Series C, 9.5% 8/1/03 B3 50,000 46,500

9.5% 8/1/03 B3 130,000 120,900

Smiths Food & Drug Centers, BBB- 100,000 104,500
Inc. 1994 Pass Through Trust
9.2% 7/2/18

354,150

CORPORATE BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

NONCONVERTIBLE BONDS -
CONTINUED

RETAIL & WHOLESALE - CONTINUED

RETAIL & WHOLESALE,
MISCELLANEOUS - 0.2%

TM Group Holdings PLC 11% B3 $ 50,000 $ 50,625
5/15/08

TOTAL RETAIL & WHOLESALE 404,775

SERVICES - 0.0%

Spin Cycle, Inc. 0% 5/1/05 (e) - 20,000 5,800

TECHNOLOGY - 1.5%

COMPUTER SERVICES & SOFTWARE
- - 1.0%

Concentric Network Corp. - 50,000 52,250
12.75% 12/15/07

DecisionOne Corp. 9.75% B3 80,000 4,000
8/1/07 (c)

Federal Data Corp. 10.125% B3 275,000 260,563
8/1/05

316,813

ELECTRONIC INSTRUMENTS - 0.3%

Telecommunications Techniques B3 90,000 87,300
Co. LLC 9.75% 5/15/08

ELECTRONICS - 0.2%

Fairchild Semiconductor Corp.:

10.125% 3/15/07 B3 50,000 48,625

10.375% 10/1/07 (g) B3 30,000 29,550

78,175

TOTAL TECHNOLOGY 482,288

TRANSPORTATION - 0.1%

AIR TRANSPORTATION - 0.1%

Kitty Hawk, Inc. 9.95% B1 30,000 29,775
11/15/04

UTILITIES - 7.6%

CELLULAR - 2.6%

McCaw International Ltd. 0% Caa1 110,000 66,550
4/15/07 (e)

Millicom International Caa1 565,000 412,450
Cellular SA 0% 6/1/06 (e)

Nextel Communications, Inc.:

0% 9/15/07 (e) B2 20,000 14,500

0% 2/15/08 (e) B2 20,000 13,800

9.75% 8/15/04 B2 70,000 71,400

12% 11/1/08 B2 90,000 101,250

CORPORATE BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

NONCONVERTIBLE BONDS -
CONTINUED

UTILITIES - CONTINUED

CELLULAR - CONTINUED

Orbital Imaging Corp.:

11.625% 3/1/05 - $ 70,000 $ 64,400

11.625% 3/1/05 (g) - 30,000 27,300

Rogers Communications, Inc. B2 10,000 10,100
8.875% 7/15/07

Spectrasite Holdings, Inc. 0% - 40,000 22,600
4/15/09 (e)(g)

804,350

TELEPHONE SERVICES - 5.0%

Compania Internacional de BB ARS 90,000 69,759
Telecomunicaciones 10.375%
8/1/04 (Reg. S)

Energis PLC 9.75% 6/15/09 (g) B1 70,000 70,875

Esprit Telecom Group PLC Caa1 70,000 73,850
10.875% 6/15/08

Global TeleSystems Group, Caa2 150,000 145,500
Inc. 9.875% 2/15/05

GST Telecommunications, Inc. - 60,000 65,100
12.75% 11/15/07

Hermes Europe Railtel BV B3 70,000 73,325
11.5% 8/15/07

ICG Services, Inc. 0% 2/15/08 - 300,000 167,250
(e)

McLeodUSA, Inc.:

0% 3/1/07 (e) B2 75,000 57,563

9.5% 11/1/08 B2 90,000 90,225

MetroNet Communications Corp.:

0% 11/1/07 (e) B3 90,000 70,425

0% 6/15/08 (e) B3 70,000 51,800

10.625% 11/1/08 (g) B3 80,000 90,200

NEXTLINK Communications, Inc. B3 120,000 70,650
0% 6/1/09 (e)

Ono Finance PLC 13% 5/1/09 - 70,000 72,100
unit (g)

Qwest Communications Ba1 50,000 38,875
International, Inc. 0%
10/15/07 (e)

Rhythms NetConnections, Inc. B3 40,000 37,400
12.75% 4/15/09 (g)

Teligent, Inc. 11.5% 12/1/07 Caa1 85,000 83,725

Viatel, Inc.:

0% 4/15/08 (e) Caa1 10,000 6,375

11.25% 4/15/08 Caa1 125,000 127,813

CORPORATE BONDS - CONTINUED

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

NONCONVERTIBLE BONDS -
CONTINUED

UTILITIES - CONTINUED

TELEPHONE SERVICES - CONTINUED

WinStar Communications, Inc.:

0% 3/15/08 (e) CCC $ 80,000 $ 70,000

10% 3/15/08 CCC 50,000 44,000

1,576,810

TOTAL UTILITIES 2,381,160

TOTAL NONCONVERTIBLE BONDS 11,323,894

TOTAL CORPORATE BONDS 11,800,869
(Cost $12,002,543)

U.S. TREASURY OBLIGATIONS -
27.2%

U.S. Treasury Bonds:

9% 11/15/18 Aaa 1,225,000 1,594,031

10.75% 8/15/05 Aaa 5,560,000 6,911,736

U.S. Treasury Notes 5.875% Aaa 50,000 50,092
8/31/99

TOTAL U.S. TREASURY OBLIGATIONS 8,555,859
(Cost $8,877,139)

ASSET-BACKED SECURITIES - 0.1%

Airplanes Pass Through Trust Ba2 40,000 37,800
10.875% 3/15/19 (Cost
$41,200)

FOREIGN GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS (I) - 21.9%

Argentinian Republic:

Brady par euro 6% 3/31/23 Ba3 390,000 249,600

9.75% 9/19/27 Ba3 310,000 238,313

Banco Central Costa Rica Ba1 100,000 87,500
Series A, 6.25% 5/21/10

Bank for Foreign Economic Ca 280,000 44,800
Affairs of Russia
(Vnesheconombank) interest
notes 6.0625% 12/15/15 (h)

FOREIGN GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS (I) - CONTINUED

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

Brazilian Federative Republic:

Brady discount euro 5.875% B2 $ 210,000 $ 133,875
4/15/24 (h)

Brady:

capitalization bond 8% 4/15/14 B2 388,467 252,989

debt conversion bond euro B2 280,000 173,600
5.9375% 4/15/12 (h)

new money bond L 5.9375% B2 350,000 245,438
4/15/09 (Bearer) (h)

global bond 10.125% 5/15/27 B2 230,000 173,363

Bulgarian Republic Brady:

discount A 5.875% 7/28/24 (h) B2 170,000 116,238

FLIRB A 2.5% 7/28/12 (h) B2 40,000 24,600

Canadian Government:

7% 12/1/06 Aa1 CAD 125,000 93,150

9% 6/1/25 Aa1 CAD 175,000 173,074

10% 5/1/02 Aa1 CAD 420,000 318,783

Central Bank of Nigeria:

6.25% 11/15/20 - 250,000 153,750

warrants 11/15/20 (a)(j) - 250 0

City of Buenos Aires euro B1 ARS 148,000 119,156
10.5% 5/28/04

Costa Rican Republic 9.335% Ba1 30,000 29,400
5/15/09 (g)

Ecuador Republic 6% 2/27/15 B3 1,132 375
(h)

German Federal Republic:

4.75% 7/4/08 Aaa EUR 300,000 315,424

5.625% 1/4/28 Aaa EUR 150,000 159,636

8.25% 9/20/01 Aaa EUR 600,000 684,289

Ivory Coast Brady past due - 68,250 23,888
interest 2% 3/29/18 (h)

Malaysian Government yankee Baa3 100,000 101,071
8.75% 6/1/09

Moscow City 9.5% 5/31/00 Caa1 50,000 30,875
(Reg.)

Peruvian Republic:

Brady FLIRB 3.75% 3/7/17 (h) Ba3 50,000 27,500

Brady past due interest 4.5% Ba3 60,000 37,050
3/7/17 (h)

Polish Republic Brady par 3% Baa3 50,000 29,875
10/27/24 (f)

Russian Federation:

euro 12.75% 6/24/28 (Reg. S) B3 270,000 151,875

9.25% 11/27/01 B3 40,000 27,100

11% 7/24/18 (Reg. S) B3 210,000 105,000

Russian Federation Ministry Ca 50,000 11,750
of Finance 3% 5/14/03

FOREIGN GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS (I) - CONTINUED

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)

Treuhandanstalt 6.625% 7/9/03 Aaa EUR 690,000 $ 786,290

Turkish Republic:

global 12.375% 6/15/09 B1 50,000 49,313

Treasury Bill 0% 1/19/00 (k) - TRL 12,835,000 19,895

United Kingdom, Great Britain
& Northern Ireland:

8.75% 8/25/17 Aaa GBP 160,000 368,937

9.75% 8/27/02 Aaa GBP 205,000 362,407

United Mexican States:

global bond 11.5% 5/15/26 Ba2 195,000 217,425

10.375% 2/17/09 Ba2 40,000 40,850

warrants 2/17/00 (a)(j) - 1,500 95,250

Venezuelan Republic:

Brady debt conversion bond B2 202,380 156,592
euro 6.3125% 12/18/07 (h)

global bond 13.625% 8/15/18 B2 40,000 36,800

9.25% 9/15/27 B2 160,000 106,400

Brady FLIRB A 6% 3/31/07 (h) B2 380,950 291,427

TOTAL FOREIGN GOVERNMENT AND 6,864,923
GOVERNMENT AGENCY OBLIGATIONS
(Cost $6,700,490)

SUPRANATIONAL OBLIGATIONS -
1.4%

International Bank for Aaa JPY 45,000,000 438,942
Reconstruction & Development
4.75% 12/20/04 (Cost
$479,245)

</TABLE>

COMMON STOCKS - 0.0%

MEDIA & LEISURE - 0.0%

BROADCASTING - 0.0%

NTL, Inc. warrants 12/31/08 56 2,800
(a)

SERVICES - 0.0%

Spin Cycle, Inc. warrants 20 0
5/1/05 (a)(g)

COMMON STOCKS - CONTINUED

SHARES VALUE (NOTE 1)

UTILITIES - 0.0%

CELLULAR - 0.0%

Orbital Imaging Corp. 90 $ 2,700
warrants 3/1/05 (a)(g)

TELEPHONE SERVICES - 0.0%

InterAmericas Communications 1,750 7,219
Corp. warrants 10/27/07 (a)

TOTAL UTILITIES 9,919

TOTAL COMMON STOCKS 12,719
(Cost $4,336)

NONCONVERTIBLE PREFERRED
STOCKS - 3.8%

CONSTRUCTION & REAL ESTATE -
0.1%

REAL ESTATE INVESTMENT TRUSTS
- - 0.1%

California Federal Preferred 1,513 39,338
Capital Corp. $2.2812

MEDIA & LEISURE - 0.7%

BROADCASTING - 0.5%

Benedek Communications Corp. 90 68,400
11.5% pay-in-kind

CSC Holdings, Inc.:

11.125% pay-in-kind 239 26,171

Series H, 11.75% pay-in-kind 355 38,784

Sinclair Capital 11.625% 234 24,395

157,750

PUBLISHING - 0.2%

PRIMEDIA, Inc. 8.625% 668 60,788

TOTAL MEDIA & LEISURE 218,538

TECHNOLOGY - 0.6%

COMPUTER SERVICES & SOFTWARE
- - 0.6%

Concentric Network Corp. 192 182,400
13.5% pay-in-kind

UTILITIES - 2.4%

CELLULAR - 1.0%

Nextel Communications, Inc. 327 328,635
11.125% pay-in-kind

TELEPHONE SERVICES - 1.4%

Intermedia Communications, 113 111,023
Inc. 13.5% pay-in-kind

NONCONVERTIBLE PREFERRED
STOCKS - CONTINUED

SHARES VALUE (NOTE 1)

UTILITIES - CONTINUED

TELEPHONE SERVICES - CONTINUED

NEXTLINK Communications, Inc. 2,220 $ 112,110
14% pay-in-kind

WinStar Communications, Inc. 250 201,250
14.25%

424,383

TOTAL UTILITIES 753,018

TOTAL NONCONVERTIBLE 1,193,294
PREFERRED STOCKS
(Cost $1,207,005)

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SOVEREIGN LOAN PARTICIPATIONS
- - 0.8%

MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D)

Algerian Republic loan - $ 30,000 28,350
participation - The Chase
Manhattan Bank 7.3125%
3/4/00 (h)

Bank for Foreign Economic
Affairs of Russia
(Vnesheconombank):

loan participation
restructured under 1997
Agreement:

- - BankBoston Corp. 6.0625% - 205,000 25,369
12/15/20 (c)(h)

- - Deutsche Bank 6.0625% - 250,000 30,938
12/15/20 (c)(h)

- - Merrill Lynch, Pierce, - 110,000 13,613
Fenner & Smith, Inc. 6.0625%
12/15/20 (c)(h)

- - Morgan (J.P.) Securities, - 230,000 28,463
Inc. 6.0625% 12/15/20 (c)(h)

- - The Chase Manhattan Bank - 310,000 38,363
6.0625% 12/15/20 (c)(h)

Moroccan Kingdom loan
participation:

Series A - ING Bank NV - 40,000 32,500
5.9063% 1/1/09 (h)

Series A - Morgan Guaranty - 35,238 28,631
Trust Co. 5.9063% 1/1/09 (h)

Series A - Paribas Capital - 40,000 32,500
Markets 5.9063% 1/1/09 (h)

TOTAL SOVEREIGN LOAN 258,727
PARTICIPATIONS
(Cost $346,443)

</TABLE>

CASH EQUIVALENTS - 7.2%

MATURITY AMOUNT VALUE (NOTE 1)

Investments in repurchase $ 2,249,302 $ 2,249,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 4.84%,
dated 6/30/99 due 7/1/99
(Cost $2,249,000)

TOTAL INVESTMENT IN $ 31,412,133
SECURITIES - 100%
(Cost $31,907,401)

SECURITY TYPE ABBREVIATIONS

FLIRB - Front Loaded Interest
Reduction Bonds

CURRENCY ABBREVIATIONS

ARS - Argentine peso

CAD - Canadian dollar

EUR - European Monetary Unit

GBP - British pound

JPY - Japanese yen

TRL - Turkish lira

LEGEND

(a) Non-income producing

(b) Standard & Poor's(registered trademark) credit ratings are used in
the absence of a rating by Moody's Investors Service, Inc.

(c) Non-income producing - issuer filed for protection under the
Federal Bankruptcy Code or is in default of interest payment.

(d) Principal amount is stated in United States dollars unless
otherwise noted.

(e) Debt obligation initially issued in zero coupon form which
converts to coupon form at a specified rate and date. The rate shown
is the rate at period end.

(f) Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date. The rate shown is the rate at
period end.

(h) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.

(j) Quantity represents share amount.

(k) Principal amount in thousands

OTHER INFORMATION

The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):

MOODY'S RATINGS S&P RATINGS

Aaa, Aa, A 39.0% AAA, AA, A 39.0%

Baa 1.0% BBB 1.4%

Ba 7.6% BB 8.2%

B 31.8% B 32.9%

Caa 4.8% CCC 2.9%

Ca, C 0.2% CC, C 0.9%

D 0.0%

The percentage not rated by Moody's or S&P amounted to 2.9%. FMR has
determined that unrated debt securities that are lower quality account
for 2.9% of the total value of investment in securities.

Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:

United States of America 69.4%

Germany 6.2

United Kingdom 3.8

Brazil 3.6

Canada 2.7

Mexico 2.3

Argentina 2.2

Venezuela 1.8

Russia 1.5

Multi-National 1.4

Luxembourg 1.3

Others (individually less 3.8
than 1%)

100.0%

INCOME TAX INFORMATION

At June 30, 1999, the aggregate cost of investment securities for
income tax purposes was $32,006,107. Net unrealized depreciation
aggregated $593,974, of which $700,634 related to appreciated
investment securities and $1,294,608 related to depreciated investment
securities.

At December 31, 1998, the fund had a capital loss carryforward of
approximately $69,000, all of which will expire on December 31, 2006.

The fund has elected to defer to its fiscal year ending December 31,
1999 approximately $223,000 of losses recognized during the period
November 1, 1998 to December 31, 1998.

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999

ASSETS

Investment in securities, at $ 31,412,133
value (including repurchase
agreements of $2,249,000)
(cost $31,907,401) - See
accompanying schedule

Cash 142,645

Receivable for investments 569,582
sold

Receivable for fund shares 163,466
sold

Dividends receivable 1,440

Interest receivable 654,393

Other receivables 684

TOTAL ASSETS 32,944,343

LIABILITIES

Payable for investments $ 451,509
purchased

Payable for fund shares 29,612
redeemed

Distributions payable 28,898

Accrued management fee 16,144

Other payables and accrued 34,932
expenses

TOTAL LIABILITIES 561,095

NET ASSETS $ 32,383,248

Net Assets consist of:

Paid in capital $ 33,346,261

Undistributed net investment 168,141
income

Accumulated undistributed net (631,139)
realized gain (loss) on
investments and foreign
currency transactions

Net unrealized appreciation (500,015)
(depreciation) on
investments and assets and
liabilities in foreign
currencies

NET ASSETS, for 3,416,991 $ 32,383,248
shares outstanding

NET ASSET VALUE, offering $9.48
price and redemption price
per share ($32,383,248
(divided by) 3,416,991
shares)

STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30,
1999

INVESTMENT INCOME $ 60,422
Dividends

Interest 1,180,918

TOTAL INCOME 1,241,340

EXPENSES

Management fee $ 85,209

Transfer agent fees 24,547

Accounting fees and expenses 30,339

Non-interested trustees' 42
compensation

Custodian fees and expenses 14,385

Registration fees 24,480

Audit 13,025

Legal 223

Miscellaneous 5

Total expenses before 192,255
reductions

Expense reductions (33,156) 159,099

NET INVESTMENT INCOME 1,082,241

REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:

Investment securities (175,081)

Foreign currency transactions (2,881) (177,962)

Change in net unrealized
appreciation (depreciation)
on:

Investment securities (165,897)

Assets and liabilities in (5,445) (171,342)
foreign currencies

NET GAIN (LOSS) (349,304)

NET INCREASE (DECREASE) IN $ 732,937
NET ASSETS RESULTING FROM
OPERATIONS

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1999 MAY 1,1998 (COMMENCEMENT OF
OPERATIONS) TO DECEMBER 31,
1998

INCREASE (DECREASE) IN NET
ASSETS

Operations Net investment $ 1,082,241 $ 906,433
income

Net realized gain (loss) (177,962) (343,215)

Change in net unrealized (171,342) (328,673)
appreciation (depreciation)

NET INCREASE (DECREASE) IN 732,937 234,545
NET ASSETS RESULTING FROM
OPERATIONS

Distributions to shareholders (945,953) (984,542)
from net investment income

Share transactions Net 16,874,130 29,660,234
proceeds from sales of shares

Reinvestment of distributions 822,347 894,120

Cost of shares redeemed (9,360,973) (5,543,597)

NET INCREASE (DECREASE) IN 8,335,504 25,010,757
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) 8,122,488 24,260,760
IN NET ASSETS

NET ASSETS

Beginning of period 24,260,760 -

End of period (including $ 32,383,248 $ 24,260,760
undistributed net investment
income of $168,141 and
$31,853, respectively)

OTHER INFORMATION
Shares

Sold 1,763,273 3,037,462

Issued in reinvestment of 85,980 93,798
distributions

Redeemed (980,461) (583,061)

Net increase (decrease) 868,792 2,548,199

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,

1999 1998 E

SELECTED PER-SHARE DATA

Net asset value, beginning of $ 9.520 $ 10.000
period

Income from Investment .351 .469
Operations Net investment
income D

Net realized and unrealized (.080) (.466)
gain (loss)

Total from investment .271 .003
operations

Less Distributions

From net investment income (.311) (.483)

Net asset value, end of period $ 9.480 $ 9.520

TOTAL RETURN B, C 2.86% .13%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period $ 32,383 $ 24,261
(000 omitted)

Ratio of expenses to average 1.10% A, F 1.10% A, F
net assets

Ratio of expenses to average 1.10% A 1.09% A, G
net assets after expense
reductions

Ratio of net investment 7.49% A 7.40% A
income to average net assets

Portfolio turnover rate 180% A 97% A

</TABLE>

A ANNUALIZED

B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.

C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.

D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.

E FOR THE PERIOD MAY 1, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER
31, 1998.

F FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.

G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.

NOTES TO FINANCIAL STATEMENTS

For the period ended June 30, 1999 (Unaudited)

1. SIGNIFICANT ACCOUNTING POLICIES.

Fidelity Strategic Income Fund (the fund) is a fund of Fidelity School
Street Trust (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company
Act of 1940, as amended, as an open-end management investment company
organized as a Massachusetts business trust. The financial statements
have been prepared in conformity with generally accepted accounting
principles which require management to make certain estimates and
assumptions at the date of the financial statements. The following
summarizes the significant accounting policies of the fund:

SECURITY VALUATION. Securities for which quotations are readily
available are valued by a pricing service at their market values as
determined by their most recent bid prices (sales prices if the
principal market is an exchange) in the principal market in which such
securities are normally traded. Securities for which market quotations
are not readily available (and in certain cases debt securities which
trade on an exchange) are valued primarily using dealer-supplied
valuations or at their fair value as determined in good faith under
consistently applied procedures under the general supervision of the
Board of Trustees. Short-term securities with remaining maturities of
sixty days or less for which quotations are not readily available are
valued at amortized cost or original cost plus accrued interest, both
of which approximate current value.

INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date

1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

INVESTMENT INCOME - CONTINUED

may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Non-cash dividends included in dividend income, if
any, are recorded at the fair market value of the securities received.
Interest income, which includes accretion of original issue discount,
is accrued as earned. Investment income is recorded net of foreign
taxes withheld where recovery of such taxes is uncertain. The fund may
place a debt obligation on non-accrual status and reduce related
interest income by ceasing current accruals and writing off interest
receivables when the collection of all or a portion of interest has
become doubtful based on consistently applied procedures, under the
general supervision of the Board of Trustees of the fund. A debt
obligation is removed from non-accrual status when the issuer resumes
interest payments or when collectibility of interest is reasonably
assured.

EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.

DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and
paid monthly from net investment income. Distributions from realized
gains, if any, are recorded on the ex-dividend date.

Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for foreign currency transactions, market discount, capital
loss carryforwards and losses deferred due to wash sales and excise
tax regulations.

SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.

2. OPERATING POLICIES.

2. OPERATING POLICIES - CONTINUED

3. PURCHASES AND SALES OF INVESTMENTS.

Purchases and sales of securities, other than short-term securities,
aggregated $31,070,371 and $22,404,174, respectively, of which U.S.
government and government agency obligations aggregated $4,610,563 and
$1,204,649, respectively.

4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.

MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .1100% to .3700% for the
period. The annual individual fund fee rate is .45%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee.

4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED

MANAGEMENT FEE - CONTINUED

For the period, the management fee was equivalent to an annualized
rate of .58% of average net assets.

ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee
is based on the level of average net assets for the month plus
out-of-pocket expenses.

5. EXPENSE REDUCTIONS.

FMR voluntarily agreed to reimburse the fund's operating expenses
(excluding interest, taxes, securities lending fees, brokerage
commissions and extraordinary expenses, if any) above an annual rate
of 1.10% of average net assets. For the period, the reimbursement
reduced the expenses by $32,870.

FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $31 under this arrangement.

In addition, the fund has entered into an arrangement with its
custodian whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of expenses. During the period,
the fund's custodian fees were reduced by $255 under this custodian
arrangement.

6. CREDIT RISK.

7. BENEFICIAL INTEREST.

At the end of the period, FMR Capital, an affiliate of FMR was record
owner of approximately 32% of the total outstanding shares of the
fund.

MANAGING YOUR INVESTMENTS

BY PHONE

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SERVICE TELEPHONE
1-800-544-5555

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Fidelity's Web site on the Internet provides a wide range of
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(PHONE_GRAPHIC)
FIDELITY'S WEB SITE
WWW.FIDELITY.COM

(PHONE_GRAPHIC)
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TO VISIT FIDELITY

For directions and hours,
please call 1-800-544-9797.

ARIZONA

7373 N. Scottsdale Road
Scottsdale, AZ

CALIFORNIA

815 East Birch Street
Brea, CA

851 East Hamilton Avenue
Campbell, CA

527 North Brand Boulevard
Glendale, CA

19200 Von Karman Avenue
Irvine, CA

10100 Santa Monica Blvd.
Los Angeles, CA

251 University Avenue
Palo Alto, CA

1760 Challenge Way
Sacramento, CA

7676 Hazard Center Drive
San Diego, CA

455 Market Street
San Francisco, CA

950 Northgate Drive
San Rafael, CA

1400 Civic Drive
Walnut Creek, CA

6300 Canoga Avenue
Woodland Hills, CA

COLORADO

1625 Broadway
Denver, CO

CONNECTICUT

48 West Putnam Avenue
Greenwich, CT

265 Church Street
New Haven, CT

300 Atlantic Street
Stamford, CT

29 South Main Street
West Hartford, CT

DELAWARE

222 Delaware Avenue
Wilmington, DE

FLORIDA

4400 N. Federal Highway
Boca Raton, FL

90 Alhambra Plaza
Coral Gables, FL

4090 N. Ocean Boulevard
Ft. Lauderdale, FL

1907 West State Road 434
Longwood, FL

8880 Tamiami Trail, North
Naples, FL

2401 PGA Boulevard
Palm Beach Gardens, FL

8065 Beneva Road
Sarasota, FL

1502 N. Westshore Blvd.
Tampa, FL

GEORGIA

3445 Peachtree Road, N.E.
Atlanta, GA

1000 Abernathy Road
Atlanta, GA

ILLINOIS

One North Franklin Street
Chicago, IL

1415 West 22nd Street
Oak Brook, IL

1700 East Golf Road
Schaumburg, IL

3232 Lake Avenue
Wilmette, IL

INDIANA

4729 East 82nd Street
Indianapolis, IN

MAINE

3 Canal Plaza
Portland, ME

MARYLAND

7401 Wisconsin Avenue
Bethesda, MD

1 West Pennsylvania Ave.
Towson, MD

MASSACHUSETTS

470 Boylston Street
Boston, MA

155 Congress Street
Boston, MA

25 State Street
Boston, MA

300 Granite Street
Braintree, MA

44 Mall Road
Burlington, MA

416 Belmont Street
Worcester, MA

MICHIGAN

280 North Woodward Ave.
Birmingham, MI

29155 Northwestern Hwy.
Southfield, MI

MINNESOTA

7600 France Avenue South
Edina, MN

MISSOURI

700 West 47th Street
Kansas City, MO

8885 Ladue Road
Ladue, MO

200 North Broadway
St. Louis, MO

NEW JERSEY

150 Essex Street
Millburn, NJ

56 South Street
Morristown, NJ

501 Route 17, South
Paramus, NJ

NEW YORK

1055 Franklin Avenue
Garden City, NY

999 Walt Whitman Road
Melville, L.I., NY

1271 Avenue of the Americas
New York, NY

71 Broadway
New York, NY

350 Park Avenue
New York, NY

NORTH CAROLINA

4611 Sharon Road
Charlotte, NC

OHIO

600 Vine Street
Cincinnati, OH

28699 Chagrin Boulevard
Woodmere Village, OH

OREGON

16850 SW 72 Avenue
Tigard, OR

PENNSYLVANIA

1735 Market Street
Philadelphia, PA

439 Fifth Avenue
Pittsburgh, PA

TENNESSEE

6150 Poplar Road
Memphis, TN

TEXAS

10000 Research Boulevard
Austin, TX

4017 Northwest Parkway
Dallas, TX

1155 Dairy Ashford Street
Houston, TX

2701 Drexel Drive
Houston, TX

400 East Las Colinas Blvd.
Irving, TX

14100 San Pedro
San Antonio, TX

19740 IH 45 North
Spring, TX

UTAH

215 South State Street
Salt Lake City, UT

VIRGINIA

8180 Greensboro Drive
McLean, VA

WASHINGTON

411 108th Avenue, N.E.
Bellevue, WA

511 Pine Street
Seattle, WA

WASHINGTON, DC

1900 K Street, N.W.
Washington, DC

WISCONSIN

595 North Barker Road
Brookfield, WI

INVESTMENT ADVISER

Fidelity Management & Research Company Boston, MA

INVESTMENT SUB-ADVISERS

Fidelity Management & Research (U.K.) Inc., London, England

Fidelity Management & Research
(Far East) Inc., Tokyo, Japan

Fidelity International Investment Advisors, Pembroke, Bermuda

Fidelity International Investment Advisors (U.K.) Limited, Kent,
England

Fidelity Investments Japan Ltd.,
Tokyo, Japan

OFFICERS

Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Bart A. Grenier, Vice President
John H. Carlson, Vice President
Ian Spreadbury, Vice President
Kevin E. Grant, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer

BOARD OF TRUSTEES

ADVISORY BOARD

J. Gary Burkhead
Abigail P. Johnson

* INDEPENDENT TRUSTEES

GENERAL DISTRIBUTOR

Fidelity Distributors Corporation
Boston, MA

TRANSFER AND SHAREHOLDER
SERVICING AGENT

Fidelity Service Company, Inc.
Boston, MA

CUSTODIAN

The Bank of New York
New York, NY

FIDELITY'S TAXABLE BOND FUNDS

THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE

Exchanges/Redemptions 1-800-544-7777

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(8 a.m. - 9 p.m.)

TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)

Fidelity Automated
Service Telephone (AUTOMATED SERVICE) 1-800-544-5555
(AUTOMATED SERVICE) AUTOMATED LINE FOR QUICKEST SERVICE

FSN-SANN-0899 82001
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