FIDELITY GOVERNMENT SECURITIES FUND
497, 1994-11-29
Previous: MERRILL LYNCH CORPORATE BOND FUND INC/NY, 24F-2NT, 1994-11-29
Next: UNITED HIGH INCOME FUND INC, N-30D, 1994-11-29


 
 
FIDELITY SHORT-INTERMEDIATE GOVERNMENT FUND
A FUND OF FIDELITY CHARLES STREET TRUST
FIDELITY GOVERNMENT SECURITIES FUND
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 28, 1994
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated November 28, 1994). Please retain this
document for future reference. The funds' financial statements and
financial highlights, included in the Annual Reports for the fiscal year
ended September 30, 1994 are incorporated herein by reference. To obtain
additional copies of the Prospectus or the Annual Reports, please call
Fidelity Distributors Corporation at 1-800-544-8888.
TABLE OF CONTENTS                                PAGE   
 
                                                        
 
Investment Policies and Limitations                     
 
Portfolio Transactions                                  
 
Valuation of Portfolio Securities                       
 
Performance                                             
 
Additional Purchase and Redemption Information          
 
Distributions and Taxes                                 
 
FMR                                                     
 
Trustees and Officers                                   
 
Management Contracts                                    
 
Distribution and Service Plans                          
 
Contracts With Companies Affiliated With FMR            
 
Description of the Trusts                               
 
Financial Statements                                    
 
Appendix                                                
 
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
Fidelity Service Co. (FSC)
FSG/GOV-ptBr-1194
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in values,
net assets, or other circumstances will not be considered when determining
whether the investment complies with the fund's investment policies and
limitations.
Each fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of the fund.
However, except for the fundamental investment limitations set forth below,
the investment policies and limitations described in this Statement of
Additional Information are not fundamental and may be changed without
shareholder approval.
INVESTMENT LIMITATIONS OF FIDELITY SHORT-INTERMEDIATE GOVERNMENT FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government, or any of its agencies or instrumentalities) if, as a result
thereof, (a) more than 5% of the fund's total assets would be invested in
the securities of that issuer, or (b) the fund would hold more than 10% of
the outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties (but this limit
does not apply to purchases of debt securities or to repurchase
agreements).
(9) The fund may, not withstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental objectives, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 7.5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser. (This limitation
does not apply to purchases of debt securities or to repurchase
agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(ix) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of the fund's net assets. Included
in that amount, but not to exceed 2% of the fund's net assets, may be
warrants that are not listed on the New York Stock Exchange or the American
Stock Exchange. Warrants acquired by the fund in units or attached to
securities are not subject to these restrictions.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment com   pany with
substantial    ly the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions"
beginning on page 7.
INVESTMENT LIMITATIONS OF FIDELITY GOVERNMENT SECURITIES FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities;
(2) make short sales of securities; provided, however, that the fund may
purchase or sell futures contracts, and may make initial and variation
margin payments in connection with purchases or sales of futures contracts
or of options on futures contracts;
(3) purchase any securities on margin except for such short-term credits as
are necessary for the clearance of transactions; provided, however, that
the fund may purchase or sell futures contracts, and may make initial and
variation margin payments in connection with purchases or sales of futures
contracts or of options on futures contracts;
(4) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of the value of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings that
come to exceed 33 1/3% of the fund's total assets by reason of decline in
net assets will be reduced within 3 days to the extent necessary to comply
with the 33 1/3% limitation;
(5) underwrite any issue of securities, except to the extent that the fund
may be deemed to be an underwriter within the meaning of the Securities Act
of 1933 (i) in the disposition of restricted securities or (ii) in
connection with the purchase of government securities directly from the
issuer in accordance with the fund's investment objective, policies, and
limitations;
(6) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the government of the United
States or its agencies or instrumentalities, or commitments to acquire such
securities on a "when-issued" basis) if, as a result thereof, more than 25%
of the fund's total assets (taken at current value) would be invested in
the securities of one or more issuers having their principal business
activities in the same industry;
(7) purchase or sell real estate, but this shall not prevent the fund from
investing in marketable securities issued by companies such as real estate
investment trusts which deal in real estate or interests therein;
(8) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities);
(9) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this limit
does not apply to purchases of debt securities or to repurchase agreements;
(10) purchase securities of other investment companies except in the open
market where no commission except the ordinary broker's commission is paid,
or as a part of a merger or consolidation, and in no event may investments
in such securities exceed 10% of the total assets of the fund. It may not
purchase or retain securities issued by other open-end investment
companies;
(11) purchase warrants, valued at the lower of cost or market, in excess of
5% of the value of the fund's net assets;
(12) invest in oil, gas or other mineral exploration or development
programs;
(13) invest in companies for the purpose of exercising control or
management.
Investment Limitation (4) is construed in conformity with the 1940 Act,
and, accordingly "3 days" means three days, exclusive of Sundays and
holidays.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(ii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (4)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iii) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(iv) The fund does not currently intend to engage in repurchase agreements
or make loans, but this limitation does not apply to purchases of debt
securities.
(v) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(vi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions"
beginning on page 7.
It is Government Securities Fund's position that proprietary strips, such
as CATS and TIGRs, are government securities. However, the fund has been
advised that the Staff of the SEC's Division of Investment Management does
not consider these to be government securities, as defined under the
Investment Company Act of 1940. Accordingly, for purposes of Government
Securities Fund's investment limitation (6), the fund has defined the
following two industry groups: (1) Custodian banks for proprietary strips
that are direct obligations backed by the full faith and credit of the U.S.
government; and (2) Custodian banks for proprietary strips that are
indirect obligations, not backed by the full faith and credit of the U.S.
government. The fund will continue its efforts to secure a favorable
opinion from the SEC Staff that proprietary strips are government
securities. If the fund concludes that, under applicable legal principles,
any of these securities are government securities, it will exclude these
securities from Government Securities Fund's investment limitations (6).
Proprietary strips are considered government securities for the purposes of
Government Securities Fund's investment limitation (i) above.  
Each fund's investments must be consistent with its investment objective
and policies. Accordingly, not all of the security types and investment
techniques discussed below are eligible investments for each of the funds.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the fund under the Investment Company Act of 1940. These
transactions may include repurchase agreements with custodian banks;
short-term obligations of, and repurchase agreements with, the 50 largest
U.S. banks (measured by deposits); municipal securities; U.S. government
securities with affiliated financial institutions that are primary dealers
in these securities; short-term currency transactions; and short-term
borrowings. In accordance with exemptive orders issued by the Securities
and Exchange Commission, the Board of Trustees has established and
periodically reviews procedures applicable to transactions involving
affiliated financial institutions.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security (and more than
seven days in the future). Typically, no interest accrues to the purchaser
until the security is delivered. Each fund may receive fees for entering
into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, a fund assumes the
rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the fund's other investments. If a fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, the fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a delayed-delivery
basis, the fund does not participate in further gains or losses with
respect to the security. If the other party to a delayed-delivery
transaction fails to deliver or pay for the securities, the fund could miss
a favorable price or yield opportunity, or could suffer a loss.
Each fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
INTERFUND BORROWING PROGRAM. The funds have received permission from the
SEC to lend money to and borrow money from other funds advised by FMR or
its affiliates, but they will participate in the interfund borrowing
program only as borrowers. Interfund loans normally will extend overnight,
but can have a maximum duration of seven days. Both funds will borrow
through the program only when the costs are equal to or lower than the cost
of bank loans. The funds will not borrow through the program if, after
doing so, total outstanding borrowings would exceed 15% of total assets.
Loans may be called on one day's notice, and the funds may have to borrow
from a bank at a higher interest rate if an interfund loan is called or not
renewed.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of a fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of a fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment). 
Investments currently considered by Short-Intermediate Government Fund to
be illiquid include repurchase agreements not entitling the holder to
payment of principal and interest within seven days, non-government
stripped fixed-rate mortgage backed securities, and over-the-counter
options. Also, FMR may determine some government-stripped fixed-rate
mortgage-backed securities to be illiquid. Investments currently considered
by Government Securities Fund to be illiquid include repurchase agreements
not entitling the holder to payment of principal and interest within seven
days and over-the-counter options. However, with respect to
over-the-counter options a fund writes, all or a portion of the value of
the underlying instrument may be illiquid depending on the assets held to
cover the option and the nature and terms of any agreement the fund may
have to close out the option before expiration. In the absence of market
quotations, illiquid investments are priced at fair value as determined in
good faith by a committee appointed by the Board of Trustees. If through a
change in values, net assets, or other circumstances, a fund were in a
position where more than 10% of its net assets were invested in illiquid
securities, it would seek to take appropriate steps to protect liquidity.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed-upon price. The resale price reflects the purchase price plus
an agreed-upon incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed-upon resale price, which
obligation is in effect secured by the value (at least equal to the amount
of the agreed-upon resale price and marked to market daily) of the
underlying security. A fund may engage in repurchase agreements with
respect to any type of security in which it is authorized to invest. While
it does not presently appear possible to eliminate all risks from these
transactions (particularly the possibility of a decline in the market value
of the underlying securities, as well as delays and costs to a fund in
connection with bankruptcy proceedings), it is each fund's current policy
to limit repurchase agreement transactions to those parties whose
creditworthiness has been reviewed and found satisfactory by FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, a fund will maintain appropriate liquid assets in a segregated
custodial account to cover its obligation under the agreement. Each fund
will enter into reverse repurchase agreements only with parties whose
creditworthiness has been found satisfactory by FMR. Such transactions may
increase fluctuations in the market value of the fund's assets and may be
viewed as a form of leverage.
SECURITIES LENDING. The funds may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange and
a subsidiary of FMR Corp.
Securities lending allows the funds to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there may be
delays in the recovery of loaned securities, or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be
made only to parties deemed by FMR to be of good standing. Furthermore,
they will only be made if, in FMR's judgment, the consideration to be
earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC Staff that a fund
may engage in loan transactions only under the following conditions: (1)
the fund must receive 100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or notes) from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of
the collateral; (3) after giving notice, the fund must be able to terminate
the loan at any time; (4) the fund must receive reasonable interest on the
loan or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest, or other distributions on the securities loaned and to
any increase in market value; (5) the fund may pay only reasonable
custodian fees in connection with the loan; and (6) the Board of Trustees
must be able to vote proxies on the securities loaned, either by
terminating the loan or by entering into an alternative arrangement with
the borrower. 
Cash received through loan transactions may be invested in any security in
which a fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
MORTGAGE-BACKED SECURITIES. A fund may purchase mortgage-backed securities
issued by government and non-government entities, such as banks, mortgage
lenders, or other financial institutions. A mortgage-backed security may be
an obligation of the issuer backed by a mortgage or pool of mortgages or a
direct interest in an underlying pool of mortgages. Some mortgage-backed
securities, such as collateralized mortgage obligations or CMOs, make
payments of both principal and interest at a variety of intervals; others
make semiannual interest payments at a predetermined rate and repay
principal at maturity (like a typical bond). Mortgage-backed securities are
based on different types of mortgages including those on commercial real
estate or residential properties. Other types of mortgage-backed securities
will likely be developed in the future, and a fund may invest in them if
FMR determines they are consistent with the fund's investment objective and
policies.
The value of mortgage-backed securities may change due to shifts in the
market's perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities market as a whole. Non-government
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
government issues. Mortgage-backed securities are subject to prepayment
risk. Prepayment, which occurs when unscheduled or early payments are made
on the underlying mortgages, may shorten the effective maturities of these
securities and may lower their total returns.
VARIABLE OR FLOATING RATE OBLIGATIONS bear variable or floating interest
rates and carry rights that permit holders to demand payment of the unpaid
principal balance plus accrued interest from the issuers or certain
financial intermediaries. Floating rate instruments have interest rates
that change whenever there is a change in a designated base rate while
variable rate instruments provide for a specified periodic adjustment in
the interest rate. These formulas are designed to result in a market value
for the instrument that approximates its par value.
SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of different types of
investments or market factors. Depending on their structure, swap
agreements may increase or decrease a fund's exposure to long- or
short-term interest rates, mortgage securities, corporate borrowing rates,
or other factors such as security prices or inflation rates. Swap
agreements can take many different forms and are known by a variety of
names. A fund is not limited to any particular form of swap agreement if
FMR determines it is consistent with the fund's investment objective and
policies.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains the
right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines elements
of buying a cap and selling a floor.
Swap agreements will tend to shift a fund's investment exposure from one
type of investment to another. For example, if the agreed to pay fixed
rates in exchange for floating rates while holding fixed-rate bonds, the
swap would tend to decrease the fund's exposure to long-term interest
rates. Caps and floors have an effect similar to buying or writing options.
Depending on how they are used, swap agreements may increase or decrease
the overall volatility of a fund's investments and its share price and
yield.
The most significant factor in the performance of swap agreements is the
change in the specific interest rate, or other factors that determine the
amounts of payments due to and from a fund. If a swap agreement calls for
payments by the fund, the fund must be prepared to make such payments when
due. In addition, if the counterparty's creditworthiness declined, the
value of a swap agreement would be likely to decline, potentially resulting
in losses. Each fund expects to be able to eliminate its exposure under
swap agreements either by assignment or other disposition, or by entering
into an offsetting swap agreement with the same party or a similarly
creditworthy party.
Each fund will maintain appropriate liquid assets in a segregated custodial
account to cover its current obligations under swap agreements. If a fund
enters into a swap agreement on a net basis, it will segregate assets with
a daily value at least equal to the excess, if any, of the fund's accrued
obligations under the swap agreement over the accrued amount the fund is
entitled to receive under the agreement. If a fund enters into a swap
agreement on other than a net basis, it will segregate assets with a value
equal to the full amount of the fund's accrued obligations under the
agreement.
INDEXED SECURITIES. Each fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, or other
financial indicators. Indexed securities typically, but not always, are
debt securities or deposits whose value at maturity or coupon rate is
determined by reference to a specific instrument or statistic. A mortgage
indexed security, for example, could be synthesized to replicate the
performance of mortgage securities and the characteristics of direct
ownership.
  The performance of indexed securities depends to a great extent on the
performance of the security or other instrument to which they are indexed,
and may also be influenced by interest rate changes. At the same time,
indexed securities are subject to the credit risks associated with the
issuer of the security, and their values may decline substantially if the
issuer's creditworthiness deteriorates. Indexed securities may be more
volatile than the underlying instruments.
ZERO COUPON BONDS. Zero coupon bonds do not make interest payments;
instead, they are sold at a deep discount from their face value and are
redeemed at face value when they mature. Because zero coupon bonds do not
pay current income, their prices can be very volatile when interest rates
change. In calculating its daily dividend, a fund takes into account as
income a portion of the difference between a zero coupon bond's purchase
price and its face value.
A broker-dealer creates a derivative zero by separating the interest and
principal components of a U.S. Treasury security and selling them as two
individual securities. CATS (Certificates of Accrual on Treasury
Securities), TIGRs (Treasury Investment Growth Receipts), and TRs (Treasury
Receipts) are examples of derivative zeros. The funds have been advised
that the staff of the Division of Investment Management of the Securities
and Exchange Commission does not consider these instruments U.S. government
securities as defined by the Investment Company Act of 1940. Therefore, a
fund will not treat these obligations as U.S. government securities for
purposes of the 65% portfolio composition test.
The Federal Reserve Bank creates STRIPS (Separate Trading of Registered
Interest and Principal of Securities) by separating the interest and
principal components of an outstanding U.S. Treasury bond and selling them
as individual securities. Bonds issued by the Resolution Funding
Corporation and the Financing Corporation can also be separated in this
fashion. Original issue zeros are zero coupon securities originally issued
by the U.S. government, a government agency, or a corporation in zero
coupon form.
STRIPPED MORTGAGE-BACKED SECURITIES are created when a U.S. government
agency or a financial institution separates the interest and principal
components of a mortgage-backed security and sells them as individual
securities. The holder of the "principal-only" security (PO) receives the
principal payments made by the underlying mortgage-backed security, while
the holder of the "interest-only" security (IO) receives interest payments
from the same underlying security.
The prices of stripped mortgage-backed securities may be particularly
affected by changes in interest rates. As interest rates fall, prepayment
rates tend to increase, which tends to reduce prices of IOs and increase
prices of POs. Rising interest rates can have the opposite effect.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each fund has filed a
notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets. The funds intend to comply with Rule 4.5 under the
Commodity Exchange Act, which limits the extent to which the funds can
commit assets to initial margin deposits and option premiums.
In addition, each fund will not: (a) sell futures contracts, purchase put
options, or write call options if, as a result, more than 50%
(Short-Intermediate Government Fund) and 25% (Government Securities Fund)
of the fund's total assets would be hedged with futures and options under
normal conditions; (b) purchase futures contracts or write put options if,
as a result, the fund's total obligations upon settlement or exercise of
purchased futures contracts and written put options would exceed 25% of its
total assets; (c) purchase call options if, as a result, the current value
of option premiums for call options purchased by the fund would exceed 5%
of the fund's total assets; or (d) with respect to Short-Intermediate
Government Fund only, write call options on securities if, as a result, the
aggregate value of the securities underlying the calls would exceed 25% of
the fund's net assets. These limitations do not apply to options attached
to, or acquired or traded together with their underlying securities, and do
not apply to securities that incorporate features similar to options.
The above limitations on each fund's investments in futures contracts and
options, and each fund's policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, may be
changed as regulatory agencies permit. 
FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees to
purchase a specified underlying instrument at a specified future date. When
a fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when a fund enters into the contract. Some
currently available futures contracts are based on specific securities,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Bond Buyer Index of municipal bonds. Futures
can be held until their delivery dates, or can be closed out before then if
a liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase each fund's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When a fund sells a futures
contract, by contrast, the value of its futures position will tend to move
in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker known
as a futures commission merchant (FCM), when the contract is entered into.
Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of the funds' investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of a fund, the fund may be
entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the fund.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, each fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the fund pays
the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. The fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the fund will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. Each fund may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary market
exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When a fund writes a put option, it takes the
opposite side of the transaction from the option's purchaser. In return for
receipt of the premium, the fund assumes the obligation to pay the strike
price for the option's underlying instrument if the other party to the
option chooses to exercise it. When writing an option on a futures contract
the fund will be required to make margin payments to an FCM as described
above for futures contracts. A fund may seek to terminate its position in a
put option it writes before exercise by closing out the option in the
secondary market at its current price. If the secondary market is not
liquid for a put option the fund has written, however, the fund must
continue to be prepared to pay the strike price while the option is
outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer generally would expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates a fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
COMBINED POSITIONS. Each fund may purchase and write options in combination
with each other, or in combination with futures contracts, to adjust the
risk and return characteristics of the overall position. For example, a
fund may purchase a put option and write a call option on the same
underlying instrument, in order to construct a combined position whose risk
and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at
one strike price and buying a call option at a lower price, in order to
reduce the risk of the written call option in the event of a substantial
price increase. Because combined options positions involve multiple trades,
they result in higher transaction costs and may be more difficult to open
and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match a fund's current or
anticipated investments exactly. Each fund may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which it typically invests
which involves a risk that the options or futures position will not track
the performance of the fund's investments. 
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. A fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in a fund's options or futures positions are poorly correlated with
its other investments, the positions may fail to produce anticipated gains
or result in losses that are not offset by gains in other investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular options or futures contract
at any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for a fund to
enter into new positions or close out existing positions. If the secondary
market for a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable positions,
and potentially could require a fund to continue to hold a position until
delivery or expiration regardless of changes in its value. As a result, a
fund's access to other assets held to cover its options or futures
positions could also be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size and
strike price, the terms of over-the-counter options (options not traded on
exchanges) generally are established through negotiation with the other
party to the option contract. While this type of arrangement allows a fund
greater flexibility to tailor an option to its needs, OTC options generally
involve greater credit risk than exchange-traded options, which are
guaranteed by the clearing organization of the exchanges where they are
traded.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. Each fund will comply
with guidelines established by the Securities and Exchange Commission with
respect to coverage of options and futures strategies by mutual funds, and
if the guidelines so require will set aside appropriate liquid assets in a
segregated custodial account in the amount prescribed. Securities held in a
segregated account cannot be sold while the futures or option strategy is
outstanding, unless they are replaced with other suitable assets. As a
result, there is a possibility that segregation of a large percentage of a
fund's assets could impede portfolio management or the fund's ability to
meet redemption requests or other current obligations.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of each fund by FMR pursuant to authority contained in the
management contract. FMR is also responsible for the placement of
transaction orders for other investment companies and accounts for which it
or its affiliates act as investment adviser. In selecting broker-dealers,
subject to applicable limitations of the federal securities laws, FMR
considers various relevant factors, including, but not limited to: the size
and type of the transaction; the nature and character of the markets for
the security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; and the
reasonableness of any commissions.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). The selection of such broker-dealers
generally is made by FMR (to the extent possible consistent with execution
considerations) based upon the quality of research and execution services
provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the funds may be useful to FMR in rendering investment management
services to the funds or its other clients, and conversely, such research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the funds. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid the
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause
each fund to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or FMR's overall
responsibilities to the funds and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.
FMR is authorized to use research services provided by and to place
transactions with brokerage firms that have provided assistance in the
distribution of shares of the funds or shares of other Fidelity funds to
the extent permitted by law. FMR may use research services provided by and
place agency transactions with Fidelity Brokerage Services, Inc. (FBSI) and
Fidelity Brokerage Services, Ltd. (FBSL) a subsidiary of FMR Corp., if the
commissions are fair, reasonable, and comparable to commissions charged by
non-affiliated, qualified brokerage firms for similar services. 
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, unless certain requirements
are satisfied. Pursuant to such regulations, the Board of Trustees has
authorized FBSI to execute portfolio transactions on national securities
exchanges in accordance with approved procedures and applicable SEC rules.
Each fund's Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio transactions
on behalf of the funds and review the commissions paid by each fund over
representative periods of time to determine whether they are reasonable in
relation to the benefits to the fund.
For the fiscal years ended September 30, 1994 and 1993, Short-Intermediate
Government Fund's portfolio turnover rates were 184% and 348%,
respectively. For the fiscal years ended September 30, 1994 and 1993,
Government Securities Fund's portfolio turnover rates were 402% and 323%,
respectively. Because a high turnover rate increases transaction costs and
may increase taxable gains, FMR carefully weighs the anticipated benefits
of short-term investing against these consequences.
For the fiscal periods ended September 30, 1994, 1993, and 1992, the funds
paid no brokerage commissions.  
From time to time the Trustees will review whether the recapture for the
benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to continue
to review whether recapture opportunities are available and are legally
permissible and, if so, to determine in the exercise of their business
judgment whether it would be advisable for each fund to seek such
recapture.
Although the Trustees and officers of each fund are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds or accounts are
managed by the same investment adviser, particularly when the same security
is suitable for the investment objective of more than one fund or account.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with procedures believed to be appropriate and equitable fore ach fund. In
some cases this system could have a detrimental effect on the price or
value of the security as far as each fund is concerned. In other cases,
however, the ability of the funds to participate in volume transactions
will produce better executions and prices for the funds. It is the current
opinion of the Trustees that the desirability of retaining FMR as
investment adviser to each fund outweighs any disadvantages that may be
said to exist from exposure to simultaneous transactions.
VALUATION OF PORTFOLIO SECURITIES
Each fund's net asset value per share is determined by FSC under procedures
established by the Board of Trustees. Portfolio securities are valued
primarily on the basis of valuations furnished by a pricing service which
uses both dealer-supplied valuations and electronic data processing
techniques that take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics, and other
market data, without exclusive reliance on quoted prices or exchange or
over-the-counter prices, since such valuations are believed to reflect more
accurately the fair value of such securities. Use of the pricing service
has been approved by the Board of Trustees. There are a number of pricing
services available, and the Trustees, or officers acting on behalf of the
Trustees, on the basis of ongoing evaluation of these services, may use
other pricing services or discontinue the use of any pricing service in
whole or in part.
Securities not valued by the pricing service and for which quotations are
readily available are valued at market values determined on the basis of
their latest available bid prices as furnished by recognized dealers in
such securities. Futures contracts and options are valued on the basis of
market quotations, if available. Securities and other assets for which
quotations or pricing service valuations 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.
PERFORMANCE
The funds may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. Each fund's share price, yield, and
total return fluctuate in response to market conditions and other factors,
and the value of fund shares when redeemed may be more or less than their
original cost.
YIELD CALCULATIONS. Yields for a fund are computed by dividing a fund's
interest income for a given 30-day or one month period, net of expenses, by
the average number of shares entitled to receive distributions during the
period, dividing this figure by the fund's net asset value (NAV) at the end
of the period, and annualizing the result (assuming compounding of income)
in order to arrive at an annual percentage rate. Income is calculated for
purposes of yield quotations in accordance with standardized methods
applicable to all stock and bond funds. In general, interest income is
reduced with respect to bonds trading at a premium over their par value by
subtracting a portion of the premium from income on a daily basis, and is
increased with respect to bonds trading at a discount by adding a portion
of the discount to daily income. Capital gains and losses generally are
excluded from the calculation.
Income calculated for purposes of calculating a fund's yield differs from
income as determined for other accounting purposes. Because of the
different accounting methods used, and because of the compounding of income
assumed in yield calculations, a fund's yield may not equal its
distribution rate, the income paid to your account, or the income reported
in the fund's financial statements.
Yield information may be useful in reviewing a fund's performance and in
providing a basis for comparison with other investment alternatives.
However, each fund's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of the
portfolio securities of respective investment companies they have chosen to
consider.
Investors should recognize that in periods of declining interest rates a
fund's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates the fund's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to a fund from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the
fund's holdings, thereby reducing the fund's current yield. In periods of
rising interest rates, the opposite can be expected to occur.
Government Securities Fund's tax equivalent yield is the rate an investor
would have to earn from a fully taxable investment to equal the fund's
tax-free yield. For funds such as this fund, earning interest free from
state (and sometimes local) taxes in most states, tax-equivalent yields may
be calculated by dividing the fund's yield by the result of one minus a
specified state tax rate.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of a fund's return, including the effect of reinvesting dividends
and capital gain distributions, and any change in the fund's NAV over a
stated period. Average annual total returns are calculated by determining
the growth or decline in value of a hypothetical historical investment in a
fund over a stated period, and then calculating the annually compounded
percentage rate that would have produced the same result if the rate of
growth or decline in value had been constant over the period. For example,
a cumulative total return of 100% over ten years would produce an average
annual total return of 7.18%, which is the steady annual rate that would
equal 100% growth on a compounded basis in ten years. While average annual
returns are a convenient means of comparing investment alternatives,
investors should realize that a fund's performance is not constant over
time, but changes from year to year, and that average annual returns
represent averaged figures as opposed to the actual year-to-year
performance of a fund.
In addition to average annual total returns, a fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. Total returns may be shown on a
before-tax or after-tax basis. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.
NET ASSET VALUE. Charts and graphs using a fund's net asset values,
adjusted net asset values, and benchmark indices may be used to exhibit
performance. An adjusted NAV includes any distributions paid by a fund and
reflects all elements of its return. Unless otherwise indicated, a fund's
adjusted NAVs are not adjusted for sales charges, if any.
HISTORICAL FUND RESULTS. The following tables show each fund's yields and
total returns for periods ended September 30, 1994.
SHORT-INTERMEDIATE GOVERNMENT FUND
Average Annual Returns   Cumulative Returns   
 
30-day    One    Life of    One     Life of   
 
Yield     Year   Fund*      Year    Fund*     
 
5.94%   -1.18%   4.06%   -1.18%   12.90%   
 
* From September 13, 1991 (commencement of operations).
Note: If FMR had not reimbursed certain fund expenses during the period,
the fund's total returns would have been lower.
GOVERNMENT SECURITIES FUND
Average Annual Returns    Cumulative Returns   
 
30-day   One    Five    Ten     One    Five    Ten     
 
Yield    Year   Years   Years   Year   Years   Years   
 
6.94%   -5.81%   8.57%   9.71%   -5.81%   50.89%   152.69%   
 
The following tables show the income and capital elements of each fund's
cumulative total return. The tables compare each fund's return to the
record of the Standard & Poor's Composite Index of 500 Stocks (S&P 500),
the Dow Jones Industrial Average (DJIA), and the cost of living (measured
by the Consumer Price Index, or CPI) over the same period. The CPI
information is as of month end closest to the initial investment date for
each fund. The S&P and DJIA comparisons are provided to show how each
fund's total return compared to the record of a broad average of common
stocks and a narrower set of stocks of major industrial companies,
respectively, over the same period. Of course, since each fund invests in
fixed-income securities, common stocks represent a different type of
investment from the fund. Common stocks generally offer greater growth
potential than the funds, but generally experience greater price
volatility, which means greater potential for loss. In addition, common
stocks generally provide lower income than a fixed-income investment such
as the funds. Figures for the S&P 500 and DJIA are based on the prices of
unmanaged groups of stocks and, unlike the funds' returns, do not include
the effect of paying brokerage commissions or other costs of investing.
SHORT-INTERMEDIATE GOVERNMENT FUND. During the period from September 13,
1991 (commencement of operations) to September 30, 1994, a hypothetical
$10,000 investment in Short-Intermediate Government Fund would have grown
to $11,290, assuming all distributions were reinvested. This was a period
of fluctuating interest rates and bond prices, and the figures below should
not be considered representative of the dividend income or capital gain or
loss that could be realized from an investment in the fund today.
FIDELITY SHORT-INTERMEDIATE GOVERNMENT FUND   INDICES    
 
 
<TABLE>
<CAPTION>
<S>      <C>          <C>             <C>             <C>     <C>       <C>    <C>        
         Value of     Value of        Value of                                            
 
Fiscal   Initial      Reinvested      Reinvested                                          
 
Period   $10,000      Dividend        Capital Gain    Total                    Cost of    
 
Ended    Investment   Distributions   Distributions   Value   S&P 500   DJIA   Living**   
 
</TABLE>
 
 
<TABLE>
<CAPTION>
<S>    <C>        <C>        <C>     <C>         <C>         <C>         <C>         
1994    $ 9,290    $ 1,919    $ 80    $ 11,290    $ 13,050    $ 13,945    $ 10,937   
 
1993    9,960      1,379       86     11,425      12,587      12,555      10,622     
 
1992    10,140     704         10      10,854     11,137      11,220      10,344     
 
1991    10,010     27         0       10,037      10,028      10,046      10,044     
 
</TABLE>
 
* From commencement of operations 9/13/91.
** From the month end closest to the initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on September
13, 1991 (commencement of operations), the net amount invested in fund
shares was $10,000. The cost of the initial investment ($10,000), together
with the aggregate cost of reinvested dividends and capital gains
distributions for the period covered (their cash value at the time they
were reinvested), amounted to $12,128. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $1,855 for dividends and $80 for capital gain distributions.
Tax consequences of different investments have not been factored into the
above figures.
GOVERNMENT SECURITIES FUND. During the ten year period ended September 30,
1994, a hypothetical $10,000 investment in Fidelity Government Securities
Fund would have grown to $25,269, assuming all distributions were
reinvested. This was a period of fluctuating interest rates and bond
prices, and the figures below should not be considered representative of
the dividend income or capital gain or loss that could be realized from an
investment in the fund today.
FIDELITY GOVERNMENT SECURITIES FUND   INDICES    
 
 
<TABLE>
<CAPTION>
<S>           <C>          <C>             <C>             <C>     <C>       <C>    <C>       
              Value of     Value of        Value of                                           
 
              Initial      Reinvested      Reinvested                                         
 
Fiscal Year   $10,000      Dividend        Capital Gain    Total                    Cost of   
 
Ended         Investment   Distributions   Distributions   Value   S&P 500   DJIA   Living    
 
</TABLE>
 
 
<TABLE>
<CAPTION>
<S>    <C>        <C>        <C>       <C>        <C>        <C>        <C>        
1994   $ 10,413   $ 13,631   $ 1,225   $ 25,269   $ 39,086   $ 45,060   $ 14,229   
 
1993    12,132     14,080     616       26,828     37,697     40,567     13,819    
 
1992    11,719     11,984     0         23,703     33,357     36,253     13,457    
 
1991    11,071     9,736      0         20,807     30,036     32,461     13,067    
 
1990    10,424     7,579      0         18,003     22,897     25,475     12,638    
 
1989    10,580     6,167      0         16,747     25,230     26,916     11,905    
 
1988    10,491     4,796      0         15,287     18,970     20,354     11,410    
 
1987    10,424     3,448      0         13,872     21,645     24,128     10,952    
 
1986    11,339     2,537      0         13,876     15,090     15,938     10,495    
 
1985    10,491     1,195      0         11,686     11,453     11,548     10,314    
 
</TABLE>
 
Explanatory Notes: With an initial investment of $10,000 made on September
30, 1984, the net amount invested in fund shares was $10,000. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(their cash value at the time they were reinvested), amounted to $25,624.
If distributions had not been reinvested, the amount of distributions
earned from the fund over time would have been smaller, and the cash
payments for the period would have amounted to $9,072 for dividends and
$625 for capital gain distributions. Tax consequences of different
investments have not been factored into the above figures.
A fund's performance may be compared to the performance of other mutual
funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings prepared
by Lipper Analytical Services, Inc. (Lipper), an independent service
located in Summit, New Jersey that monitors the performance of mutual
funds. Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. Lipper may also rank funds based on yield. In addition to the
mutual fund rankings, a fund's performance may be compared to stock, bond,
and money market mutual fund performance indices prepared by Lipper or
other organizations. When comparing these indices, it is important to
remember the risk and return characteristics of each type of investment.
For example, while stock mutual funds may offer higher potential returns,
they also carry the highest degree of share price volatility. Likewise,
money market funds may offer greater stability of principal, but generally
do not offer the higher potential returns from stock mutual funds.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
A fund may be compared in advertising to Certificates of Deposit (CDs) or
other investments issued by banks or other depository institutions. Mutual
funds differ from bank investments in several respects. For example, a fund
may offer greater liquidity or higher potential returns than CDs, a fund
does not guarantee your principal or your return, and fund shares are not
FDIC insured.  
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. Such
information may include information about current economic, market, and
political conditions; materials that describe general principles of
investing, such as asset allocation, diversification, risk tolerance, and
goal setting; questionnaires designed to help create a personal financial
profile; worksheets used to project savings needs based on assumed rates of
inflation and hypothetical rates of return; and action plans offering
investment alternatives. Materials may also include discussions of
Fidelity's asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices. 
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future. 
A fund may compare its performance or the performance of securities in
which it may invest to averages published by IBC USA (Publications), Inc.
of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The IBC/Donoghue's MONEY FUND AVERAGES(trademark)/All
Taxable, which is reported in the MONEY FUND REPORT(registered trademark),
covers over 698 taxable money market funds. The Bond Fund Report
AverageS(trademark)/ All Taxable, which is reported in the BOND FUND
REPORT(registered trademark), covers over 385 bond funds. When evaluating
comparisons to money market funds, investors should consider the relevant
differences in investment objectives and policies. Specifically, money
market funds invest in short-term, high-quality instruments and seek to
maintain a stable $1.00 share price. Each fund, however, invests in
longer-term instruments and its share price changes daily in response to a
variety of factors.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college or other
goals; charitable giving; and the Fidelity credit card. In addition,
Fidelity may quote or reprint financial or business publications and
periodicals, including model portfolios or allocations, as they relate to
current economic and political conditions, fund management, portfolio
composition, investment philosophy, investment techniques, the desirability
of owning a particular mutual fund, and Fidelity services and products.
Fidelity may also reprint, and use as advertising and sales literature,
articles from Fidelity Focus, a quarterly magazine provided free of charge
to Fidelity fund shareholders.
A fund may present its fund number, Quotron(trademark) number, and CUSIP
number, and discuss or quote its current portfolio manager.
VOLATILITY. A fund may quote various measures of volatility and benchmark
correlation in advertising. In addition, the fund may compare these
measures to those of other funds. Measures of volatility seek to compare
the fund's historical share price fluctuations or total returns to those of
a benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. All measures of volatility and correlation
are calculated using averages of historical data. In advertising, a fund
may also discuss or illustrate examples of interest rate sensitivity.
MOMENTUM INDICATORS indicate a fund's price movements over specific periods
of time. Each point on the momentum indicator represents the fund's
percentage change in price movements over that period.
A fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an
investor invests a fixed dollar amount in a fund at periodic intervals,
thereby purchasing fewer shares when prices are high and more shares when
prices are low. While such a strategy does not assure a profit or guard
against loss in a declining market, the investor's average cost per share
can be lower than if fixed numbers of shares are purchased at the same
intervals. In evaluating such a plan, investors should consider their
ability to continue purchasing shares during periods of low price levels.
A fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which may
produce superior after-tax returns over time. For example, a $1,000
investment earning a taxable return of 10% annually would have an after-tax
value of $1,949 after ten years, assuming tax was deducted from the return
each year at a 31% rate. An equivalent tax-deferred investment would have
an after-tax value of $2,100 after ten years, assuming tax was deducted at
a 31% rate from the tax-deferred earnings at the end of the ten-year
period.
As of September 30, 1994, FMR advised over $25 billion in tax-free fund
assets, $65 billion in money market fund assets, $165 billion in equity
fund assets, $40 billion in international fund assets, and $20 billion in
Spartan fund assets. The funds may reference the growth and variety of
money market mutual funds and the adviser's innovation and participation in
the industry. The equity funds under management figure represents the
largest amount of equity fund assets under management by a mutual fund
investment adviser in the United States, making FMR America's leading
equity (stock) fund manager. FMR, its subsidiaries, and affiliates maintain
a worldwide information and communications network for the purpose of
researching and managing investments abroad.
In addition to performance rankings, each fund may compare its total
expense ratio to the average total expense ratio of similar funds tracked
by Lipper. A fund's total expense ratio is a significant factor in
comparing bond and money market investments because of its effect on yield. 
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Each fund is open for business and its fund's net asset value per share
(NAV) is calculated each day the New York Stock Exchange (NYSE) is open for
trading. The NYSE has designated the following holiday closings for 1994:
Washington's Birthday (observed), Good Friday, Memorial Day (observed),
Independence Day (observed), Labor Day, Thanksgiving Day, and Christmas Day
(observed). Although FMR expects the same holiday schedule, with the
addition of New Year's Day, to be observed in the future, the NYSE may
modify its holiday schedule at any time. 
FSC normally determines each fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier
if trading on the NYSE is restricted or as permitted by the SEC. To the
extent that portfolio securities are traded in other markets on days when
the NYSE is closed, a fund's NAV may be affected on days when investors do
not have access to the fund to purchase or redeem shares. In addition,
trading in some of a fund's portfolio securities may not occur on days when
the fund is open for business.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing a fund's NAV. Shareholders receiving securities or other property
on redemption may realize a gain or loss for tax purposes, and will incur
any costs of sale as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the 1940
Act), each fund is required to give shareholders at least 60 days' notice
prior to terminating or modifying its exchange privilege. Under the Rule,
the 60-day notification requirement may be waived if (i) the only effect of
a modification would be to reduce or eliminate an administrative fee,
redemption fee, or deferred sales charge ordinarily payable at the time of
exchange, or (ii) the fund suspends the redemption of shares to be
exchanged as permitted under the 1940 Act or the rules and regulations
thereunder, or the fund to be acquired suspends the sale of its shares
because it is unable to invest amounts effectively in accordance with its
investment objective and policies. 
In the Prospectus, each fund has notified shareholders that they reserve
the right at any time, without prior notice, to refuse exchange purchases
by any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. Because each fund's income is primarily derived from interest,
dividends from the funds normally will not qualify for the
dividends-received deduction available to corporations shareholders.
Short-term capital gains are distributed as dividend income, but do not
qualify for the dividends received deduction. A portion of each fund's
dividends derived from certain U.S. government obligations may be exempt
from state and local taxation. For Short-Intermediate Government Fund,
Mortgage Securities pay down gains (losses) are generally taxable as
ordinary income and, therefore, increase (decrease) taxable dividend
distributions. Each fund will send each shareholder a notice in January
describing the tax status of dividend and capital gain distributions for
the prior year.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by each fund on
the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains, regardless of the length of time
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of a fund and such shares are held six
months or less and are sold at a loss, the portion of the loss equal to the
amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes. Short-term capital gains distributed by
each fund are taxable to shareholders as dividends, not as capital gains. 
STATE AND LOCAL TAX ISSUES. For mutual funds organized as business trusts,
state law provides for a pass-through of the state and local income tax
exemption afforded to direct owners of U.S. government securities. Some
states limit this to mutual funds that invest a certain amount in U.S.
government securities, and some types of securities, such as repurchase
agreements and some agency backed securities, may not qualify for this
benefit. The tax treatment of your dividend distributions from a fund will
be the same as if you directly owned your proportionate share of the U.S.
government securities in each fund's portfolio. Because the income earned
on most U.S. government securities in which each fund invests is exempt
from state and local income taxes, the portion of your dividends from each
fund attributable to these securities will also be free from income taxes.
The exemption from state and local income taxation does not preclude states
from assessing other taxes on the ownership of U.S. government securities.
In a number of states, corporate franchise (income) tax laws do not exempt
interest earned on U.S. government securities whether such securities are
held directly or through a fund.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company and
avoid being subject to federal income or excise taxes at the fund level,
each fund intends to distribute substantially all of its net investment
income and net realized capital gains within each calendar year as well as
on a fiscal year basis. Each fund intends to comply with other tax rules
applicable to regulated investment companies, including a requirement that
capital gains from the sale of securities held less than three months
constitute less than 30% of a fund's gross income for each fiscal year.
Gains from some futures contracts and options are included in this 30%
calculation, which may limit the funds' investments in such instruments.
Short-Intermediate Government Fund is treated as a separate entity from the
other funds of Fidelity Charles Street Trust for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting each fund and its shareholders,
and no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders may be subject to state and
local taxes on fund distributions, and shares may be subject to state and
local personal property taxes. Investors should consult their tax advisors
to determine whether a fund is suitable to their particular tax situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent company organized
in 1972. Through ownership of voting common stock and the execution of a
shareholders' voting agreement, Edward C. Johnson 3d, Johnson family
members, and various trusts for the benefit of the Johnson family form a
controlling group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by three of its divisions as follows: FSC, which is the transfer
and shareholder servicing agent for certain of the funds advised by FMR;
Fidelity Investments Institutional Operations Company, which performs
shareholder servicing functions for institutional customers and funds sold
through intermediaries; and Fidelity Investments Retail Marketing Company,
which provides marketing services to various companies within the Fidelity
organization. 
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures for
personal investing and restricts certain transactions. For example, all
personal trades require pre-clearance, and participation in initial public
offerings is prohibited. In addition, restrictions on the timing of
personal investing relative to trades by Fidelity funds and on short-term
trading have been adopted.
TRUSTEES AND OFFICERS
The Trustees and executive officers of each trust are listed below. Except
as indicated, each individual has held the office shown or other offices in
the same company for the last five years. Trustees and officers elected or
appointed prior to Government Securities Fund's conversion from a Nebraska
limited partnership to a Massachusetts business trust served the Nebraska
limited partnership in identical capacities. All persons named as Trustees
also serve in similar capacities for other funds advised by FMR. Unless
otherwise noted, the business address of each Trustee and officer is 82
Devonshire Street, Boston, Massachusetts 02109, which is also the address
of FMR. Those Trustees who are "interested persons" (as defined in the
Investment Company Act of 1940) by virtue of their affiliation with either
the Trusts or FMR, are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief Executive
Officer and a Director of FMR Corp.; a Director and Chairman of the Board
and of the Executive Committee of FMR; Chairman and a Director of FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of FMR;
and President and a Director of FMR Texas Inc. (1989), Fidelity Management
& Research (U.K.) Inc. and Fidelity Management & Research (Far East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is a
consultant to Western Mining Corporation (1994). Prior to February 1994, he
was President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Until March 1990, Mr. Cox was President and Chief
Operating Officer of Union Pacific Resources Company (exploration and
production). He is a Director of Sanifill Corporation (non-hazardous waste,
1993) and CH2M Hill Companies (engineering). In addition, he served on the
Board of Directors of the Norton Company (manufacturer of industrial
devices, 1983-1990) and continues to serve on the Board of Directors of the
Texas State Chamber of Commerce, and is a member of advisory boards of
Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, P.O. Box 264, Bridgehampton, NY, Trustee (1992). Prior
to her retirement in September 1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990),
and previously served as a Director of Hallmark Cards, Inc. (1985-1991) and
Nabisco Brands, Inc. In addition, she is a member of the President's
Advisory Council of The University of Vermont School of Business
Administration.
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee (1990).
Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive
Officer of LTV Steel Company. Prior to May 1990, he was Director of
National City Corporation (a bank holding company) and National City Bank
of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation, Hyster-Yale Materials Handling, Inc. (1989), and RPM,
Inc. (manufacturer of chemical products, 1990). In addition, he serves as a
Trustee of First Union Real Estate Investment, a Trustee and member of the
Executive Committee of the Cleveland Clinic Foundation, a Trustee and
member of the Executive Committee of University School (Cleveland), and a
Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the Financial
Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance), and Valuation Research Corp. (appraisals and
valuations, 1993). In addition, he serves as Vice Chairman of the Board of
Directors of the National Arts Stabilization Fund and Vice Chairman of the
Board of Trustees of the Greenwich Hospital Association.
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior to
his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction). In addition, he serves as a Trustee of
Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield
(1989) and Society for the Preservation of New England Antiquities, and as
an Overseer of the Museum of Fine Arts of Boston (1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989), is
Chairman of G.M. Management Group (strategic advisory services). Prior to
his retirement in July 1988, he was Chairman and Chief Executive Officer of
Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), Commercial Intertech Corp. (water treatment equipment, 1992), and
Associated Estates Realty Corporation (a real estate investment trust,
1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee. Prior
to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company. He
is a Director of Allegheny Power Systems, Inc. (electric utility), General
Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer). In
addition, he serves as a Trustee of Corporate Property Investors, the EPS
Foundation at Trinity College, the Naples Philharmonic Center for the Arts,
and Rensselaer Polytechnic Institute, and he is a member of the Advisory
Boards of Butler Capital Corporation Funds and Warburg, Pincus Partnership
Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (1993) and is a member of the University of Alabama President's Cabinet
(1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee, is President of The Wales Group, Inc. (management and financial
advisory services). Prior to retiring in 1987, Mr. Williams served as
Chairman of the Board of First Wachovia Corporation (bank holding company),
and Chairman and Chief Executive Officer of The First National Bank of
Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software, 1988), Georgia Power Company (electric utility), Gerber
Alley & Associates, Inc. (computer software), National Life Insurance
Company of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and Senior
Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
JOHN H. COSTELLO, Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH, Assistant Treasurer (1994), is an employee of FMR (1994).
Prior to becoming Assistant Treasurer of the Fidelity Funds, Mr. Rush was
Chief Compliance of Officer of FMR Corp. (1994); Chief Financial Officer of
Fidelity Brokerage Services, Inc. (1990-1993); and Vice President,
Assistant Controller, and Director of the Accounting Department - First
Boston Corp. (1986-1990).
ARTHUR S. LORING, Secretary, is Senior Vice President (1993) and General
Counsel of FMR, Vice President - Legal of FMR Corp., and Vice President and
Clerk of FDC.
THOMAS J. STEFFANCI, Vice President (1994), is Vice President of Fidelity's
fixed-income funds and Senior Vice President of FMR (1993). Prior to
joining FMR, Mr. Steffanci was Senior Managing Director of CMB Investment
Counselors (1984-1990).
CURTIS HOLLINGSWORTH, is Vice President of Fidelity Government Securities
Fund (1990) and of other funds advised by FMR and is an employee of FMR.
Mr. Hollingsworth is manager of Fidelity Short-Intermediate Government and
Government Securities, which he has managed since October 1991 and February
1990, respectively. He also manages Advisor Government Investment,
Institutional Short-Intermediate Government, Spartan Limited Maturity
Government Bond, Spartan Long-Term Government Bond, and Spartan
Short-Intermediate Government. Mr. Hollingsworth joined Fidelity in 1983.
Under a retirement program that became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
benefit retirement program under which they receive payments during their
lifetime from the funds based on their basic trustee fees and length of
service. Currently, Messrs. William R. Spaulding, Bertram H. Witham, and
David L. Yunich participate in the program.
As of September 30, 1994, the Trustees and officers of the funds owned, in
the aggregate, less than 1% of each fund's total outstanding shares. Also,
as of September 30, 1994, Cape Cod Bank and Trust Co., Trust Division,
Hyannis, MA and United Catalysts Inc., P.O. Box 32370, Louisville, KY owned
of record or beneficially approximately 7.6% and 5.1%, respectively, of the
total outstanding shares of Fidelity Short-Intermediate Government Fund.
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of each fund in accordance with its investment objective,
policies, and limitations. FMR also provides the funds with all necessary
office facilities and personnel for servicing the funds' investments, and
compensates all officers of the trusts, all Trustees who are "interested
persons" of the trusts or of FMR, and all personnel of the Trusts or FMR
performing services relating to research, statistical, and investment
activities. 
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of the funds. These services include providing facilities
for maintaining the funds' organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with the funds; preparing all general shareholder
communications and conducting shareholder relations; maintaining the funds'
records and the registration of the funds' shares under federal and state
law; developing management and shareholder services for the funds; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Board of Trustees.
In addition to the management fee payable to FMR and the fees payable to
FSC, the funds pay all of their expenses, without limitation, that are not
assumed by those parties. The funds pay for typesetting, printing, and
mailing proxy material to shareholders, legal expenses, and the fees of the
custodian, auditor, and non-interested Trustees. Although each fund's
management contract provides that the funds will pay for typesetting,
printing and mailing prospectuses, statements of additional information,
notices, and reports to existing shareholders, Government Securities Fund
has entered into revised transfer agent agreement with FSC pursuant to
which FSC bears the cost of providing these services to existing
shareholders. Pursuant to Fidelity Charles Street Trust's transfer agent
agreement with FSC, FSC bears the cost of providing these services to
existing shareholders. Other expenses paid by the funds include interest,
taxes, brokerage commissions, the funds' proportionate share of insurance
premiums and Investment Company Institute dues, and the costs of
registering shares under federal and state securities laws. Each fund is
also liable for such nonrecurring expenses as may arise, including costs of
any litigation to which the fund may be a party and any obligation it may
have to indemnify the trusts' officers and Trustees with respect to
litigation.
FMR is Short-Intermediate Government Fund's manager pursuant to a
management contract dated October 1, 1994 that was approved by shareholders
on September 21, 1994. FMR is Government Securities Fund's manager pursuant
to a management contract dated December 31, 1991 that was approved by
Fidelity Government Securities Fund (a limited partnership) on December 31,
1991, as the then sole shareholder of the fund pursuant to an Agreement and
Plan of Reorganization approved by public shareholders of the limited
partnership on November 13, 1991. (The terms of the fund's current contract
with FMR duplicate those of its previous contract.) For the services of FMR
under the contract, each fund pays FMR a monthly management fee composed of
the sum of two elements: a group fee rate and an individual fund fee rate.
The group fee rate is based on the monthly average net assets of all of the
registered investment companies with which FMR has management contracts and
is calculated on a cumulative basis pursuant to the graduated fee rate
schedule shown on page 19 on the left. On the right, the effective fee rate
schedule, shows the results of cumulatively applying the annualized rates
at varying asset levels. For example, the effective annual fee rate at $272
billion of group net assets - their approximate level for September 1994 -
was .1563%, which is the weighted average of the respective fee rates for
each level of group net assets up to $272 billion.
 GROUP FEE RATE SCHEDULE     EFFECTIVE ANNUAL FEE RATES   
 
  Average Group   Annualized   Group Net        Effective Annual    
 Assets            Rate         Assets          Fee Rate            
 
$ 0 - 3 billion   .3700%        $ 0.5 billion   .3700%              
 
3 -  6            .3400         25              .2664               
 
6 -  9            .3100         50              .2188               
 
9 - 12            .2800         75              .1986               
 
12 - 15           .2500         100             .1869               
 
15 - 18           .2200         125             .1793               
 
18 - 21           .2000         150             .1736               
 
21 - 24           .1900         175             .1695               
 
24 - 30           .1800         200             .1658               
 
30 - 36           .1750         225             .1629               
 
36 - 42           .1700         250             .1604               
 
42 - 48           .1650         275             .1583               
 
48 - 66           .1600         300             .1565               
 
66 - 84           .1550         325             .1548               
 
84 - 120          .1500         350             .1533               
 
120 - 174         .1450         400             .1507               
 
174 - 228         .1400                                             
 
228 - 282         .1375                                             
 
282 - 336         .1350                                             
 
       Over 336   .1325                                             
 
Prior to August 1, 1994, Short-Intermediate Government Fund's group fee
rate was based on a schedule with breakpoints ending at .1400% for average
group assets in excess of $174 billion. The group fee rate breakpoints
shown above for average group assets in excess of $120 billion and under
$228 billion were voluntarily adopted by FMR on January 1, 1992. The
additional breakpoints shown above for average group assets in excess of
$228 billion were voluntarily adopted by FMR on November 1, 1993. The
fund's current management contract reflects these extensions of the group
fee rate schedule.
Under Government Securities Fund's current management contract with FMR,
the group fee rate is based on a schedule with breakpoints ending at .1500%
for average group assets in excess of $84 billion. The group fee rate
breakpoints shown above for average group assets in excess of $120 billion
and under $228 billion were voluntarily adopted by FMR on January 1, 1992.
The additional breakpoints shown above for average group assets in excess
of $228 billion were voluntarily adopted by FMR on November 1, 1993.
On August 1, 1994, FMR voluntarily revised the prior extensions to the
group fee rate schedule, and added new breakpoints, pending shareholder
approval of new management contracts reflecting the revised schedule. The
revised group fee rate schedule is identical to the above schedule for
average group assets under $156 billion. For average group assets in excess
of $156 billion, the group fee rate schedule voluntarily adopted by FMR is
as follows:
 GROUP FEE RATE SCHEDULE     EFFECTIVE ANNUAL FEE RATES   
 
  Average Group      Annualized   Group Net      Effective Annual    
 Assets               Rate         Assets        Fee Rate            
 
120 - $156 billion   .1450%       $150 billion   .1736%              
 
156 -  192           .1400         175           .1690               
 
192 - 228            .1350         200           .1652               
 
228 - 264            .1300         225           .1618               
 
 264 - 300           .1275         250           .1587               
 
 300 - 336           .1250         275           .1560               
 
 336 - 372           .1225         300           .1536               
 
  Over 372           .1200         325           .1514               
 
             350    .1494   
 
             375    .1476   
 
             400    .1459   
 
The individual fund fee rate for each fund is .30%. Based on the average
net assets of funds advised by FMR for September 1994, the annual
management fee rate would be calculated as follows:
Group Fee Rate   Individual Fund Fee Rate   Management Fee Rate   
 
.1563%    +   .30%   =   .4563%    
 
One-twelfth (1/12) of this annual management fee rate is then applied to
the fund's average net assets for the current month, giving a dollar amount
which is the fee for that month.
SHORT-INTERMEDIATE GOVERNMENT FUND. During the fiscal years ended 1994,
1993, and 1992, FMR received $676,355, $783,194, and $250,118,
respectively, for its services as investment advisor to the fund. These
fees are equivalent to .46%, .47%, and .47% of the fund's average net
assets for those years. The fees for the years ended September 30, 1993,
and 1992 reflect FMR's voluntarily implementation of the group fee
management rate structure as previously described. If voluntarily
implementation had not been in effect, the fund's management fees for those
years would have been higher.
FMR may, from time to time, voluntarily reimburse all or a portion of the
fund's operating expenses (excluding interest, taxes, brokerage
commissions, and extraordinary expenses). The following table outlines
expense limitations (as a percentage of the fund's average net assets) in
effect from commencement of operations to June 30, 1993. The table also
shows the amount of management fees reimbursed by FMR for each fiscal year.
From   To   Expense Limitation   
 
June 1, 1993         June 30, 1993        .70%   
 
May 1, 1993          May 31, 1993         .65%   
 
February 1, 1993     April 30, 1993       .60%   
 
January 1, 1993      January 31, 1993     .50%   
 
September 1, 1992    December 31, 1992    .40%   
 
August 1, 1992       August 31, 1992      .25%   
 
May 1, 1992          July 31, 1992         0%    
 
April 1, 1992        April 30, 1992       .85%   
 
March 9, 1992        March 31, 1992       .65%   
 
January 15, 1992     March 8, 1992         0%    
 
September 13, 1991   January 14, 1992     .65%   
 
Fiscal Periods ended   Amount of       
 
September 30,          Reimbursement   
 
1994   $ 0        
 
1993    486,551   
 
1992    538,256   
 
GOVERNMENT SECURITIES FUND. During the fiscal periods ended September 30,
1994, 1993, and 1992, FMR received $3,257,871, $2,881,668, and $1,854,733,
respectively for its services as investment adviser to the fund. These fees
are equivalent to .46%, .47%, and .47%(annualized), of the fund's average
net assets for those periods. The fees for the periods ended September 30,
1994, 1993, and 1992 reflect FMR's voluntary implementation of the group
fee management rate schedule structure as previously described. If
voluntary implementation had not been in effect, the fund's management fee
those periods would have been higher.
To comply with the California Code of Regulations, FMR will reimburse each
fund if and to the extent that the fund's aggregate annual operating
expenses exceed specified percentages of their average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating a fund's expenses for purposes of this regulation, the
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its distribution plan expenses.
DISTRIBUTION AND SERVICE PLANS
Each fund has adopted a distribution and service plan (the plans) under
Rule 12b-1 of the Investment Company Act of 1940 (the Rule). The Rule
provides in substance that a mutual fund may not engage directly or
indirectly in financing any activity that is primarily intended to result
in the sale of shares of the fund except pursuant to a plan adopted by the
fund under the Rule. Each fund's Boards of Trustees has adopted a plan to
allow each fund and FMR to incur certain expenses that might be considered
to constitute indirect payment by the fund of distribution expenses. Under
the plan, if the payment of management fees by the fund to FMR is should be
deemed to be indirect financing by the fund of the distribution of its
shares, such payment is authorized by the plan.
Each plan specifically recognizes that FMR, either directly or through FDC,
may use its management fee revenues, past profits, or other resources,
without limitation, to pay promotional and administrative expenses in
connection with the offer and sale of shares of a fund. In addition, each
plan provides that FMR may use its resources, including its management fee
revenues, to make payments to third parties that provide assistance in
selling shares of a fund, or to third parties, including banks, that render
shareholder support services. Payments made by FMR to third parties during
the fiscal year ended September 30, 1994 amounted to $38,157
(Short-Intermediate Government Fund), and $183,303 (Government Securities
Fund).
Each fund's plan has been approved by the Trustees. As required by the
Rule, the Trustees carefully considered all pertinent factors relating to
the implementation of each plan prior to its approval, and have determined
that there is a reasonable likelihood that the plan will benefit the fund
and its shareholders. In particular, the Trustees noted that each plan does
not authorize payments by the fund other than those made to FMR under its
management contract with the fund. To the extent that each plan give FMR
and FDC greater flexibility in connection with the distribution of shares
of the fund, additional sales of the fund's shares may result.
Additionally, certain shareholder support services may be provided more
effectively under each plan by local entities with whom shareholders have
other relationships. 
Short-Intermediate Government Fund's Plan was approved by shareholders on
September 16, 1992. Government Securities Fund's Plan was approved by
Fidelity Government Securities Fund (a limited partnership) on December 31,
1991, as the then sole shareholder of the fund pursuant to an Agreement and
Plan of Reorganization approved by public shareholders of the limited
partnership on November 13, 1991.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services, or
servicing and recordkeeping functions. FDC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the funds
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. 
Each fund may execute portfolio transactions with and purchase securities
issued by depository institutions that receive payments under the plan. No
preference for the instruments of such depository institutions will be
shown in the selection of investments. In addition, state securities laws
on this issue may differ from the interpretations of federal law expressed
herein, and banks and other financial institutions may be required to
register as dealers pursuant to state law.
CONTRACTS WITH COMPANIES AFFILIATED WITH FMR
FSC is transfer, dividend disbursing, and shareholders' servicing agent for
the funds. Under the trusts' contracts with FSC, each fund pays an annual
fee of $26.03 per basic retail account with a balance of $5,000 or more;
$15.31 per basic retail account with a balance of less than $5,000; and a
supplemental activity charge of $2.25 for standing order transactions and
$6.11 for other monetary transactions. These fees and charges are subject
to annual cost escalation based on postal rate changes and changes in wage
and price levels as measured by the National Consumer Price Index for Urban
Areas. With respect to certain institutional client master accounts, the
funds pay FSC a per-account fee of $95 and monetary transaction charges of
$20 or $17.50, depending on the nature of services provided. With respect
to certain broker-dealer master accounts, the funds pay FSC a per-account
fee of $30 and a charge of $6 for monetary transactions. Fees for certain
institutional retirement plan accounts are based on the net assets of all
such accounts in each fund.
Under the contracts, FSC pays out-of-pocket expenses associated with
providing transfer agent services. In addition, FSC bears the expense of
typesetting, printing, and mailing prospectuses, statements of additional
information, and all other reports, notices and statements to shareholders,
with the exception of proxy statements.
The table below shows the transfer agent fees paid to FSC during each
fund's last three fiscal periods ended September 30.
TRANSFER AGENT FEES
                                 1994         1993         1992        
 
Short-Intermediate Government     $445,354     $417,815     $253,862   
 
Government Securities             1,275,823    1,030,455    591,606    
 
Each trust's contract with FSC also provides that FSC will perform the
calculations necessary to determine each fund's net asset value per share
and dividends, and maintain the funds' accounting records. The fee rates
for pricing and bookkeeping are based on each fund's average net assets,
specifically, .04% for the first $500 million of average net assets and
.02% for average net assets in excess of $500 million. The fee is limited
to a minimum of $45,000 and a maximum of $750,000 per year.
The table below shows the fees paid to FSC for pricing and bookkeeping
services, including related out-of-pocket expenses during each fund's last
three fiscal periods:
PRICING AND BOOKKEEPING FEES
                                 1994       1993        1992        
 
Short-Intermediate Government     $66,692     $80,316     $51,172   
 
Government Securities             240,654     230,028     158,679   
 
Each fund has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The distribution agreements call
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of each fund, which are continuously
offered at net asset value. Promotional and administrative expenses in
connection with the offer and sale of shares are paid by FMR.
DESCRIPTION OF THE TRUSTS
TRUSTS' ORGANIZATION. Fidelity Short-Intermediate Government Fund is a fund
of Fidelity Charles Street Trust, an open-end management investment
company, organized as a Massachusetts business trust on July 7, 1981.
Currently, there are seven funds of Fidelity Charles Street Trust: Fidelity
Short-Intermediate Government Fund, Fidelity Asset Manager, Fidelity U.S.
Government Reserves, Fidelity Asset Manager: Growth, Fidelity Asset
Manager: Income, Spartan Investment Grade Bond Fund, and Spartan Short-Term
Income Fund. Fidelity Government Securities Fund, an open-end management
investment company, is organized as a Massachusetts business trust as of
September 20, 1991. The fund was originally organized as a limited
partnership in the State of Nebraska on August 25, 1978. On December 31,
1991, the limited partnership transferred all of its assets to the
Massachusetts business trust. The Declarations of Trust permit the Trustees
to create additional funds.
In the event that FMR ceases to be the investment adviser to a trust or a
fund, the right of the trust or fund to use the identifying name "Fidelity"
may be withdrawn. There is a remote possibility that one fund might become
liable for any misstatement in its prospectus or statement of additional
information about another fund.
The assets of each trust received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general liabilities of their respective trusts. Expenses with respect to
each trust are to be allocated in proportion to the asset value of their
respective funds, except where allocations of direct expense can otherwise
be fairly made. The officers of each trust, subject to the general
supervision of the Boards of Trustees, have the power to determine which
expenses are allocable to a given fund, or which are general or allocable
to all of the funds of a certain trust. In the event of the dissolution or
liquidation of a trust, shareholders of each fund of that trust are
entitled to receive as a class the underlying assets of such fund available
for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. Each trust is an entity of the type
commonly known as "Massachusetts business trust." Under Massachusetts law,
shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. Each Declaration of
Trust provides that the trust shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed by the
trust or its Trustees shall include a provision limiting the obligations
created thereby to the trust and its assets. Each Declaration of Trust
provides for indemnification out of each fund's property of any shareholder
held personally liable for the obligations of the fund. Each Declaration of
Trust also provides that its funds shall, upon request, assume the defense
of any claim made against any shareholder for any act or obligation of the
fund and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the fund itself would be unable to meet its
obligations. FMR believes that, in view of the above, the risk of personal
liability to shareholders is remote.
Each Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declarations of Trust protects Trustees
against any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of their office.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder of Short-Intermediate Government Fund, you
receive one vote for each dollar value of net asset value you own. The
shares have no preemptive or conversion rights; the voting and dividend
rights, the right of redemption, and the privilege of exchange are
described in the Prospectus. Shares are fully paid and nonassessable,
except as set forth under the heading "Shareholder and Trustee Liability"
above. Shareholders representing 10% or more of a trust or fund may, as set
forth in the Declarations of Trust, call meetings of a trust or fund for
any purpose related to the trust or fund, as the case may be, including, in
the case of a meeting of an entire trust, the purpose of voting on removal
of one or more Trustees. Each trust or fund may be terminated upon the sale
of its assets to another open-end management investment company, or upon
liquidation and distribution of its assets, if approved by vote of the
holders of a majority of the outstanding shares of the fund for Government
Securities Fund or a majority of the trust or fund, as determined by the
current value of each shareholder's investment in the fund or trust, for
Short-Intermediate Government Fund. If not so terminated, each Trust or
fund will continue indefinitely. Each fund of Fidelity Charles Street Trust
may invest all of its assets in another investment company.
CUSTODIAN. The Bank of New York, 110 Washington Street, New York, New York
10286 is custodian of each fund's assets. The custodian is responsible for
the safekeeping of each fund's assets and the appointment of subcustodian
banks and clearing agencies. The custodian takes no part in determining the
investment policies of the funds or in deciding which securities are
purchased or sold by a fund. Each fund may, however, invest in obligations
of the custodian and may purchase securities from or sell securities to the
custodian.
FMR, its officers and directors, its affiliated companies, and the trusts'
Trustees may from time to time have transactions with various banks,
including banks serving as custodians for certain of the funds advised by
FMR. Transactions that have occurred to date include mortgages and personal
and general business loans. In the judgment of FMR, the terms and
conditions of those transactions were not influenced by existing or
potential custodial or other fund relationships.
SHORT-INTERMEDIATE GOVERNMENT FUND'S AUDITOR. Price Waterhouse LLP, 160
Federal Street, Boston, Massachusetts serves as Fidelity Charles Street
Trust's independent accountant. The auditor examines financial statements
for the fund and provides other audit, tax, and related services.
GOVERNMENT SECURITIES FUND'S AUDITOR. Coopers & Lybrand L.L.P., One Post
Office Square, Boston, Massachusetts serves as the Fund's independent
accountant. The auditor examines financial statements for the fund and
provides other audit, tax, and related services.
FINANCIAL STATEMENTS
The funds' financial statements and financial highlights for fiscal year
ended September 30, 1994 are included in each fund's Annual Report, which
are separate reports supplied with this Statement of Additional
Information. Each fund's financial statements and financial highlights are
incorporated herein by reference.
APPENDIX
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value of
each investment by the number of days remaining to its maturity, adding
these calculations, and then dividing the total by the value of the fund's
portfolio. An obligation's maturity is typically determined on a stated
final maturity basis, although there are some exceptions to this rule.
For example, if it is probable that the issuer of an instrument will take
advantage of a maturity-shortening device, such as a call, refunding, or
redemption provision, the date on which the instrument will probably be
called, refunded, or redeemed may be considered to be its maturity date.
Also, the maturities of mortgage-backed securities and some asset-backed
securities, such as collateralized mortgage obligations, are determined on
a weighted average life basis, which is the average time for principal to
be repaid. For a mortgage security, this average time is calculated based
on estimates of the date principal will be paid in advance of its stated
maturity. The weighted average life of these securities is likely to be
substantially shorter than their stated final maturity.



© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission