FIDELITY FIXED INCOME TRUST, 485BPOS, 1994-06-17

FIDELITY FIXED INCOME TRUST
485BPOS, 1994-06-17

Previous: FARAH INC, 10-Q, 1994-06-17

Next: FIRST TENNESSEE NATIONAL CORP, 424B2, 1994-06-17

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (NO. 2-41839)
UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 71 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [X]
Amendment No. ______ [ ]
Fidelity Fixed-Income Trust__________________________________________
(Exact Name of Registrant as Specified in Charter)
82 Devonshire Street, Boston, MA
02109_______________________________________
(Address Of Principal Executive Offices)
Registrant's Telephone Number (617)
570-7000_________________________________
Arthur S. Loring, Secretary
82 Devonshire Street
Boston, MA 02109__________________________________________________________
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) Immediately upon filing pursuant to paragraph (b)
(x) On June 21, 1994 pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)
( ) On ( ) pursuant to paragraph (a) of Rule 485
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and intends to file the notice required by
such Rule on or before June 30, 1994.
FIDELITY FIXED-INCOME TRUST:
FIDELITY SHORT-TERM BOND PORTFOLIO
FIDELITY INVESTMENT GRADE BOND FUND
CROSS REFERENCE SHEET
FORM N-1A

ITEM NUMBER PROSPECTUS SECTION

<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page

2 a .............................. Expenses

b, c .............................. Contents; The Funds at a Glance;
Who May Want to Invest

3 a, b .............................. *

c .............................. Performance

4 a i............................. Charter

ii........................... The Funds at a Glance; Investment
Principles and Risks

b .............................. Investment Principles and Risks

c .............................. Who May Want to Invest; Investment
Principles and Risks

5 a .............................. Charter

b i............................. Doing Business with Fidelity;
Charter

ii........................... Charter; Breakdown of Expenses

iii.......................... Expenses; Breakdown of Expenses

c, d .............................. Charter; Breakdown of Expenses;
Cover Page; FMR and Its Affiliates

e .............................. FMR and its Affiliates

f .............................. Expenses

g i............................. FMR and its Affiliates
.

ii............................ *
..

5 A .............................. Performance

6 a i............................. Charter

ii........................... How to Buy Shares; How to Sell
Shares; Transaction Details;
Exchange Restrictions

iii.......................... *

b ............................. *

c .............................. Exchange Restrictions

d .............................. *

e .............................. Doing Business with Fidelity; How
to Buy Shares; How to Sell Shares;
Investor Services

f, g .............................. Dividends, Capital Gains, and Taxes

7 a .............................. Charter; Cover Page

b .............................. How to Buy Shares; Transaction
Details

c .............................. *

d .............................. How to Buy Shares

e .............................. *

f .............................. Breakdown of Expenses

8 .............................. How to Sell Shares; Investor
Services; Transaction Details;
Exchange Restrictions

9 .............................. *

</TABLE>

Not applicable
FIDELITY FIXED-INCOME TRUST
FIDELITY SHORT-TERM BOND PORTFOLIO
FIDELITY INVESTMENT GRADE BOND FUND
CROSS REFERENCE SHEET
(CONTINUED)
FORM N-1A

ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION

<TABLE>
<CAPTION>
<S> <C> <C> <C>
10, 11 ............................ Cover Page

12 ............................ *

13 a - c ............................ Investment Policies and Limitations

d ............................ *

14 a - c ............................ Trustees and Officers

15 a, b ............................ *

c ............................ Trustees and Officers

16 a i ............................ FMR

ii ............................ Trustees and Officers

iii ............................ Management Contracts

b ............................ Management Contracts

c, d ............................ Contracts with Companies Affiliated
with FMR

e ............................ *

f ............................ Distribution and Service Plans

g ............................ *

h ............................ Description of the Trust

i ............................ Contracts with Companies Affiliated
with FMR

17 a ............................ Portfolio Transactions

b ............................ *

c ............................ Portfolio Transactions

d, e ............................ *

18 a ............................ Description of the Trust

b ............................ *

19 a ............................ Additional Purchase and Redemption
Information

b ............................ Additional Purchase and Redemption
Information; Valuation of Portfolio
Securities

c ............................ *

20 ............................ Distributions and Taxes

21 a, b ............................ Contracts with Companies Affiliated
with FMR

c ............................ *

22 ............................ Performance

23 ............................ Financial Statements

</TABLE>

* Not Applicable
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
A Statement of Additional Information dated June 21, 1994 has been filed
with the Securities and Exchange Commission, and is incorporated herein by
reference (is legally considered a part of this prospectus). The Statement
of Additional Information is available free upon request by calling
Fidelity at 1-800-544-8888.
Mutual fund shares are not deposits or obligations of, or guaranteed by,
any depository institution. Shares are not insured by the FDIC, the Federal
Reserve Board, or any other agency, and are subject to investment risk,
including the possible loss of principal.
These funds invest mainly in investment-grade corporate debt securities.
Short-Term Bond seeks high current income with preservation of capital.
Investment Grade Bond seeks high current income from investments with
longer maturities.
FIDELITY
SHORT-TERM BOND
PORTFOLIO
and
FIDELITY
INVESTMENT
GRADE BOND
FUND
PROSPECTUS
(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA 02109JUNE 21, 1994
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
BON-pro-694
CONTENTS

KEY FACTS THE FUNDS AT A GLANCE

WHO MAY WANT TO INVEST

EXPENSES Each fund's yearly
operating expenses.

FINANCIAL HIGHLIGHTS A summary
of each fund's financial data.

PERFORMANCE How each fund has
done over time.

THE FUNDS IN DETAIL CHARTER How each fund is
organized.

INVESTMENT PRINCIPLES AND RISKS
Each fund's overall approach to
investing.

BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.

YOUR ACCOUNT DOING BUSINESS WITH FIDELITY

TYPES OF ACCOUNTS Different
ways to set up your account,
including tax-sheltered retirement
plans.

HOW TO BUY SHARES Opening an
account and making additional
investments.

HOW TO SELL SHARES Taking money
out and closing your account.

INVESTOR SERVICES Services to
help you manage your account.

SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS, AND
ACCOUNT POLICIES TAXES

TRANSACTION DETAILS Share price
calculations and the timing of
purchases and redemptions.

EXCHANGE RESTRICTIONS

<r>KEY FACTS</r>

THE SPECTRUM OF
FIDELITY FUNDS
Broad categories of Fidelity
funds are presented here in
order of ascending risk.
Generally, investors seeking
to maximize return must
assume greater risk. The
funds in this prospectus are
in the INCOME category.
(bullet) MONEY MARKET Seeks
income and stability by
investing in high-quality,
short-term investments.
(arrow) INCOME Seeks income by
investing in bonds.
(bullet) GROWTH AND INCOME
Seeks long-term growth and
income by investing in stocks
and bonds.
(bullet) GROWTH Seeks long-term
growth by investing mainly in
stocks.
(checkmark)
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund.
Maximum sales charge on purchases and
reinvested distributions None
Deferred sales charge on redemptions None
Exchange fee None
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to FMR. It also incurs other expenses for
services such as maintaining shareholder records and furnishing shareholder
statements and financial reports. A fund's expenses are factored into its
share price or dividends and are not charged directly to shareholder
accounts (see page ).
The following are projections based on historical expenses, and, for
Investment Grade Bond, adjusted to reflect current fees,
and are calculated as a percentage of average net assets.
SHORT-TERM BOND
Management fee .46%
12b-1 fee None
Other expenses .34%
Total f und operating expenses .80%
INVESTMENT GRADE BOND
Management fee .4 6 %
12b-1 fee None
Other expenses .33%
Total f und operating expenses . 79 %
EXAMPLES: Let's say, hypothetically, that each fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses if you
close your account after the number of years indicated:
SHORT-TERM BOND
After 1 year $ 8
After 3 years $26
After 5 years $44
After 10 years $99
INVESTMENT GRADE BOND
After 1 year $ 8
After 3 years $2 5
After 5 years $ 44
After 10 years $9 8
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.

FINANCIAL HIGHLIGHTS
The tables that follow are included in each fund's Annual Report and
have been audited by Coopers & Lybrand , independent accountants.
Their reports on the financial statements and financial highlights are
included in the Annual Reports. The financial statements and financial
highlights are incorporated by reference into (are legally a part of) The
funds' Statement of Additional Information .
SHORT-TERM BOND

<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C>
1.Selected Per-Share

Data and Ratios

2.Years ended
1987 A 1988 1989 1990 1991 1992 1993 1994
April 30

3.Net asset
$ 10.000 $ 9.670 $ 9.470 $ 9.180 $ 9.170 $ 9.180 $ 9.430 $ 9.510
value,
beginning of
period

4.Income from
.481 .840 .809 .778 .792 .810 .744 .6 41
Investment
Operations
Net
investment
income

5. Net realized
(.330) (.200) (.290) (.010) .040 .251 .063 (.44 5 )
and
unrealized gain
(loss)
on investments

6.Total from
.151 .640 .519 .768 .832 1.061 .807 .196
investment
operations

7.Less
(.481) (.840) (.809) (.778) (.822) (.811) (.727) (. 592 )
Distributions
From net
investment
income

8. In excess of
-- -- -- -- -- -- -- (.034)
net
investment
income

9.Total
(.481) (.840) (.809) (.778) (.822) (.811) (.727) (.626)
Distributions

10.Net asset
$ 9.670 $ 9.470 $ 9.180 $ 9.170 $ 9.180 $ 9.430 $ 9.510 $ 9.080
value,
end of period

11.Total
1.49% 6.91% 5.74% 8.58% 9.49% 12.00% 8.85% 1.99 %
return B,C

12.Net assets,
$ 137 $ 382 $ 237 $ 197 $ 235 $ 984 $ 1,990 $ 1,962
end of
period (i n
millions)

13.Ratio of
.90% .88% .89% .83% .83% .86% .77% .80%
expenses to
average net
assets

14.Ratio of
1.14% .89% .89% .83% .83% .86% .77% .80%
expenses to
average net
assets before
expense
reductions

15.Ratio of net
8.40% 8.77% 8.77% 8.28% 8.65% 8.23% 7.68% 6.70%
investment
income to
average net
assets

16.Portfolio
149% 251% 171% 148% 164% 87% 63% 73%
turnover rate

</TABLE>

A FROM SEPTEMBER 15, 1986 (COMMENCEMENT OF OPERATIONS)
B RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
INVESTMENT GRADE BOND

<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
17.Selected Per-Share
Data and Ratios

18.Years ended
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
April 30

19.Net asset
$ 6.34 $ 6.60 $ 7.46 $ 7.00 $ 6.77 $ 6.67 $ 6.56 $ 6.83 $ 7.07 $ 7.57
value,
0 0 0 0 0 0 0 0 0 0
beginning of
period

20.Income from
.789 .741 .674 .609 .595 .597 .592 .591 .570 .522
Investment
Operations
Net
investment
income

21. Net
.260 .860 (.460) (.230) (.095) (.110) .277 .244 .499 (.2 54 )
realized and
unrealized gain
(loss)
on investments

22.Total from
1.049 1.601 .214 .379 .500 .487 .869 .835 1.069 .268
investment
operations

23.Less
(.7 89 )(.7 41 )(. 674 )(.6 09 )(. 600 )(. 597) ( . 59 9 )(.59 5 )(.5 69 )(. 52
)
Distributions
From net
investment
income

24. In excess
-- -- -- -- -- -- -- -- -- ( . 013)
of net
investment
income

25.Total
(.789) (.741) (.674) (.609) (.600) (.597) (.599) (.595) (.569) (.538)
Distributions

26.Net asset
$ 6.60 $ 7.46 $ 7.00 $ 6.77 $ 6.67 $ 6.56 $ 6.83 $ 7.07 $ 7.57 $ 7.30
value,
0 0 0 0 0 0 0 0 0 0
end of period

27.Total return
17.66 25.59 2.86% 5.75% 7.74% 7.31% 13.82 12.63 15.63 3.35%

% % % % %

28.Net assets,
$ 166 $ 250 $ 384 $ 316 $ 334 $ 3 60 $ 455 $ 943 $ 1,01 $ 943
end of 8
period ( i n
millions)

29.Ratio of
.79% .67% .69% .76% .66% .70% .67% .70% .68% .74%
expenses to
average net
assets

30.Ratio of net
12.22 10.53 9.17% 8.95% 8.91% 8.76% 8.84% 8.29% 7.74% 6.94%
investment
% %
income to
average net
assets

31.Portfolio
164% 243% 127% 118% 128% 103% 101% 77% 74% 61%
turnover rate

</TABLE>

PERFORMANCE
Bond fund performance can be measured as TOTAL RETURN or YIELD. The total
returns and yields that follow are based on historical fund results and do
not reflect the effect of taxes.
Each fund's fiscal year runs from May 1 through April 30. The tables below
show each fund's performance over past fiscal years compared to a measure
of inflation. The charts on page help you compare the yields of
these funds to those of their competitors.
SHORT-TERM BOND
Fiscal periods ended Past 1 Past 5 Life of
April 30 , 1994 year years FundA
Average annual
total return 1.99% 8.13% 7.17%
Cumulative
total return 1.99% 47.82% 69.60%
Consumer Price
Index 2.36% 19.74% 34.37%
INVESTMENT GRADE BOND
Fiscal periods ended Past 1 Past 5 Past 10
April 30 , 1994 year years years
Average annual
total return 3.35% 10.45% 11.03%
Cumulative
total return 3.35% 64.38% 184.67%
Consumer Price
Index 2.36% 19.74% 42.97%
A FROM SEPTEMBER 15, 1986

UNDERSTANDING
PERFORMANCE
Because these funds invest
in fixed-income securities,
their performance is related
to changes in interest rates.
Funds that hold short-term
bonds are usually less
affected by changes in
interest rates than long-term
bond funds. For that reason,
long-term bond funds typically
offer higher yield s and carry
more risk than short-term
bond funds.
(checkmark)
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. Yields are
calculated according to a standard that is required for all stock and bond
funds. Because this differs from other accounting methods, the quoted yield
may not equal the income actually paid to shareholders.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
THE COMPETITIVE FUNDS AVERAGES, which assume reinvestment of distributions,
are published by Lipper Analytical Services, Inc. Short-Term Bond compares
its performance to the Lipper Short Investment Grade Debt Funds Average and
Investment Grade Bond compares to the Lipper Corporate Bond Funds Average.
These averages currently reflect the performance of over 100 and 70
mutual funds with similar objectives, respectively.
SHORT-TERM BOND
30-day yields
Percentage (%)
Row: 1, Col: 1, Value: 7.859999999999999
Row: 1, Col: 2, Value: 5.95
Row: 2, Col: 1, Value: 7.22
Row: 2, Col: 2, Value: 6.01
Row: 3, Col: 1, Value: 7.149999999999999
Row: 3, Col: 2, Value: 5.92
Row: 4, Col: 1, Value: 7.81
Row: 4, Col: 2, Value: 5.76
Row: 5, Col: 1, Value: 6.95
Row: 5, Col: 2, Value: 5.56
Row: 6, Col: 1, Value: 6.69
Row: 6, Col: 2, Value: 5.470000000000001
Row: 7, Col: 1, Value: 6.5
Row: 7, Col: 2, Value: 5.06
Row: 8, Col: 1, Value: 6.430000000000001
Row: 8, Col: 2, Value: 4.99
Row: 9, Col: 1, Value: 6.27
Row: 9, Col: 2, Value: 4.859999999999999
Row: 10, Col: 1, Value: 6.609999999999999
Row: 10, Col: 2, Value: 5.05
Row: 11, Col: 1, Value: 6.8
Row: 11, Col: 2, Value: 5.13
Row: 12, Col: 1, Value: 6.87
Row: 12, Col: 2, Value: 5.22
Row: 13, Col: 1, Value: 6.8
Row: 13, Col: 2, Value: 5.22
Row: 14, Col: 1, Value: 6.28
Row: 14, Col: 2, Value: 4.819999999999999
Row: 15, Col: 1, Value: 5.95
Row: 15, Col: 2, Value: 4.609999999999999
Row: 16, Col: 1, Value: 5.9
Row: 16, Col: 2, Value: 4.53
Row: 17, Col: 1, Value: 5.71
Row: 17, Col: 2, Value: 4.54
Row: 18, Col: 1, Value: 5.649999999999999
Row: 18, Col: 2, Value: 4.5
Row: 19, Col: 1, Value: 5.6
Row: 19, Col: 2, Value: 4.41
Row: 20, Col: 1, Value: 5.430000000000001
Row: 20, Col: 2, Value: 4.4
Row: 21, Col: 1, Value: 5.45
Row: 21, Col: 2, Value: 4.33
Row: 22, Col: 1, Value: 4.9
Row: 22, Col: 2, Value: 4.25
Row: 23, Col: 1, Value: 4.78
Row: 23, Col: 2, Value: 4.39
Row: 24, Col: 1, Value: 5.149999999999999
Row: 24, Col: 2, Value: 4.359999999999999
Row: 25, Col: 1, Value: 4.98
Row: 25, Col: 2, Value: 4.22
Row: 26, Col: 1, Value: 5.17
Row: 26, Col: 2, Value: 4.38
Row: 27, Col: 1, Value: 5.85
Row: 27, Col: 2, Value: 4.78
Short-Term
Bond
Competitive
funds average
1992
1993
1994

INVESTMENT GRADE BOND
30-day yields
Percentage (%)
Row: 1, Col: 1, Value: 7.85
Row: 1, Col: 2, Value: 6.77
Row: 2, Col: 1, Value: 7.89
Row: 2, Col: 2, Value: 6.83
Row: 3, Col: 1, Value: 7.619999999999999
Row: 3, Col: 2, Value: 7.05
Row: 4, Col: 1, Value: 7.430000000000001
Row: 4, Col: 2, Value: 6.89
Row: 5, Col: 1, Value: 7.25
Row: 5, Col: 2, Value: 6.81
Row: 6, Col: 1, Value: 7.13
Row: 6, Col: 2, Value: 6.69
Row: 7, Col: 1, Value: 6.94
Row: 7, Col: 2, Value: 6.430000000000001
Row: 8, Col: 1, Value: 7.21
Row: 8, Col: 2, Value: 6.359999999999999
Row: 9, Col: 1, Value: 7.02
Row: 9, Col: 2, Value: 6.13
Row: 10, Col: 1, Value: 7.64
Row: 10, Col: 2, Value: 6.37
Row: 11, Col: 1, Value: 7.859999999999999
Row: 11, Col: 2, Value: 6.470000000000001
Row: 12, Col: 1, Value: 8.129999999999999
Row: 12, Col: 2, Value: 6.58
Row: 13, Col: 1, Value: 7.91
Row: 13, Col: 2, Value: 6.45
Row: 14, Col: 1, Value: 7.5
Row: 14, Col: 2, Value: 6.1
Row: 15, Col: 1, Value: 7.39
Row: 15, Col: 2, Value: 6.07
Row: 16, Col: 1, Value: 7.59
Row: 16, Col: 2, Value: 5.94
Row: 17, Col: 1, Value: 7.319999999999999
Row: 17, Col: 2, Value: 6.07
Row: 18, Col: 1, Value: 7.159999999999999
Row: 18, Col: 2, Value: 6.0
Row: 19, Col: 1, Value: 6.88
Row: 19, Col: 2, Value: 5.85
Row: 20, Col: 1, Value: 6.470000000000001
Row: 20, Col: 2, Value: 5.63
Row: 21, Col: 1, Value: 6.34
Row: 21, Col: 2, Value: 5.48
Row: 22, Col: 1, Value: 6.01
Row: 22, Col: 2, Value: 5.41
Row: 23, Col: 1, Value: 5.88
Row: 23, Col: 2, Value: 5.67
Row: 24, Col: 1, Value: 6.07
Row: 24, Col: 2, Value: 5.77
Row: 25, Col: 1, Value: 5.94
Row: 25, Col: 2, Value: 5.51
Row: 26, Col: 1, Value: 6.34
Row: 26, Col: 2, Value: 5.63
Row: 27, Col: 1, Value: 6.859999999999999
Row: 27, Col: 2, Value: 6.0
Investment
Grade Bond
Competitive
funds average
1992
1993
1994
THE CHARTS SHOW THE 30-DAY ANNUALIZED NET YIELDS FOR THE FUNDS AND
THEIR COMPETITIVE FUNDS AVERAGES AS OF THE LAST DAY OF EACH MONTH FROM
JANUARY 1992 THROUGH APRIL 1994.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
<r>THE FUNDS IN DETAIL</r>

INVESTORS SERVICE, INC. CORPORATION
Rating Average A Rating Averag
eA
INVESTMENT GRADE

Highest quality Aaa AAA

High quality Aa 47.3% AA 47.4%

Upper-medium grade A A

Medium grade Baa 24.6% BBB 24.7%
LOWER QUALITY

Moderately speculative Ba 8.3% BB 4.2%

Speculative B 0.4% B 0.4%

Highly speculative Caa 0% CCC 0%

Poor quality Ca 0% CC 0%

Lowest quality, no interest C C

In default, in arrears --- D 0%

80.6% 76.7%
A FOR SOME FOREIGN GOVERNMENT OBLIGATIONS, FMR ASSIGNS THE RATINGS OF
THE
SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT. THE DOLLAR-WEIGHTED AVERAGE

OF DEBT SECURITIES NOT RATED DIRECTLY OR INDIRECTLY BY MOODY'S OR
S&P
AMOUNTED TO 5.5%. THIS MAY INCLUDE SECURITIES RATED BY OTHER NATIONALLY

RECOGNIZED RATING SERVICES, AS WELL AS UNRATED SECURITIES. FMR HAS
DETERMINED THAT UNRATED SECURITIES THAT ARE LOWER QUALITY ACCOUNT FOR
4.5%
OF THE FUND'S TOTAL INVESTMENTS. REFER TO THE FUND'S STATEMENT OF
ADDITIONAL
INFORMATION FOR A MORE COMPLETE DISCUSSION OF THESE RATINGS.

Investment-grade debt securities are medium- and high-quality
securities. Some, however, may posses speculative characteristics and may
be more sensitive to economic changes and changes in the financial
condition of issuers.
Lower-quality debt securities (sometimes called "junk bonds") are often
considered to be speculative and involve greater risk of default or price
changes due to changes in the issuer's creditworthiness. The market prices
of these securities may fluctuate more than higher-quality securities and
may decline significantly in periods of general economic difficulty.
The table below provides a summary of ratings assigned to debt holdings
(not including money market instruments) in Investment Grade Bond's
portfolio. These figures are dollar-weighted averages of month-end
portfolio holdings during fiscal 1994, and are presented as a percentage of
total investments. These percentages are historical and do not necessarily
indicate a fund's current or future debt holdings.
RESTRICTIONS: Short-Term Bond does not currently intend to invest in
securities rated below Baa by Moody's or BBB by S&P, or in unrated
securities judged by FMR to be of equivalent quality. Investment Grade Bond
does not currently intend to invest more than 35% of its assets in
securities rated below Baa by Moody's or BBB by S&P, and unrated
securities judged by FMR to be of equivalent quality. The fund does not
currently intend to invest in securities rated below B by Moody's or
S&P.
U.S. GOVERNMENT SECURITIES are high-quality debt securities issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the
U.S. government. Not all U.S. government securities are backed by the full
faith and credit of the United States. For example, securities issued by
the Federal Farm Credit Bank or by the Federal National Mortgage
Association are supported by the instrumentality's right to borrow money
from the U.S. Treasury under certain circumstances. However, securities
issued by the Financing Corporation are supported only by the credit of the
entity that issued them.
FOREIGN SECURITIES and foreign currencies may involve additional risks.
These include currency fluctuations, risks relating to political or
economic conditions in the foreign country, and the potentially less
stringent investor protection and disclosure standards of foreign markets.
In addition to the political and economic factors that can affect foreign
securities, a governmental issuer may be unwilling to repay principal and
interest when due, and may require that the conditions for payment be
renegotiated. These factors could make foreign investments, especially
those in developing countries, more volatile.
ASSET-BACKED AND MORTGAGE SECURITIES may include pools of consumer loans or
mortgages, such as collateralized mortgage obligations and stripped
mortgage-backed securities. The value of these securities may be
significantly affected by changes in interest rates, the market's
perception of the issuers, and the creditworthiness of the parties
involved. These securities may also be subject to prepayment risk.
MONEY MARKET INSTRUMENTS are high quality instruments that present minimal
credit risk. They may include U.S. government obligations, commercial paper
and other short-term corporate obligations, and certificates of deposit,
bankers' acceptances, bank deposits, and other financial institution
obligations. These instruments may carry fixed or variable interest rates.
STRIPPED SECURITIES are the separate income or principal components of a
debt instrument. These involve risks that are similar to those of other
debt securities, although they may be more volatile.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, currency exchange rates, commodity prices, or other factors that
affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts,
entering into currency exchange contracts or swap agreements, and
purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with the
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of the fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
DIRECT DEBT. Loans and other direct debt instruments are interests in
amounts owed to another party by a company, government, or other borrower.
They have additional risks beyond conventional debt securities because they
may entail less legal protection for a fund, or there may be a requirement
that a fund supply additional cash to a borrower on demand.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect a fund's yield.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security at
one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of other securities, including illiquid securities, may be subject
to legal restrictions. Difficulty in selling securities may result in a
loss or may be costly to a fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more than
10% of its assets would be invested in illiquid securities.
OTHER INSTRUMENTS may include convertible securities and preferred stocks.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry.
RESTRICTIONS: With respect to 75% of total assets, a fund may not invest
more than 5% of its total assets in any one issuer. A fund may not invest
more than 25% of its total assets in any one industry. These limitations do
not apply to U.S. government securities.
BORROWING. A fund may borrow from banks or from other funds advised by FMR,
or through reverse repurchase agreements. If a fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: A fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
LENDING. Lending securities to broker-dealers and institutions, including
FBSI, an affiliate of FMR, is a means of earning income. This practice
could result in a loss or a delay in recovering a fund's securities. A fund
may also lend money to other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 33% of a fund's total
assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
SHORT-TERM BOND seeks to obtain a high level of current income, consistent
with preservation of capital, by investing primarily in a broad range of
fixed-income securities.
INVESTMENT GRADE BOND seeks to provide a high rate of income, consistent
with reasonable risk, by investing in a broad range of fixed-income
securities. In addition, the fund seeks to protect your capital. Where
appropriate, the fund will take advantage of opportunities to realize
capital appreciation.
EACH FUND, with respect to 75% of total assets, may not invest more than 5%
of its total assets in any one issuer. Each fund may not invest more than
25% of its total assets in any one industry. Each fund may borrow only for
temporary or emergency purposes, but not in an amount exceeding 33% of its
total assets. Loans, in the aggregate, may not exceed 33% of a fund's total
assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its share
price or dividends; they are neither billed directly to shareholders nor
deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn may pay fees to affiliates who provid e
assistance with these services. Each fund also pays OTHER EXPENSES, which
are explained on page .
FMR may, from time to time, agree to reimburse the funds for management
fees and other expenses above a specified limit. FMR retains the ability to
be repaid by a fund if expenses fall below the specified limit prior to the
end of the fiscal year. Reimbursement arrangements, which may be terminated
at any time without notice, can decrease a fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The fee is
calculated by adding a group fee rate to an individual fund fee rate, and
multiplying the result by the fund's average net assets.
The group fee rate is based on the average net assets of all the mutual
funds advised by FMR. This rate cannot rise above .37%, and it drops as
total assets under management increase.
For fiscal 1994, the group fee rate was .1671%. The individual fund
fee rate for each fund is .30%. The total management fee rate for fiscal
1994 was .46% for Short-Term Bond and .41% for Investment
Grade Bond.
FMR HAS SUB-ADVISORY AGREEMENTS with FMR U.K. and FMR Far East. These
sub-advisers provide FMR with investment research and advice on
issuers based outside the United States. Under the sub-advisory
agreements, FMR pays FMR U.K. and FMR Far East fees equal to 110% and 105%,
respectively, of the costs of providing these services.
OTHER EXPENSES
While the management fee is a significant component of the funds' annual
operating costs, the funds have other expenses as well.
The funds contract with FSC to perform many transaction and accounting
functions. These services include processing shareholder transactions,
valuing each fund's investments, and handling securities loans. In fiscal
1994, Short-Term Bond and Investment Grade Bond paid FSC fees equal to
. 29 % and . 27 %, respectively, of average net assets.
The funds also pay other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of trustees who are
not affiliated with Fidelity.
Each fund has adopted a Distribution and Service Plan. These plans
recognize that FMR may use its resources, including management fees, to pay
expenses associated with the sale of fund shares. This may include payments
to third parties, such as banks or broker-dealers, that provide shareholder
support services or engage in the sale of the fund's shares. It is
important to note, however, that the funds do not pay FMR any separate fees
for this service.
For fiscal 1994, the portfolio turnover rates for Short-Term Bond and
Investment Grade Bond were 7 3 % and 61%, respectively. These
rates vary from year to year.

UNDERSTANDING THE

MANAGEMENT FEE
The management fee FMR
receives is designed to be
responsive to changes in
FMR's total assets under
management. Building this
variable into the fee
calculation assures
shareholders that they will
pay a lower rate as FMR's
assets under management
increase.
(checkmark)
<r>YOUR ACCOUNT</r>

FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 2 0 0
(bullet) Assets in Fidelity mutual
funds: over $2 2 5 billion
(bullet) Number of shareholder
accounts: over 16 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(checkmark)
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal age
and under 70 with earned income to invest up to $2,000 per tax year.
Individuals can also invest in a spouse's IRA if the spouse has earned
income of less than $250.
(bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(bullet) KEOGH OR CORPORATE PROFIT SHARING AND MONEY PURCHASE PENSION PLANS
allow self-employed individuals or small business owners (and their
employees) to make tax-deductible contributions for themselves and any
eligible employees up to $30,000 per year.
(bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employed income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(bullet) 403(B) CUSTODIAL ACCOUNTS are available to employees of most
tax-exempt institutions, including schools, hospitals, and other charitable
organizations.
(bullet) 401(K) PROGRAMS allow employees of corporations of all sizes to
contribute a percentage of their wages on a tax-deferred basis. These
accounts need to be established by the trustee of the plan.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
EACH FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. Each fund's shares are sold without a sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated
at 4:00 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page . If there is no application accompanying this
prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Open your account by exchanging from another Fidelity fund.
IF YOU ARE INVESTING THROUGH A TAX-SHELTERED RETIREMENT PLAN, such as an
IRA, for the first time, you will need a special application. Retirement
investing also involves its own investment procedures. Call 1-800-544-8888
for more information and a retirement application.
If you buy shares by check or Fidelity Money Line(registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business days to
ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For Fidelity retirement accounts $500
TO ADD TO AN ACCOUNT $250
For Fidelity retirement accounts $250
Through automatic investment plans $100
MINIMUM BALANCE $1,000
For Fidelity retirement accounts $500
The minimum initial or subsequent investment may vary for a Fidelity
Payroll Deduction Program account in the funds. Refer to the program's
materials for details.

<TABLE>
<CAPTION>
<S> <C> <C>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT

Phone 1-800-544-777 (phone_graphic) (bullet) Exchange from another (bullet) Exchange from another
Fidelity fund account Fidelity fund account
with the same with the same
registration, including registration, including
name, address, and name, address, and
taxpayer ID number. taxpayer ID number.
(bullet) Use Fidelity Money
Line to transfer from
your bank account. Call
before your first use to
verify that this service
is in place on your
account. Maximum
Money Line: $50,000.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Mail (mail_graphic) (bullet) Complete and sign the (bullet) Make your check
application. Make your payable to the complete
check payable to the name of the fund.
complete name of the Indicate your fund
fund of your choice. account number on
Mail to the address your check and mail to
indicated on the the address printed on
application. your account statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
In Person (hand_graphic) (bullet) Bring your application (bullet) Bring your check to a
and check to a Fidelity Fidelity Investor Center.
Investor Center. Call Call 1-800-544-9797 for
1-800-544-9797 for the the center nearest you.
center nearest you.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Wire (wire_graphic) (bullet) Call 1-800-544-7777 to (bullet) Not available for
set up your account retirement accounts.
and to arrange a wire (bullet) Wire to:
transaction. Not Bankers Trust
available for retirement Company,
accounts. Bank Routing
(bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, Specify the complete
Bank Routing name of the fund and
#021001033, include your account
Account #00163053. number and your
Specify the complete name.
name of the fund and
include your new
account number and
your name.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Automatically (automatic_graphic) (bullet) Not available. (bullet) Use Fidelity Automatic
Account Builder. Sign
up for this service
when opening your
account, or call
1-800-544-6666 to add
it.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

</TABLE>

HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the methods
described on these two pages.
TO SELL SHARES IN A FIDELITY RETIREMENT ACCOUNT, your request must be made
in writing, except for exchanges to other Fidelity funds, which can be
requested by phone or in writing. Call 1-800-544-6666 for a retirement
distribution form.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $1,000
worth of shares in the account to keep it open ($500 for retirement
accounts).
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(bullet) The redemption proceeds are being transferred to a Fidelity
account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
CHECKWRITING
If you have a checkbook for your account, you may write an unlimited number
of checks. Do not, however, try to close out your account by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS

<TABLE>
<CAPTION>
<S> <C> <C>
Phone 1-800-544-777 (phone_graphic) All account types (bullet) Maximum check request:
except retirement $100,000.
(bullet) For Money Line transfers to
All account types your bank account; minimum:
$10; maximum: $100,000.
(bullet) You may exchange to other
Fidelity funds if both
accounts are registered with
the same name(s), address,
and taxpayer ID number.

Mail or in Person (mail_graphic)(hand_graphic) Individual, Joint (bullet) The letter of instruction must
Tenant, be signed by all persons
Sole Proprietorship required to sign for
, UGMA, UTMA transactions, exactly as their
Retirement account names appear on the
account.
(bullet) The account owner should
Trust complete a retirement
distribution form. Call
1-800-544-6666 to request
one.
Business or (bullet) The trustee must sign the
Organization letter indicating capacity as
trustee. If the trustee's name
is not in the account
registration, provide a copy of
the trust document certified
Executor, within the last 60 days.
Administrator, (bullet) At least one person
Conservator, authorized by corporate
Guardian resolution to act on the
account must sign the letter.
(bullet) Include a corporate
resolution with corporate seal
or a signature guarantee.
(bullet) Call 1-800-544-6666 for
instructions.

Wire (wire_graphic) All account types (bullet) You must sign up for the wire
except retirement feature before using it. To
verify that it is in place, call
1-800-544-6666. Minimum
wire: $5,000.
(bullet) Your wire redemption request
must be received by Fidelity
before 4 p.m. Eastern time
for money to be wired on the
next business day.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Check (check_graphic) All account types (bullet) Minimum check: $500.
except retirement (bullet) All account owners must sign
a signature card to receive a
checkbook.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

</TABLE>

INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365 days
a year. Whenever you call, you can speak with someone equipped to provide
the information or service you need.
24-HOUR SERVICE
ACCOUNT ASSISTANCE
1-800-544-6666
ACCOUNT BALANCES
1-800-544-7544
ACCOUNT TRANSACTIONS
1-800-544-7777
PRODUCT INFORMATION
1-800-544-8888
QUOTES
1-800-544-8544
RETIREMENT ACCOUNT
ASSISTANCE
1-800-544-4774
AUTOMATED SERVICE
(checkmark)
STATEMENTS AND REPORTS that Fidelity sends to you include the following:
(bullet) Confirmation statements (after every transaction, except
reinvestments, that affects your account balance or your account
registration)
(bullet) Account statements (quarterly)
(bullet) Financial reports (every six months)

To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in the fund. Call
1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing.
Note that exchanges out of a fund are limited to four per calendar year,
and that they may have tax consequences for you. For details on policies
and restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see page .
SYSTEMATIC WITHDRAWAL PLANS let you set up periodic redemptions from
your account.
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against
loss in a declining market, they can be an excellent way to invest for
retirement, a home, educational expenses, and other long-term financial
goals. Certain restrictions apply for retirement accounts. Call
1-800-544-6666 for more information.
REGULAR INVESTMENT PLANS

FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND

MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly or (bullet) For a new account, complete the
quarterly appropriate section on the fund
application.
(bullet) For existing accounts, call
1-800-544-6666 for an application.
(bullet) To change the amount or frequency of
your investment, call 1-800-544-6666 at
least three business days prior to your
next scheduled investment date.

<TABLE>
<CAPTION>
<S> <C> <C>
DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA

</TABLE>

MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Every pay (bullet) Check the appropriate box on the fund
period application, or call 1-800-544-6666 for an
authorization form.
(bullet) Changes require a new authorization
form.

<TABLE>
<CAPTION>
<S> <C> <C>
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, (bullet) To establish, call 1-800-544-6666 after
bimonthly, both accounts are opened.
quarterly, or (bullet) To change the amount or frequency of
annually your investment, call 1-800-544-6666.

</TABLE>

A BECAUSE THEIR SHARE PRICES FLUCTUATE, THESE FUNDS MAY NOT BE APPROPRIATE
CHOICES FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
<r>SHAREHOLDER AND ACCOUNT POLICIES</r>

DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income and
capital gains to shareholders each year. Income dividends are declared
daily and paid monthly. Capital gains are normally distributed in June and
December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. Each fund offers four
options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions will
be automatically reinvested in additional shares of the fund. If you do not
indicate a choice on your application, you will be assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested, but you will be sent a check for each dividend
distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions.
4. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and
capital gain distributions will be automatically invested in another
identically registered Fidelity fund.
FOR RETIREMENT ACCOUNTS, all distributions are automatically reinvested.
When you are over 59 years old, you can receive distributions in cash.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions will be reinvested at the NAV as of the
date the fund deducts the distribution from its NAV. The mailing of
distribution checks will begin within seven days.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
Each fund earns interest from
its investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund may
realize capital gains if it sells
securities for a higher price
than it paid for them. These
are passed along as CAPITAL
GAIN DISTRIBUTIONS.
(checkmark)
TAXES
As with any investment, you should consider how your investment in a fund
will be taxed. If your account is not a tax-deferred retirement account,
you should be aware of these tax implications.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax,
and may also be subject to state or local taxes. If you live outside the
United States, your distributions could also be taxed by the country in
which you reside. Your distributions are taxable when they are paid,
whether you take them in cash or reinvest them. However, distributions
declared in December and paid in January are taxable as if they were paid
on December 31.
For federal tax purposes, each fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions
are taxed as long-term capital gains. Every January, Fidelity will send you
and the IRS a statement showing the taxable distributions paid to you in
the previous year.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other
Fidelity funds - are subject to capital gains tax. A capital gain or loss
is the difference between the cost of your shares and the price you receive
when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a fund deducts a capital
gain distribution from its NAV, you will pay the full price for the shares
and then receive a portion of the price back in the form of a taxable
distribution.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, a fund may
have to limit its investment activity in some types of instruments.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates each fund's NAV as of the close of
business of the NYSE, normally 4 p.m. Eastern time.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
Each fund's assets are valued primarily on the basis of market quotations.
If quotations are not readily available, assets are valued by a method that
the Board of Trustees believes accurately reflects fair value. Foreign
securities are valued on the basis of quotations from the primary market in
which they are traded, and are translated from the local currency into U.S.
dollars using current exchange rates.
EACH FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they would
disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) Each fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees a fund or its transfer agent has
incurred.
(bullet) You begin to earn dividends as of the first business day
following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUNDS THROUGH A BROKER, who may charge
you a fee for this service. If you invest through a broker or other
institution, read its program materials for any additional service features
or fees that may apply.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
FDC may enter confirmed purchase orders on behalf of customers by phone,
with payment to follow no later than the time when a fund is priced on the
following business day. If payment is not received by that time, the
financial institution could be held liable for resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect a
fund, it may take up to seven days to pay you.
(bullet) Shares will earn dividends through the date of redemption;
however, shares redeemed on a Friday or prior to a holiday will continue to
earn dividends until the next business day.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) Each fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(bullet) Redemptions may be suspended or payment dates postponed when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.
(bullet) If you sell shares by writing a check and the amount of the check
is greater than the value of your account, your check will be returned to
you and you may be subject to additional charges.
IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to qualified
recipients who support the sale of shares of the funds without
reimbursement from the funds. Qualified recipients are securities dealers
who have sold fund shares or others, including banks and other financial
institutions, under special arrangements in connection with FDC's sales
activities. In some instances, these incentives may be offered only to
certain institutions whose representatives provide services in connection
with the sale or expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of a fund for
shares of other Fidelity funds. However, you should note the following:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Because excessive trading can hurt fund performance and
shareholders, each fund reserves the right to temporarily or permanently
terminate the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(bullet) The exchange limit may be modified for accounts in certain
institutional retirement plans to conform to plan exchange limits and
Department of Labor regulations. See your plan materials for further
information.
(bullet) Each fund reserves the right to refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to invest
the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
(bullet) Your exchanges may be restricted or refused if a fund receives or
anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.

This prospectus is printed on recycled paper using soy-based inks.
FIDELITY SHORT-TERM BOND PORTFOLIO
FIDELITY INVESTMENT GRADE BOND FUND
FUNDS OF FIDELITY FIXED-INCOME TRUST
STATEMENT OF ADDITIONAL INFORMATION
JUNE 21, 1994
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated June 21, 1994). Please retain this
document for future reference. Each fund's financial statements and
financial highlights, included in the Annual Report for the fiscal year
ended April 30, 1994 are incorporated herein by reference. To obtain
an additional copy 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 Transactio n s
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 Trust
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
Fidelity Management & Research (Far East) Inc. (FMR Far East)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
Fidelity Service Co. (FSC)

BON-ptB- 694
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 funds' investment policies and
limitations.
A 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-TERM BOND PORTFOLIO
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, (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
sale of restricted securities or the purchase of bonds in accordance with
the fund's investment objective, policies, and limitations, either directly
from the issuer, or from an underwriter for an issuer, may be deemed to be
underwriting;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or its agencies or instrumentalities) if,
as a result, more than 25% of the value of its total assets would be
invested in securities of companies having their principal business
activities 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
limitation does not apply to purchases of debt securities or to repurchase
agreements.
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 securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of 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 (a) 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 or (b) acquiring
loans, loan participations, or other forms of direct debt instruments
and, in connection therewith, assuming any associated unfunded commitments
of the sellers. (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 invest in oil, gas, or other
mineral exploration or development programs or leases.
For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT LIMITATIONS OF FIDELITY INVESTMENT GRADE BOND 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, (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);
(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
limitation does not apply to purchases of debt securities or to repurchase
agreements; or
(9) invest in companies for the purpose of exercising control or
management.
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 securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of 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 (a) 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 or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (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 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 .
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. The funds 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 funds 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, a fund could miss a
favorable price or yield opportunity, or could suffer a loss.
A 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.
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 the funds 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 restricted securities, government-stripped fixed-rate
mortgage-backed securities, loans and other direct debt instruments,
emerging market securities, and swap agreements to be illiquid. 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 was invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a fund may be obligated to pay all or part of the
registration expense and a considerable period may elapse between the time
it decides to seek registration and the time the fund may be permitted to
sell a security under an effective registration statement. If, during such
a period, adverse market conditions were to develop, the fund might obtain
a less favorable price than prevailed when it decided to seek registration
of the security.
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 on an agreed-upon date within a number of days from
the date of purchase. 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 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. Each fund may engage in repurchase agreements with respect to any
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 a fund's assets and may be
viewed as a form of leverage.
MORTGAGE-BACKED SECURITIES. The funds 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 the
funds may invest in them if FMR determines they are consistent with the
funds' 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 returns.
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.
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 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 (REFCORP) and the Financing Corporation (FICO) 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.
LOWER-RATED DEBT SECURITIES. (Investment Grade Bond only) While the market
for high-yield corporate debt securities has been in existence for many
years and has weathered previous economic downturns, the 1980s brought a
dramatic increase in the use of such securities to fund highly leveraged
corporate acquisitions and restructurings. Past experience may not provide
an accurate indication of the future performance of the high-yield bond
market, especially during periods of economic recession. In fact, from 1989
to 1991, the percentage of lower-rated debt securities that defaulted rose
significantly above prior levels, although the default rate decreased in
1992.
The market for lower-rated debt securities may be thinner and less active
than that for higher-rated debt securities, which can adversely affect the
prices at which the former are sold. If market quotations are not
available, lower-rated debt securities will be valued in accordance with
procedures established by the Board of Trustees, including the use of
outside pricing services. Judgment plays a greater role in valuing
high-yield corporate debt securities than is the case for securities for
which more external sources for quotations and last-sale information are
available. Adverse publicity and changing investor perceptions may affect
the ability of outside pricing services to value lower-rated debt
securities and the fund's ability to dispose of these securities.
Since the risk of default is higher for lower-rated debt securities, FMR's
research and credit analysis are an especially important part of managing
securities of this type held by the fund. In considering investments for
the fund, FMR will attempt to identify those issuers of high-yielding debt
securities whose financial condition is adequate to meet future
obligations, has improved, or is expected to improve in the future. FMR's
analysis focuses on relative values based on such factors as interest or
dividend coverage, asset coverage, earnings prospects, and the experience
and managerial strength of the issuer.
The fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security holder
to seek to protect the interests of security holders if it determines this
to be in the best interest of the fund's shareholders.
SECURITIES LENDING. Each fund 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 a fund 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 the
funds may engage in loan transactions only under the following conditions:
(1) a 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, a fund must be able to terminate
the loan at any time; (4) a 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) a 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).
INTERFUND BORROWING PROGRAM. Each fund has received permission from the
SEC to lend money to and borrow money from other funds advised by FMR or
its affiliates. Interfund loans and borrowing normally will extend
overnight, but can have a maximum duration of seven days. Loans may be
called on one day's notice. A fund will lend through the program only when
the returns are higher than those available at the same time from other
short-term instruments (such as repurchase agreements), and will borrow
through the program only when the costs are equal to or lower than the cost
of bank loans. A fund may have to borrow from a bank at a higher interest
rate if an interfund loan is called or not renewed. Any delay in repayment
to a lending fund could result in a lost investment opportunity or
additional borrowing cost.
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 (in the U.S. or abroad), foreign currency values,
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 a fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease the fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and 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, currency, or other factors that
determine the amounts of payments due to and from a fund. If a swap
agreement calls for payments by a 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. The funds expect to be able to eliminate
their 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, currencies,
precious metals or other commodities, 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. Gold-indexed securities, for
example, typically provide for a maturity value that depends on the price
of gold, resulting in a security whose price tends to rise and fall
together with gold prices. Currency-indexed securities typically are
short-term to intermediate-term debt securities whose maturity values or
interest rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed
securities may be positively or negatively indexed; that is, their maturity
value may increase when the specified currency value increases, resulting
in a security that performs similarly to a foreign-denominated instrument,
or their maturity value may decline when foreign currencies increase,
resulting in a security whose price characteristics are similar to a put on
the underlying currency. Currency-indexed securities may also have prices
that depend on the values of a number of different foreign currencies
relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they
are indexed, and may also be influenced by interest rate changes in the
U.S. and abroad. 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.
Recent issuers of indexed securities have included banks, corporations, and
certain U.S. government agencies. Indexed securities may be more volatile
than the underlying instruments.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other borrower
to lenders or lending syndicates (loans and loan participations), to
suppliers of goods or services (trade claims or other receivables), or to
other parties. Direct debt instruments are subject to each fund's policies
regarding the quality of debt securities.
Purchasers of loans and other forms of direct indebtedness depend
primarily upon the creditworthiness of the borrower for payment of
principal and interest. Direct debt instruments may not be rated by any
nationally recognized rating service. If a fund does not receive scheduled
interest or principal payments on such indebtedness, the fund's share price
and yield could be adversely affected. Loans that are fully secured offer a
fund more protections than an unsecured loan in the event of non-payment of
scheduled interest or principal. However, there is no assurance that the
liquidation of collateral from a secured loan would satisfy the borrower's
obligation, or that the collateral could be liquidated. Indebtedness of
borrowers whose creditworthiness is poor involves substantially greater
risks and may be highly speculative. Borrowers that are in bankruptcy or
restructuring may never pay off their indebtedness, or may pay only a small
fraction of the amount owed. Direct indebtedness of developing countries
also involves a risk that the governmental entities responsible for the
repayment of the debt may be unable, or unwilling, to pay interest and
principal when due.
Investments in loans through direct assignment of a financial
institution's interests with respect to a loan may involve additional risks
to a fund. For example, if a loan is foreclosed, a fund could become part
owner of any collateral, and would bear the costs and liabilities
associated with owning and disposing of the collateral. In addition, it is
conceivable that under emerging legal theories of lender liability, a fund
could be held liable as a co-lender. Direct debt instruments may also
involve a risk of insolvency of the lending bank or other intermediary.
Direct debt instruments that are not in the form of securities may offer
less legal protection to a fund in the event of fraud or misrepresentation.
In the absence of definitive regulatory guidance, the funds rely on FMR's
research in an attempt to avoid situations where fraud or misrepresentation
could adversely affect the funds.
A loan is often administered by a bank or other financial institution that
acts as agent for all holders. The agent administers the terms of the loan,
as specified in the loan agreement. Unless, under the terms of the loan or
other indebtedness, a fund has direct recourse against the borrower, it may
have to rely on the agent to apply appropriate credit remedies against a
borrower. If assets held by the agent for the benefit of a fund were
determined to be subject to the claims of the agent's general creditors,
the fund might incur certain costs and delays in realizing payment on the
loan or loan participation and could suffer a loss of principal or
interest.
Direct indebtedness purchased by a fund may include letters of credit,
revolving credit facilities, or other standby financing commitments
obligating the fund to pay additional cash on demand. These commitments may
have the effect of requiring a fund to increase its investment in a
borrower at a time when it would not otherwise have done so, even if the
borrower's condition makes it unlikely that the amount will ever be repaid.
A fund will set aside appropriate liquid assets in a segregated custodial
account to cover its potential obligations under standby financing
commitments.
Each fund limits the amount of total assets that it will invest in any one
issuer or in issuers within the same industry (see limitations (1) and (5)
for each fund. For purposes of these limitations, a fund generally will
treat the borrower as the "issuer" of indebtedness held by a fund. In the
case of loan participations where a bank or other lending institution
serves as financial intermediary between a fund and the borrower, if the
participation does not shift to the fund the direct debtor-creditor
relationship with the borrower, SEC interpretations require the fund, in
appropriate circumstances, to treat both the lending bank or other lending
institution and the borrower as "issuers" for these purposes. Treating a
financial intermediary as an issuer of indebtedness may restrict a fund's
ability to invest in indebtedness related to a single financial
intermediary, or a group of intermediaries engaged in the same industry,
even if the underlying borrowers represent many different companies and
industries.
FOREIGN INVESTMENTS. Foreign investments can involve significant risks in
addition to the risks inherent in U.S. investments. The value of securities
denominated in or indexed to foreign currencies, and of dividends and
interest from such securities, can change significantly when foreign
currencies strengthen or weaken relative to the U.S. dollar. Foreign
securities markets generally have less trading volume and less liquidity
than U.S. markets, and prices on some foreign markets can be highly
volatile. Many foreign countries lack uniform accounting and disclosure
standards comparable to those applicable to U.S. companies, and it may be
more difficult to obtain reliable information regarding an issuer's
financial condition and operations. In addition, the costs of foreign
investing, including withholding taxes, brokerage commissions, and
custodial costs, are generally higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including those
involving the release of assets in advance of payment, may involve
increased risks in the event of a failed trade or the insolvency of a
broker-dealer, and may involve substantial delays. It may also be difficult
to enforce legal rights in foreign countries.
Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments
adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention. There
may be a greater possibility of default by foreign governments or foreign
government-sponsored enterprises. Investments in foreign countries also
involve a risk of local political, economic, or social instability,
military action or unrest, or adverse diplomatic developments. There is no
assurance that FMR will be able to anticipate these potential events or
counter their effects.
The considerations noted above generally are intensified for investments
in developing countries. Developing countries may have relatively unstable
governments, economies based on only a few industries, and securities
markets that trade a small number of securities.
Each fund may invest in foreign securities that impose restrictions on
transfer within the U.S. or to U.S. persons. Although securities subject to
such transfer restrictions may be marketable abroad, they may be less
liquid than foreign securities of the same class that are not subject to
such restrictions.
American Depositary Receipts and European Depositary Receipts (ADRs and
EDRs), are certificates evidencing ownership of shares of a foreign-based
issuer held in trust by a bank or similar financial institution. Designed
for use in the U.S. and European securities markets, respectively, ADRs and
EDRs are alternatives to the purchase of the underlying securities in their
national markets and currencies.
FOREIGN CURRENCY TRANSACTIONS. The funds may hold foreign currency
deposits from time to time, and may convert dollars and foreign currencies
in the foreign exchange markets. Currency conversion involves dealer
spreads and other costs, although commissions usually are not charged.
Currencies may be exchanged on a spot (i.e., cash) basis, or by entering
into forward contracts to purchase or sell foreign currencies at a future
date and price. Forward contracts generally are traded in an interbank
market conducted directly between currency traders (usually large
commercial banks) and their customers. The parties to a forward contract
may agree to offset or terminate the contract before its maturity, or may
hold the contract to maturity and complete the contemplated currency
exchange.
A fund may use currency forward contracts to manage currency risks and to
facilitate transactions in foreign securities. The following discussion
summarizes the principal currency management strategies involving forward
contracts that could be used by a fund.
In connection with purchases and sales of securities denominated in
foreign currencies, a fund may enter into currency forward contracts to fix
a definite price for the purchase or sale in advance of the trade's
settlement date. This technique is sometimes referred to as a "settlement
hedge" or "transaction hedge." FMR expects to enter into settlement hedges
in the normal course of managing each fund's foreign investments. A fund
could also enter into forward contracts to purchase or sell a foreign
currency in anticipation of future purchases or sales of securities
denominated in foreign currency, even if the specific investments have not
yet been selected by FMR.
A fund may also use forward contracts to hedge against a decline in the
value of existing investments denominated in foreign currency. For example,
if a fund owned securities denominated in pounds sterling, it could enter
into a forward contract to sell pounds sterling in return for U.S. dollars
to hedge against possible declines in the pound's value. Such a hedge,
sometimes referred to as a "position hedge," would tend to offset both
positive and negative currency fluctuations, but would not offset changes
in security values caused by other factors. A fund could also hedge the
position by selling another currency expected to perform similarly to the
pound sterling - for example, by entering into a forward contract to sell
Deutschemarks or European Currency Units in return for U.S. dollars. This
type of hedge, sometimes referred to as a "proxy hedge," could offer
advantages in terms of cost, yield, or efficiency, but generally would not
hedge currency exposure as effectively as a simple hedge into U.S. dollars.
Proxy hedges may result in losses if the currency used to hedge does not
perform similarly to the currency in which the hedged securities are
denominated.
Under certain conditions, SEC guidelines require mutual funds to set aside
appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, a fund will
segregate assets to cover currency forward contracts, if any, whose purpose
is essentially speculative. A fund will not segregate assets to cover
forward contracts entered into for hedging purposes, including settlement
hedges, position hedges, and proxy hedges.
Successful use of forward currency contracts will depend on FMR's skill in
analyzing and predicting currency values. Forward contracts may
substantially change a fund's investment exposure to changes in currency
exchange rates, and could result in losses to the fund if currencies do not
perform as FMR anticipates. For example, if a currency's value rose at a
time when FMR had hedged a fund by selling that currency in exchange for
dollars, the fund would be unable to participate in the currency's
appreciation. If FMR hedges currency exposure through proxy hedges, the
fund could realize currency losses from the hedge and the security position
at the same time if the two currencies do not move in tandem. Similarly, if
FMR increases a fund's exposure to a foreign currency, and that currency's
value declines, the fund will realize a loss. There is no assurance that
FMR's use of forward currency contracts will be advantageous to the funds
or that it will hedge at an appropriate time. The policies described in
this section are non-fundamental policies of the funds.
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.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The funds have filed
notices 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 a fund 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 25% 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; or (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. 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 Municipal Bond Index. 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 a 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 each fund's 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, a 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. A 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. A 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, a 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 a 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 would generally 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. A fund may purchase and write options in combination
with each other, or in combination with futures or forward 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. A 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 invest, which
involves a risk that the options or futures position will not track the
performance of the fund's other 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 option 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.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally
is purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the
right to sell the underlying currency.
The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above. A fund
may purchase and sell currency futures and may purchase and write currency
options to increase or decrease its exposure to different foreign
currencies. A fund may also purchase and write currency options in
conjunction with each other or with currency futures or forward contracts.
Currency futures and options values can be expected to correlate with
exchange rates, but may not reflect other factors that affect the value of
a fund's investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not protect a
fund against a price decline resulting from deterioration in the issuer's
creditworthiness. Because the value of a fund's foreign-denominated
investments changes in response to many factors other than exchange rates,
it may not be possible to match the amount of currency options and futures
to the value of the fund's investments exactly over time.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The funds will comply
with guidelines established by the SEC 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. Commissions for foreign investments
traded on foreign exchanges generally will be higher than for U.S.
investments and may not be subject to negotiation.
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
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
portfolio 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 r esearch
services provided by and place agency transactions with Fidelity Brokerage
Services, Inc. (FBSI) and Fidelity Brokerage Services, Ltd. (FBSL),
subsidiaries 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 requirements, 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 if they are reasonable in
relation to the benefits to the fund.
For the fiscal periods ended April 30, 1994 and 1993, Short-Term Bond's
portfolio turnover rates were 73% and 63%, respectively. For the fiscal
periods ended April 30, 1994 and 1993, Investment Grade Bond's portfolio
turnover rates were 61% and 74%, respectively.
For fiscal year 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 and 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 allo cated in accordance
with procedures believed to be appropriate and equitable for each 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
Securities and other assets for which market quotations are readily
available are valued at market values determined by their most recent bid
prices (sales prices if the principal market is an exchange) in the
principal market in which such securities normally are traded. Securities
and other assets for which market quotations are not readily available
(including restricted securities, if any) are appraised at their fair value
as determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees.
Securities may also be valued on the basis of valuations furnished by a
pricing service that uses both dealer-supplied valuations and evaluations
based on expert analysis of market data and other factors if such
valuations are believed to reflect more accurately the fair value of such
securities. Use of a 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 pricing services, may use other pricing
services or may 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.
PERFORMANCE
The funds may quote their performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. The funds' share prices, yields, and
total returns fluctuate in response to market conditions and other factors,
and the value of a fund's shares when redeemed may be more or less than
their original cost.
YIELD CALCULATIONS. Yields for the funds used in advertising are computed
by dividing a fund's interest and dividend 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 per share (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 the purposes of determining 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.
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 (if any), and any change in the fund's NAV
over the 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 return of 100% over ten years would produce an average annual
total return of 7.18%, which is the steady annual rate of return 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 total 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. An example of this type of
illustration is given below. 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 table shows the funds' 30-day
yields and total returns for the periods ended April 30, 1994.
SHORT-TERM BOND
AVERAGE ANNUAL RETURNS CUMULATIVE RETURNS
30-DAY ONE FIVE LIFE OF ONE FIVE LIFE OF
YIELD YEAR YEARS FUND* YEAR YEARS FUND*
6.43% 1.99% 8.13% 7.17% 1.99% 47.82% 69.60%
* Life of fund figures are from September 15, 1986 (commencement of
operations). If FMR had not reimbursed certain fund expenses during this
period, the fund's total returns would have been lower.
INVESTMENT GRADE BOND
AVERAGE ANNUAL RETURNS CUMULATIVE RETURNS
30-DAY ONE FIVE TEN ONE FIVE TEN
YIELD YEAR YEARS YEARS YEAR YEARS YEARS
7.07% 3.35% 10.45% 11.03% 3.35% 64.38% 184.67%
The following tables show the income and capital elements of each fund's
cumulative total returns. The tables compare the funds' returns to the
record of the Standard & Poor's 500 Composite Stock Price Index
(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 S&P 500 and DJIA comparisons are provided to show how the funds'
total returns compared to the returns of a broad range of common stocks and
a narrower set of stocks of major industrial companies, respectively, over
the same period. Of course, since the funds invest in fixed-income
securities, common stocks represent a different type of investment than
those which the funds invest in. Fixed-income securities are not included
in the indices. Common stocks generally offer greater growth potential than
the funds, but generally experience greater price volatility which means a
greater potential for loss. In addition, common stocks generally provide
lower income than a fund 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, their returns do not include the effect of
paying brokerage commissions and other costs of investing. During the
periods quoted, interest rates and bond prices fluctuated widely; thus the
tables should not be considered representative of the dividend income or
capital gain or loss that could be realized from an investment in either of
the funds today.
SHORT-TERM BOND. During the period from September 15, 1986 (commencement
of operations) to April 30, 1994, a hypothetical $10,000 investment in the
fund would have grown to $16,960, assuming all distributions were
reinvested.
SHORT-TERM BOND INDICES
VALUE OF VALUE OF VALUE OF
INITIAL REINVESTED REINVESTED
YEAR ENDED $10,000 DIVIDEND CAPITAL GAIN TOTAL
APRIL 30 INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P
500 DJIA CPI**
1987* $9,670 $ 479 $0 $10,149 $12,755 $13,266 $10,273
1988 9,470 1,381 0 10,851 11,929 12,185 10,675
1989 9,180 2,294 0 11,474 14,662 15,036 11,222
1990 9,170 3,288 0 12,458 16,210 17,148 11,750
1991 9,180 4,461 0 13,641 19,065 19,360 12,325
1992 9,430 5,848 0 15,278 21,743 23,224 12,717
1993 9,510 7,120 0 16,630 23,755 24,413 13,127
1994 9,080 7,880 0 16,960 25,020 26,967 13,437
* From September 15, 1986 (commencement of operations).
** From month end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on September
15, 1986 (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 for the period covered
(their cash value at the time they were reinvested), amounted to $18,148.
If distributions had not been reinvested, the amount of distributions
earned from the fund over time would have been smaller, and cash payments
(dividends) for the period would have amounted to $5,892. There were no
capital gain distributions during this period. Tax consequences of
different investments have not been factored into the figures.
INVESTMENT GRADE BOND. During the period from April 30, 1984 to April 30,
1994, a hypothetical $10,000 investment in the fund would have grown to
$28,467, assuming all distributions were reinvested.
INVESTMENT GRADE BOND INDICES
VALUE OF VALUE OF VALUE OF
INITIAL REINVESTED REINVESTED
YEAR ENDED $10,000 DIVIDEND CAPITAL GAIN TOTAL
APRIL 30 INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500
DJIA CPI
1985 $10,410 $ 1,356 $0 $11,766 $11,767 $11,286 $10,369
1986 11,767 3,010 0 14,777 16,034 16,670 10,533
1987 11,041 4,158 0 15,199 20,286 22,097 10,931
1988 10,678 5,395 0 16,073 18,973 20,297 11,358
1989 10,521 6,797 0 17,318 23,320 25,046 11,940
1990 10,347 8,237 0 18,584 25,782 28,564 12,502
1991 10,773 10,379 0 21,152 30,321 32,248 13,113
1992 11,151 12,671 0 23,823 34,581 38,685 13,531
1993 11,940 15,605 0 27,545 37,781 40,665 13,967
1994 11,514 16,953 0 28,467 39,792 44,919 14,297
Explanatory Notes: With an initial investment of $10,000 made on April 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 for the period covered (their cash value at the time
they were reinvested), amounted to $26,266. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments (dividends) for the period would
have amounted to $9,954. There were no capital gain distributions during
this period. Tax consequences of different investments have not been
factored into the 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 mutual
fund performance indices prepared by Lipper.
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.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. For
example, Fidelity's FundMatchsm Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
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. In
advertising, the fund may discuss or illustrate examples of interest rate
sensitivity.
The 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 340 taxable money market funds. The Bond Fund Report
AverageS(REGISTERED TRADEMARK)/All Taxable, which is reported in the BOND
FUND REPORT(TRADEMARK), covers over 350 taxable 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. The fund, however, invests in
longer-term instruments and its share price changes daily in response to a
variety of factors.
The funds may also quote the following unmanaged indices of bond prices
and yields in advertising, and may compare the price volatility of these
indices to the price volatility of the S&P 500.
LEHMAN BROTHERS GOVERNMENT BOND INDEX is comprised of all public
obligations of the U.S. Treasury, U.S. government agencies, quasi-federal
corporations, and of corporate debt guaranteed by the U.S. government. The
index excludes flower bonds, foreign targeted issues, and mortgage-backed
securities.
LEHMAN BROTHERS CORPORATE BOND INDEX is comprised of all public,
fixed-rate, non-convertible investment-grade domestic corporate debt.
Issues included in this index are rated at least Baa by Moody's Investors
Service (Moody's) or BBB by Standard & Poor's Corporation (S&P) or,
in the case of non-rated bonds, BBB by Fitch Investors Service (Fitch).
Collateralized mortgage obligations are not included in the Corporate Bond
Index.
The Government Bond Index and the Corporate Bond Index are combined to
form the Government/Corporate Bond Index.
LEHMAN BROTHERS INTERMEDIATE CORPORATE BOND INDEX is comprised of all
public, fixed-rate, non-convertible investment-grade domestic corporate
debt. Issues included in this index have remaining maturities of one to ten
years and are rated at least Baa by Moody's or BBB by S&P or, in the
case of non-rated bonds, BBB by Fitch.
LEHMAN BROTHERS LONG-TERM CORPORATE BOND INDEX is comprised of all public,
fixed-rate, non-convertible investment-grade domestic corporate debt.
Issues included in this index have remaining maturities greater than ten
years and are rated at least Baa by Moody's or BBB by S&P or, in the
case of non-rated bonds, BBB by Fitch.
SALOMON BROTHERS HIGH YIELD COMPOSITE INDEX is comprised of high yielding
utility and corporate bonds with a minimum maturity of seven years and with
total debt outstanding of at least $50 million. Issues included in the
index are rated Baa or lower by Moody's or BBB or lower by S&P.
SALOMON BROTHERS HIGH GRADE CORPORATE BOND INDEX is comprised of high
quality corporate bonds with a minimum maturity of at least ten years and
with total debt outstanding of at least $50 million. Issues included in the
index are rated Aa or better by Moody's or AA or better by S&P.
MERRILL LYNCH HIGH AND MEDIUM QUALITY INTERMEDIATE-TERM CORPORATE INDEX is
an index comprised of all public, fixed-rate, non-convertible corporate
debt. Issues included in this index have remaining maturities of between 1
and 9.99 years. Issues included in the index are rated at least Baa3 by
Moody's and BBB- by S&P.
MERRILL LYNCH HIGH AND MEDIUM QUALITY LONG-TERM CORPORATE BOND INDEX is an
index comprised of all public, fixed-rate, non-convertible domestic
corporate debt. Issues included in this index have remaining maturities of
greater than 15 years and are rated at least Baa3 by Moody's and BBB- by
S&P.
MERRILL LYNCH MEDIUM QUALITY SHORT-TERM CORPORATE INDEX is an index
comprised of all public, fixed-rate, non-convertible corporate debt. Issues
included in this index have remaining maturities of 1 to 2.99 years. Issues
included in this index are rated at least Baa3 by Moody's and BBB- by
S&P, and below Aa3 by Moody's and AA- by S&P.
MERRILL LYNCH HIGH AND MEDIUM QUALITY SHORT-TERM CORPORATE INDEX is an
index comprised of all public, fixed rate, non-convertible corporate debt.
Issues included in this index have remaining maturities of 1 to 2.99 years.
Issues included in this index are rated at least Baa3 by Moody's and BBB-
by S&P.
The funds may be compared in advertising to Certificates of Deposit
(CDs), the Bank Rate Monitor National Index, an average of the quoted rates
for 100 leading banks and thrifts in ten U.S. cities chosen to represent
the ten largest Consumer Metropolitan Statistical Areas, or other
investments issued by banks. The funds differ from bank investments in
several respects. The funds may offer greater liquidity or higher potential
returns than CDs; but unlike CDs, the funds have a fluctuating share price
and are not FDIC insured.
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; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. 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.
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.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Each fund is open for business and its 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, 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.
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 the 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 it reserves
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.
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.
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 will alternate instructions.
DIVIDENDS. Because each fund's income is primarily derived from interest,
dividends from the fund generally will not qualify for the
dividends-received deduction available to corporations. A portion of a
fund's dividends derived from certain U.S. government obligations may be
exempt from state and local taxation. Gains (losses) attributable to
foreign currency fluctuations are generally taxable as ordinary income, and
therefore will increase (decrease) dividend distributions. The funds will
send each shareholder a notice in January describing the tax status of
dividends and capital gain distributions for the prior year.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the funds 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 less
than six months 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 the funds are taxable to
shareholders as dividends, not as capital gains. Distributions from
short-term capital gains do not qualify for the dividends-received
deduction.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Because the funds do not
currently anticipate that securities of foreign issuers will constitute
more than 50% of their total assets at the end of their fiscal year,
shareholders should not expect to claim a foreign tax credit or deduction
on their federal income tax returns with respect to foreign taxes withheld.
TAX STATUS OF THE FUNDS. Each fund has qualified and intends to continue
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. The funds intend 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 forward currency contracts, futures contracts,
and options are included in this 30% limitation, which may limit a fund's
investments in such instruments.
If a fund purchases shares of certain foreign investment entities, defined
as passive foreign investment companies (PFICs) in the Internal Revenue
Code, it may be subject to U.S. federal income tax on a portion of any
excess distribution or gain in the disposition of such shares. Interest
charges may also be imposed on a fund with respect to deferred taxes
arising from such distributions or gains.
Each fund is treated as a separate entity from the other funds of Fidelity
Fixed-Income Trust for tax purposes.
As of April 30, 1994 Short-Term Bond had capital loss carryovers available
to offset future capital gains as follows:
AGGREGATE
CAPITAL LOSS EXPIRES ON APRIL 30
CARRYOVERS 1996 1997 1998 1999 2002
Short-Term Bond $22,261,000 $4,373,000 $873,000 $6,892,000
$7,352,000 $2,771,000
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. Investors should consult their tax
advisers to determine whether either fund is suitable to their particular
tax situation.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. 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 certain institutional
customers; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. FMR U.K. and FMR Far East, both wholly owned
subsidiaries of FMR formed in 1986, supply investment research, and may
supply portfolio management services, to FMR in connection with certain
funds advised by FMR. Analysts employed by FMR, FMR U.K., and FMR Far East
research and visit thousands of domestic and foreign companies each year.
FMR Texas Inc., a wholly owned subsidiary of FMR formed in 1989, supplies
portfolio management and research services in connection with certain money
market funds advised by FMR.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the 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. 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 1940
Act) by virtue of their affiliation with either the Trust 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 serves as a Director of the New York
City Chapter of the National Multiple Sclerosis Society, and is a member of
the Advisory Council of the International Executive Service Corps. and 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 Investments, Chairman of the Board of
Trustees and a member of the Executive Committee of the Cleveland Clinic
Foundation, a Trustee and a 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 Renselaer 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), 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).
ARTHUR S. LORING, Secretary, is Senior Vice President and General
Counsel of FMR, Vice President - Legal of FMR Corp., and Vice President and
Clerk of FDC.
ROBERT H. MORRISON, Manager, Security Transactions, is an employee of
FMR.
MICHAEL GRAY, Vice President, is also Vice President of other funds
advised by FMR and is an employee of FMR.
DONALD TAYLOR, Vice President (1991), is also Vice President of other
funds advised by FMR and is an employee of FMR.
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 fund based on their basic trustee fees and length of
service. Currently, Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham, and David L. Yunich participate in the program.
As of April 30, 1994, FMR and its affiliates owned approximately 5% of
the total outstanding shares of the Short-Term Bond Portfolio. Mr. Edward
C. Johnson 3d, President and Trustee of the trust, by virtue of his
controlling interest in FMR Corp., may be considered a beneficial owner of
these shares. Also as of this date, the other Trustees and officers of the
funds owned, in the aggregate, less than 1% of each fund's total
outstanding shares.
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 trust, all Trustees who are "interested
persons" of the trust or of FMR, and all personnel of the trust 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 each fund's 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 each
fund's records and the registration of each fund's 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, each fund pays all of its expenses, without limitation, that are not
assumed by those parties. Each fund pays 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 fund will pay for typesetting,
printing, and mailing prospectuses, statements of additional information,
notices, and reports to existing shareholders, the trust has entered into a
revised transfer agent agreement with FSC, pursuant to which FSC bears the
cost of providing these services to existing shareholders. Other expenses
paid by each fund include interest, taxes, brokerage commissions, each
fund's 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 a fund may be a party
and any obligation it may have to indemnify the trust's officers and
Trustees with respect to litigation.
FMR is the manager of the funds pursuant to management contracts dated
November 1, 1993, which were approved by shareholders on October 20, 1993.
For the services of FMR under the contracts, 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 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 $250 billion of
group net assets - their approximate level for April 1994 - was .1604%,
which is the weighted average of the respective fee rates for each level of
group net assets up to $250 billion.
GROUP FEE RATE SCHEDULE* EFFECTIVE ANNUAL FEE RATES

AVERAGE GROUP EFFECTIVE

GROUP ANNUALIZED NET 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

174 - 228 .1400

228 - 282 .1375

282 - 336 .1350

Over 336 .1325

* Prior to January 1, 1992, the group fee rate was based on a schedule
with breakpoints ending at .150% for average group assets in excess of $84
billion. The group fee breakpoints shown for average group assets between
$84 billion and $228 billion were voluntarily adopted by FMR on January 1,
1992. Each fund's management contract dated November 1, 1993 includes these
group fee rate breakpoints. Additional breakpoints for average group assets
in excess of $228 billion were voluntarily added to the group fee rate
schedule by FMR on November 1, 1993, pending shareholder approval of a new
management contract reflecting the extended schedule. The extended schedule
provides for lower management fees as FMR's total assets under management
increase.
The individual fund fee rate for each fund is .30%. At a shareholder
meeting on October 20, 1993, Investment Grade Bond Fund shareholders
approved an amended management contract which increased the fund's
individual fund fee rate from .20% to .30%, effective November 1, 1993.
Based on the average net assets of funds advised by FMR for April 1994,
the annual management fee rate would be calculated as follows:
GROUP FEE RATE INDIVIDUAL FUND FEE RATE MANAGEMENT FEE RATE
SHORT-TERM BOND .1604% + .30% = .4604%
INVESTMENT GRADE BOND .1604% + .30% = .4604%
One-twelfth (1/12) of each fund's 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.
Management fees paid by each fund to FMR for the fiscal years ended
April 30, 1994, 1993, and 1992 are indicated in the table below.
MANAGEMENT FEES
1994 1993 1992
SHORT-TERM BOND $10,325,430 $7,689,730 $2,279,994
INVESTMENT GRADE BOND $ 4,232,396 $3,885,654 $2,444,228
Short-Term Bond's management fees for the fiscal years ended April 30,
1994, 1993, and 1992 and Investment Grade Bond's management fees for fiscal
1993 and 1992 reflect FMR's voluntary implementation of a reduced fee
structure as of January 1, 1992. Each fund's management fee for fiscal 1994
reflects FMR's voluntary implementation of the additional group fee rate
breakpoints on November 1, 1993. If voluntary implementation of the reduced
fee structures had not been in effect, fees for these periods would have
been higher. Short-Term Bond's fees were equal to .46, .47%, and .48%,
respectively, of its average net assets for fiscal 1994, 1993, and 1992,
respectively. Investment-Grade Bond's fees were equal to .41, .37%, and
.38%, respectively, of its average net assets for each of those years.
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 its 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 the fund's expenses for purposes of this regulation, each
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its distribution plan expenses and
custodian fees attributable to investments in foreign securities.
SUB-ADVISERS. FMR has entered into sub-advisory agreements with FMR U.K.
and FMR Far East. Pursuant to the sub-advisory agreements, FMR may receive
investment advice and research services outside the United States from the
sub-advisers.
Currently, FMR U.K. and FMR Far East focus on issuers in countries other
than the United States such as those in Europe, Asia, and the Pacific
Basin.
FMR U.K. and FMR Far East are wholly owned subsidiaries of FMR.
Under the sub-advisory agreements FMR pays the fees of FMR U.K. and FMR
Far East. For providing non-discretionary investment advice and research
services, the sub-advisers are compensated as follows: FMR pays FMR U.K.
and FMR Far East fees equal to 110% and 105%, respectively, of FMR U.K.'s
and FMR Far East's cost incurred in connection with providing investment
advice and research services.
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. The Board of Trustees has adopted the plans to allow
the funds and FMR to incur certain expenses that might be considered to
constitute indirect payment by the funds of distribution expenses. Under
the plans, if the payment by a fund to FMR of management fees should be
deemed to be indirect financing by the fund of the distribution of its
shares, such payment is authorized by the fund's plan.
The plans specifically recognize 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 the funds. In addition, the
plans provide that FMR may use its resources, including its management fee
revenues, to make payments to third parties that provide assistance in
selling the funds' shares, or to third parties, including banks, that
render shareholder support services. For the fiscal year ended April 30,
1994, payments to third parties amounted to $216,613 for Short-Term Bond
and there were no payments made to third parties for Investment Grade Bond.
Each fund's plan has been approved by the Trustees. As required by the
Rule, the Trustees carefully considered all pertinent factors relating to
implementation of the plans prior to their approval, and have determined
that there is a reasonable likelihood that the plans will benefit the funds
and their shareholders. In particular, the Trustees noted that the plans do
not authorize payments by the funds other than those made to FMR under its
management contracts with the funds. To the extent that the Plans give FMR
and FDC greater flexibility in connection with the distribution of shares
of the funds, additional sales of the funds' shares may result.
Additionally, certain shareholder support services may be provided more
effectively under the plans by local entities with whom shareholders have
other relationships. The plans were approved by the funds' shareholders on
November 18, 1987 (Short-Term Bond) and November 19, 1986 (Investment Grade
Bond).
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 a fund
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 Plans. No preference will be shown in the
selection of investments for the instruments of such depository
institutions. 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 trust's contract 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 a fund.
Under the contract, 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 years ended April 30, 1994, 1993, and 1992.
TRANSFER AGENT FEES
1994 1993 1992
SHORT-TERM BOND $5,802,980 $3,157,954 $1,205,091
INVESTMENT GRADE BOND $2,476,682 $2,304,490 $1,440,584
The 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 fund's accounting records. Prior to July 1,
1991, the annual fee for these pricing and bookkeeping services was based
on two schedules, one pertaining to each fund's average net assets, and one
pertaining to the type and number of transactions the fund made. The fee
rates in effect as of July 1, 1991 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 years.
PRICING AND BOOKKEEPING FEES
1994 1993 1992
SHORT-TERM BOND $554,995 $449,231 $154,704
INVESTMENT GRADE BOND $308,981 $342,240 $229,931
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 TRUST
TRUST ORGANIZATION. Fidelity Short-Term Bond Portfolio and Fidelity
Investment Grade Bond Fund are funds of Fidelity Fixed-Income Trust (the
trust), an open-end management investment company originally organized as a
Massachusetts corporation on June 25, 1970. On September 7, 1984, the trust
was reorganized as a Massachusetts business trust, at which time its name
was changed from Fidelity Corporate Bond Fund, Inc. to Fidelity Corporate
Bond Fund. On October 23, 1985, the Trust's name was changed to Fidelity
Flexible Bond Fund and on August 31, 1986 the Trust's name was changed to
Fidelity Fixed-Income Trust. Currently, there are five funds of Fidelity
Fixed-Income Trust: Fidelity Short-Term Bond Portfolio, Fidelity Investment
Grade Bond Fund, Spartan Government Income Fund, Spartan High Income Fund,
and Spartan Short-Intermediate Government Fund. The Declaration of Trust
permits the Trustees to create additional funds.
In the event that FMR ceases to be the investment adviser to the trust or
a fund, the right of the trust or fund to use the identifying names
"Fidelity" and "Spartan" 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 the 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 expenses of the trust. Expenses with respect to the trust are to be
allocated in proportion to the asset value of the respective funds, except
where allocations of direct expense can otherwise be fairly made. The
officers of the trust, subject to the general supervision of the Board 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. In the
event of the dissolution or liquidation of the trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The 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. The 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 the Trustees shall include a provision limiting the obligations
created thereby to the trust and its assets. The Declaration of Trust
provides for indemnification out of each fund's property of any
shareholders held personally liable for the obligations of the fund. The
Declaration of Trust also provides that each fund 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.
The 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 Declaration 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, you receive one vote for each dollar value of
net asset value per share 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 the trust or a fund may, as set forth in the Declaration of Trust,
call meetings of the trust or a fund for any purpose related to the trust
or fund, as the case may be, including, in the case of a meeting of the
entire trust, the purpose of voting on removal of one or more Trustees. The
trust or any 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 trust or the fund, as determined by the current value of
each shareholder's investment in the fund or trust. If not so terminated,
the trust and the funds will continue indefinitely.
CUSTODIAN. The Bank of New York, New York, N.Y., is custodian of the
assets of each fund. The custodian is responsible for the safekeeping of
the fund's assets and the appointment of subcustodian banks and clearing
agencies. The custodian takes no part in determining investment policies of
the funds or in deciding which securities are purchased or sold by the
funds. The funds, 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 trust's
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.
AUDITOR. Coopers & Lybrand, One Post Office Square, Boston,
Massachusetts serves as the trust's independent accountant. The auditor
examines financial statements for the funds and provides other audit, tax,
and related services.
FINANCIAL STATEMENTS
The financial statements and financial highlights for each fund for the
fiscal year ended April 30, 1994 are included in the funds' annual reports
which are separate reports supplied with this Statement of Additional
Information. The 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 a 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 by
assuming a constant prepayment rate for the life of the mortgage. The
weighted average life of these securities is likely to be substantially
shorter than their stated final maturity.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.
A - Bonds rated A possess many favorable investment attributes and are to
be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA - Bonds rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of
other terms of the contract over any long period of time may be small.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB- rating.
The ratings from AA to B may be modified by the addition of a plus or minus
to show relative standing within the major rating categories.
SPARTAN HIGH INCOME FUND

CROSS REFERENCE SHEET
FORM N-1A

ITEM NUMBER PROSPECTUS SECTION

<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page

2 a .............................. Expenses

b, c .............................. Contents; The Funds at a Glance; Who May Want
to Invest

3 a .............................. Financial Highlights

b .............................. *

c, d .............................. Performance

4 a i............................. Charter

ii........................... The Fund at a Glance; Investment Principles and
Risks

b .............................. Investment Principles and Risks

c .............................. Who May Want to Invest; Investment Principles
and Risks

5 a .............................. Charter

b i............................. Cover Page; Doing Business with Fidelity;
Charter; The Fund at a Glance

ii........................... Charter

iii.......................... Expenses; Breakdown of Expenses

c .............................. Charter

d .............................. Charter; Breakdown of Expenses

e .............................. Cover Page; Charter

f .............................. Expenses

g .............................. *

5 A .............................. Performance

6 a i............................. Charter

ii........................... How to Buy Shares; How to Sell Shares; Exchange
Restrictions; Transaction Details

iii.......................... Charter

b ............................. *

c .............................. Exchange Restrictions; Transaction Details

d .............................. *

e .............................. Doing Business with Fidelity; How to Buy Shares;
How to Sell Shares; Investor Services

f, g .............................. Dividends, Capital Gains, and Taxes

7 a .............................. Charter; Cover Page

b .............................. How to Buy Shares; Transaction Details; Expenses

c .............................. *

d .............................. How to Buy Shares

e .............................. *

f .............................. Breakdown of Expenses

8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions

9 .............................. *

</TABLE>

* Not Applicable

CROSS REFERENCE SHEET
(CONTINUED)
FORM N-1A

ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<CAPTION>
<S> <C> <C> <C>
10, 11 ............................ Cover Page

12 ............................ Description of the Trust

13 a - c ............................ Investment Policies and Limitations

d ............................ Portfolio Transactions

14 a - c ............................ Trustees and Officers

15 a, b ............................ *

c ............................ Trustees and Officers

16 a i............................ FMR; Portfolio Transactions

ii........................... Trustees and Officers
.

iii.......................... Management Contract
.

b ............................ Management Contract

c, d ............................ Contracts with Companies Affiliated with FMR

e ............................ *

f ............................ Distribution and Service Plan

g ............................ *

h ............................ Description of the Trust

i ............................ Contracts with Companies Affiliated with FMR

17 a - c ............................ Portfolio Transactions

d, e ............................ *

18 a ............................ Description of the Trust

b ............................ *

19 a ............................ Additional Purchase and Redemption Information

b ............................ Additional Purchase and Redemption Information;
Valuation of Portfolio Securities

c ............................ *

20 ............................ Distributions and Taxes

21 a, b ............................ Contracts with Companies Affiliated with FMR

c ............................ *

22 ............................ Performance

23 ............................ Financial Statements

</TABLE>

* Not Applicable
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how the fund
invests and the services available to shareholders.
A Statement of Additional Information dated June 21, 1994 has been filed
with the Securities and Exchange Commission, and is incorporated herein by
reference (is legally considered a part of this prospectus). The Statement
of Additional Information is available free upon request by calling
Fidelity at 1-800-544-8888.
Mutual fund shares are not deposits or obligations of, or guaranteed by,
any depository institution. Shares are not insured by the FDIC, the Federal
Reserve Board, or any other agency, and are subject to investment risk,
including the possible loss of principal.
The fund may invest without limitation in lower quality debt securities,
sometimes called "junk bonds." Investors should consider that these
securities carry greater risks, such as the risk of default, than other
debt securities. Refer to "Investment Principles and Risks" on page for
further information.
Spartan High Income seeks high current income by investing mainly in
high-yielding debt securities , with an emphasis on lower-quality
securities.
SPARTAN(REGISTERED TRADEMARK)
HIGH INCOME
FUND
PROSPECTUS
JUNE 21, 1994(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA 02109
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
SPH-pro-694

CONTENTS

KEY FACTS THE FUND AT A GLANCE

WHO MAY WANT TO INVEST

EXPENSES The fund's yearly
operating expenses.

FINANCIAL HIGHLIGHTS A summary
of the fund's financial data.

PERFORMANCE How the fund has
done over time.

THE FUND IN DETAIL CHARTER How the fund is
organized.

INVESTMENT PRINCIPLES AND RISKS
The fund's overall approach to
investing.

BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.

YOUR ACCOUNT DOING BUSINESS WITH FIDELITY

TYPES OF ACCOUNTS Different
ways to set up your account,
including tax-sheltered retirement
plans.

HOW TO BUY SHARES Opening an
account and making additional
investments.

HOW TO SELL SHARES Taking money
out and closing your account.

INVESTOR SERVICES Services to
help you manage your account.

SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS, AND
ACCOUNT POLICIES TAXES

TRANSACTION DETAILS Share price
calculations and the timing of
purchases and redemptions.

EXCHANGE RESTRICTIONS

APPENDIX

<r>KEY FACTS</r>

THE FUND AT A GLANCE
GOAL: High current income. As with any mutual fund, there is no assurance
that the fund will achieve its goal.
STRATEGY: Invests mainly in high-yielding debt securities, with an
emphasis on lower-quality securities.
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946 and
is now America's largest mutual fund manager.
SIZE: As of April 30, 1994, the fund had over $ 640 million in
assets.
WHO MAY WANT TO INVEST
The fund is designed for those who want high current income with some
potential for capital growth from a portfolio of high-yielding debt
securities and income-producing equity securities. The fund may be
appropriate for long-term , aggressive investors who understand the
potential risks and rewards of investing in lower-quality securities,
including defaulted securities, and are willing to accept their greater
price movements and credit risks.
By itself, the fund does not constitute a balanced investment plan. The
value of the fund's investments and the income they generate will vary from
day to day, generally reflecting changes in company news, interest rates,
market conditions, and other political and economic news. When you sell
your shares, they may be worth more or less than what you paid for them.
The Spartan family of funds is designed for cost-conscious investors
looking for higher yields through lower costs. The Spartan
Approach(Registered trademark) requires investors to make high minimum
investments and, in some cases, to pay for individual transactions.

THE SPECTRUM OF
FIDELITY FUNDS
Broad categories of Fidelity
funds are presented here in
order of ascending risk.
Generally, investors seeking
to maximize return must
assume greater risk. Spartan
High Income is in the INCOME
category.
(bullet) MONEY MARKET Seeks
income and stability by
investing in high-quality,
short-term investments.
(arrow) INCOME Seeks income by
investing in bonds.
(bullet) GROWTH AND INCOME
Seeks long-term growth and
income by investing in stocks
and bonds.
(bullet) GROWTH Seeks long-term
growth by investing mainly in
stocks.
(checkmark)
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund. See page for more information.
Maximum sales charge on purchases and
reinvested distributions None
Deferred sales charge on redemptions None
Redemption fee
(on shares held less than 270 days) 1%
Exchange and wire transaction fees $5.00
Account closeout fee $5.00
THESE FEES ARE WAIVED (except for the redemption fee) if your account
balance at the time of the transaction is $50,000 or more.
ANNUAL FUND OPERATING EXPENSES are paid out of the fund's assets. The fund
pays a management fee to FMR. Expenses are factored into the fund's share
price or dividends and are not charged directly to shareholder accounts
(see page ).
The following are projections based on historical expenses, adjusted to
reflect current fees, and are calculated as a percentage of average net
assets.
Management fee .80%
12b-1 fee None
Other expenses .00%
Total fund operating expenses .80%
EXAMPLES: Let's say, hypothetically, that the fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses after
the number of years indicated, first assuming that you leave your account
open, and then assuming that you close your account at the end of the
period:
Account open Account closed
After 1 year $ 8 $ 13
After 3 years $ 26 $ 31
After 5 years $ 44 $ 49
After 10 years $ 99 $ 104
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
UNDERSTANDING
EXPENSES
Operating a mutual fund
involves a variety of
expenses for portfolio
management, shareholder
statements, tax reporting, and
other services. These costs
are paid from the fund's
assets; their effect is already
factored into any quoted
share price or return.
(checkmark)

FINANCIAL HIGHLIGHTS
The table that follows is included in the fund's Annual Report and has
been a udited by Coopers & Lybrand, independent accountants.
Their report on the financial statements and financial highlights is
included in the Annual Report. The financial statements and financial
highlights are incorporated by reference into (are legally a part of) the
fund's Statement of Additional Information .
SELECTED PER-SHARE DATA

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1.Years ended April 30 1991 C 1992 1993 1994

2.Net asset value, beginning of period $ 10.000 $ 10.640 $ 11.900 $ 12.220

3.Income from Investment Operations
.811 1.292 1.175 1.101
Net investment income

4. Net realized and unrealized gain (loss) on .602 1.614 .672 .357
investments

5. Total from investment operations 1.413 2.906 1.847 1.458

6.Less Distributions
(.796) (1.342) (1.183) (.976)
From net investment income

7. In excess of net investment income -- -- -- (.078)

8. From net realized gain on investments -- (.320) (.370) (.790)

9. Total distributions (.796) (1.662) (1.553) (1.844)

10. Redemption fees added to paid in capital .023 .016 .026 .046

11.Net asset value, end of period $ 10.640 $ 11.900 $ 12.220 $ 11.880

12.Total return B 15.33 29.76 16.96 12.70
% % % %

13.RATIOS AND SUPPLEMENTAL DATA

14.Net assets, end of period (000 omitted) $ 100,840 $ 370,933 $ 601,417 $ 640,685

15.Ratio of expenses to average net assets .70 .70 .70 .75
%A % % %

16.Ratio of net investment income to average 11.98 11.43 9.57 8.07
net assets %A % % %

17.Portfolio turnover rate 72 99 136 213
%A % % %

</TABLE>

A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS
OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C FROM AUGUST 29, 1990 (COMMENCEMENT OF OPERATIONS) TO APRIL 30,
1991
PERFORMANCE
Bond fund performance can be measured as TOTAL RETURN or YIELD. The total
returns and yields that follow are based on historical fund results and do
not reflect the effect of taxes or any transaction fees you may have paid.
The figures would be lower if fees were taken into account.
The fund's fiscal year runs from May 1 through April 30. The tables below
show the fund's performance over past fiscal years compared to a measure of
inflation. The chart on page helps you compare the yields of this
fund to those of its competitors.
AVERAGE ANNUAL TOTAL RETURNS
Fiscal periods ended Past 1 Life of
April 30, 1994 year fundA
Spartan High Income 12.70% 20.31%
Consumer Price
Index 2.36% 3.14%
CUMULATIVE TOTAL RETURNS
Fiscal periods ended Past 1 Life of
April 30, 1994 year fundA
Spartan High Income 12.70% 97.27%
Consumer Price
Index 2.36% 12.01%
A FROM AUGUST 29, 1990

UNDERSTANDING
PERFORMANCE
Because this fund invests in
fixed-income securities, its
performance is related to
changes in interest rates.
Funds that hold short-term
bonds are usually less
affected by changes in
interest rates than long-term
bond funds. For that reason,
long-term bond funds typically
offer higher returns and carry
more risk than short-term
bond funds.
(checkmark)
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in the fund over a
given period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in the fund over a
given period of time, expressed as an annual percentage rate. Yields are
calculated according to a standard that is required for all stock and bond
funds. Because this differs from other accounting methods, the quoted yield
may not equal the income actually paid to shareholders.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
THE COMPETITIVE FUNDS AVERAGE is the Lipper High Yield Bond Funds Average,
which currently reflects the performance of over 85 mutual funds
with similar objectives. This average, which assumes reinvestment of
distributions, is published by Lipper Analytical Services, Inc.
30-DAY YIELDS

Percentage (%)
Row: 1, Col: 1, Value: 11.54
Row: 1, Col: 2, Value: 10.31
Row: 2, Col: 1, Value: 10.96
Row: 2, Col: 2, Value: 9.91
Row: 3, Col: 1, Value: 10.27
Row: 3, Col: 2, Value: 9.59
Row: 4, Col: 1, Value: 10.39
Row: 4, Col: 2, Value: 9.81
Row: 5, Col: 1, Value: 10.08
Row: 5, Col: 2, Value: 9.529999999999999
Row: 6, Col: 1, Value: 9.91
Row: 6, Col: 2, Value: 9.56
Row: 7, Col: 1, Value: 9.94
Row: 7, Col: 2, Value: 9.470000000000001
Row: 8, Col: 1, Value: 9.350000000000001
Row: 8, Col: 2, Value: 9.32
Row: 9, Col: 1, Value: 9.09
Row: 9, Col: 2, Value: 9.199999999999999
Row: 10, Col: 1, Value: 9.779999999999999
Row: 10, Col: 2, Value: 9.81
Row: 11, Col: 1, Value: 9.539999999999999
Row: 11, Col: 2, Value: 9.719999999999999
Row: 12, Col: 1, Value: 9.41
Row: 12, Col: 2, Value: 9.68
Row: 13, Col: 1, Value: 9.06
Row: 13, Col: 2, Value: 9.48
Row: 14, Col: 1, Value: 8.68
Row: 14, Col: 2, Value: 9.199999999999999
Row: 15, Col: 1, Value: 8.42
Row: 15, Col: 2, Value: 8.960000000000001
Row: 16, Col: 1, Value: 7.78
Row: 16, Col: 2, Value: 8.739999999999998
Row: 17, Col: 1, Value: 7.42
Row: 17, Col: 2, Value: 8.619999999999999
Row: 18, Col: 1, Value: 7.35
Row: 18, Col: 2, Value: 8.33
Row: 19, Col: 1, Value: 7.5
Row: 19, Col: 2, Value: 8.15
Row: 20, Col: 1, Value: 8.0
Row: 20, Col: 2, Value: 8.06
Row: 21, Col: 1, Value: 8.19
Row: 21, Col: 2, Value: 8.27
Row: 22, Col: 1, Value: 7.98
Row: 22, Col: 2, Value: 8.139999999999999
Row: 23, Col: 1, Value: 7.8
Row: 23, Col: 2, Value: 8.139999999999999
Row: 24, Col: 1, Value: 8.239999999999998
Row: 24, Col: 2, Value: 8.109999999999999
Row: 25, Col: 1, Value: 7.54
Row: 25, Col: 2, Value: 7.92
Row: 26, Col: 1, Value: 7.31
Row: 26, Col: 2, Value: 7.7
Row: 27, Col: 1, Value: 7.79
Row: 27, Col: 2, Value: 8.17
Spartan High
Income
Competitive
funds average
1993
1992
1994
THE CHART SHOWS THE 30-DAY ANNUALIZED NET YIELDS FOR THE FUND AND ITS

COMPETITIVE FUNDS AVERAGE AS OF THE LAST DAY OF EACH MONTH FROM
JANUARY 1992 THROUGH APRIL 1994.
The fund's recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
<r>THE FUND IN DETAIL</r>

CHARTER
SPARTAN HIGH INCOME IS A MUTUAL FUND: an investment that pools
shareholders' money and invests it toward a specified goal. In technical
terms, the fund is currently a diversified fund of Fidelity Fixed-Income
Trust, an open-end management investment company organized as a
Massachusetts business trust on September 7, 1984.
THE FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the fund's activities,
review contractual arrangements with companies that provide services to the
fund, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUND MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These meetings
may be called to elect or remove trustees, change fundamental policies,
approve a management contract, or for other purposes. Shareholders not
attending these meetings are encouraged to vote by proxy. Fidelity will
mail proxy materials in advance, including a voting card and information
about the proposals to be voted on. The number of votes you are entitled to
is based upon the dollar value of your investment.
FMR AND ITS AFFILIATES
The fund is managed by FMR, which chooses the fund's investments and
handles its business affairs. Fidelity Management & Research (U.K.)
Inc. (FMR U.K. ) , in London, England, and Fidelity Management
& Research (Far East) Inc. (FMR Far East), in Tokyo, Japan,
assist FMR with foreign investments.
David Glancy is manager of Spartan High Income, which he has managed since
April 1993. Before joining Fidelity in 1990, Mr. Glancy was a high-income
analyst for Dean Witter and a rating officer for Standard & Poor's.
Fidelity Distributors Corporation (FDC) distributes and markets Fidelity's
funds and services. Fidelity Service Co. (FSC) performs transfer agent
servicing functions for the fund.
FMR Corp. is the parent company of these organizations. Through ownership
of voting common stock, Edward C. Johnson 3d (President and a trustee of
the trust), Johnson family members, and various trusts for the benefit of
the Johnson family form a controlling group with respect to FMR Corp.
To carry out the fund's transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that the fund
receives services and commission rates comparable to those of other
broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
THE FUND SEEKS HIGH CURRENT INCOME by investing primarily in all
types of income-producing debt securities, preferred stocks, and
convertible securities. FMR normally invests at least 65% of the fund's
total assets in these securities. When consistent with its goal, the fund
may also consider the potential for growth of capital.
Although the fund has no limits on the quality and maturity of its
investments, its strategy typically leads to longer-term,
lower-quality, fixed-income securities. These domestic and foreign
investments may present the risk of default or may be in default. If
consistent with its investment objective, however, the fund can also invest
in common stocks, other equity securities , and debt securities not
currently paying interest but which are expected to do so in the
future. Because of the fund's investment strategy, its performance is
especially affected by individual company news.
In addition, the fund's yield and share price will change based on changes
in interest rates, market conditions and other political and economic news.
In general, bond prices rise when interest rates fall, and vice versa. FMR
may use various investment techniques to hedge the fund's risks, but there
is no guarantee that these strategies will work as intended. When you sell
your shares, they may be worth more or less than what you paid for them.
FMR normally invests the fund's assets according to its investment
strategy. The fund also reserves the right to invest without limitation
in preferred stocks and investment-grade debt instruments for temporary
defensive purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which the fund may invest, and strategies FMR may employ in
pursuit of the fund's investment objective. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. Policies and limitations are considered at
the time of purchase; the sale of instruments is not required in the event
of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
fund achieve its goal. As a shareholder, you will receive financial reports
every six months detailing fund holdings and describing recent investment
activities.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. Debt
securities have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term bonds are generally
more sensitive to interest rate changes than short-term bonds.
Lower-quality debt securities (sometimes called "junk bonds") are often
considered to be speculative and involve greater risk of default or price
changes due to changes in interest rates, economic conditions, and the
issuer's creditworthiness. As a result, their market prices tend to
fluctuate more than higher-quality securities. Lower-quality securities
are those rated lower than Baa by Moody's or BBB by Moody's or S&P, and
unrated debt securities of equivalent quality.
The default rate of lower-quality debt securities is likely to be higher
when issuers have difficulty meeting projected goals or obtaining
additional financing. This could occur during economic recessions or
periods of high interest rates. If an issuer defaults, the fund may try to
protect its interests and those of other security holders if it determines
this to be in the interest of its shareholders.
Lower-quality securities may be thinly traded, making them difficult to
sell promptly at an acceptable price. If market quotations are unavailable,
lower-quality securities are valued under guidelines established by the
Board of Trustees, including the use of outside pricing services. Negative
publicity or investor perceptions may make this difficult, and could hurt
the fund's ability to dispose of these securities.
The table on page provides a summary of ratings assigned to debt
holdings (not including money market instruments) in the fund's portfolio.
These figures are dollar-weighted averages of month-end portfolio holdings
during fiscal 1994, and are presented as a percentage of total investments.
These percentages are historical and do not necessarily indicate the fund's
current or future debt holdings.
FISCAL 1994 DEBT HOLDINGS, BY RATING
MOODY'S STANDARD &
POOR'S

INVESTORS SERVICE, INC. CORPORATION
Rating Average A Rating Averag
eA
INVESTMENT GRADE

Highest quality Aaa AAA

High quality Aa .18% AA .18%

Upper-medium grade A A

Medium grade Baa 0% BBB .16%
LOWER QUALITY

Moderately speculative Ba 4.98% BB 6.49%

Speculative B 35.66% B 32.76%

Highly speculative Caa 4.83% CCC 4.41%

Poor quality Ca 2.50% CC .24%

Lowest quality, no interest C C

In default, in arrears -- D 3.42%

48.15% 47.66%
A FOR SOME FOREIGN GOVERNMENT OBLIGATIONS, FMR ASSIGNS THE RATINGS OF
THE
SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT. THE DOLLAR-WEIGHTED AVERAGE

OF DEBT SECURITIES NOT RATED DIRECTLY OR INDIRECTLY BY MOODY'S OR
S&P
AMOUNTED TO 30.48%. THIS MAY INCLUDE SECURITIES RATED BY OTHER
NATIONALLY
RECOGNIZED RATING SERVICES, AS WELL AS UNRATED SECURITIES. FMR HAS
DETERMINED THAT UNRATED SECURITIES THAT ARE LOWER QUALITY ACCOUNT FOR

30.34% OF THE FUND'S INVESTMENTS. REFER TO THE APPENDIX FOR A MORE
COMPLETE DISCUSSION OF THESE RATINGS.

EQUITY SECURITIES may include common stocks, preferred stocks,
convertible securities, and warrants. Common stocks, the most familiar
type, represent an equity (ownership) interest in a corporation. This
ownership interest often gives the fund the right to vote on measures
affecting the company's organization and operations. Although common stocks
have a history of long-term growth in value, their prices tend to fluctuate
in the shorter term, particularly those of smaller companies.
RESTRICTIONS: The fund may not invest more than 20% of its total assets in
equity securities. This restriction does not apply to income-producing
preferred stocks and convertible securities, nor to equity securities
acquired as part of a unit with fixed-income securities.
FOREIGN SECURITIES and foreign currencies may involve additional risks.
These include currency fluctuations, risks relating to political or
economic conditions in the foreign country, and the potentially less
stringent investor protection and disclosure standards of foreign markets.
In addition to the political and economic factors that can affect foreign
securities, a governmental issuer may be unwilling to repay principal and
interest when due, and may require that the conditions for payment be
renegotiated. These factors could make foreign investments, especially
those in developing countries, more volatile.
ASSET-BACKED AND MORTGAGE SECURITIES may include pools of consumer loans or
mortgages, such as collateralized mortgage obligations and stripped
mortgage-backed securities. The value of these securities may be
significantly affected by changes in interest rates, the market's
perception of the issuers, and the creditworthiness of the parties
involved. These securities may also be subject to prepayment risk.
STRIPPED SECURITIES are the separate income or principal components of a
debt instrument. These involve risks that are similar to those of other
debt securities, although they may be more volatile.
ADJUSTING INVESTMENT EXPOSURE. The fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, currency exchange rates, commodity prices, or other factors that
affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts,
entering into currency exchange contracts or swap agreements, purchasing
indexed securities, and selling securities short.
FMR can use these practices to adjust the risk and return characteristics
of the fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with the
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of the fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
DIRECT DEBT. Loans and other direct debt instruments are interests in
amounts owed to another party by a company, government, or other borrower.
They have additional risks beyond conventional debt securities because they
may entail less legal protection for the fund, or there may be a
requirement that the fund supply additional cash to a borrower on demand.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect the fund's yield.
REPURCHASE AGREEMENTS. In a repurchase agreement, the fund buys a security
at one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of other securities, including illiquid securities, may be subject
to legal restrictions. Difficulty in selling securities may result in a
loss or may be costly to the fund.
RESTRICTIONS: The fund may not purchase a security if, as a result, more
than 15% of its assets would be invested in illiquid securities.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry.
RESTRICTIONS: With respect to 75% of total assets, the fund may not invest
more than 5% of its total assets in any one issuer. The fund may not invest
more than 25% of its total assets in any one industry. These limitations do
not apply to U.S. government securities.
BORROWING. The fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements. If the fund borrows money,
its share price may be subject to greater fluctuation until the borrowing
is paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: The fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
LENDING. Lending securities to broker-dealers and institutions, including
FBSI, an affiliate of FMR, is a means of earning income. This practice
could result in a loss or a delay in recovering the fund's securities. The
fund may also lend money to other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 33% of the fund's
total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraph restates all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraph, can be changed without shareholder approval.
The fund seeks a high level of current income by investing primarily in
high-yielding, fixed-income securities. In pursuing this objective, growth
of capital may also be considered when consistent with the fund's objective
of seeking high current income. With respect to 75% of total assets, the
fund may not invest more than 5% of its total assets in any one issuer. The
fund may not invest more than 25% of its total assets in any one industry.
The fund may borrow only for temporary or emergency purposes, but not in an
amount exceeding 33% of its total assets. Loans, in the aggregate, may not
exceed 33% of the fund's total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the fund pays fees related to its daily operations.
Expenses paid out of the fund's assets are reflected in its share price or
dividends; they are neither billed directly to shareholders nor deducted
from shareholder accounts.
The fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn may pay fees to affiliates who provide
assistance with these services.
FMR may, from time to time, agree to reimburse the fund for management fees
above a specified limit. FMR retains the ability to be repaid by the fund
if expenses fall below the specified limit prior to the end of the fiscal
year. Reimbursement arrangements, which may be terminated at any time
without notice, can decrease the fund's expenses and boost its performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The fund pays
the fee at the annual rate of .80% of its average net assets.
FMR HAS SUB-ADVISORY AGREEMENTS with FMR U.K. and FMR Far East. These
sub-advisers provide FMR with investment research and advice on
issuers based outside the United States. Under the sub-advisory
agreements, FMR pays FMR U.K. and FMR Far East fees equal to 110% and 105%,
respectively, of the costs of providing these services.
FSC performs many transaction and accounting functions for the fund. These
services include processing shareholder transactions and calculating the
fund's share price. FMR, and not the fund, pays for these services.
To offset shareholder service costs, FMR or its affiliates also collect the
fund's $5.00 exchange fee, $5.00 account closeout fee, and $5.00 fee for
wire purchases and redemptions. For fiscal 1994, these fees amounted to
$ 28,240 , $ 1,620 , and $ 970 , respectively.
The fund has adopted a Distribution and Service Plan. This plan recognizes
that FMR may use its resources, including management fees, to pay expenses
associated with the sale of fund shares. This may include payments to third
parties, such as banks or broker-dealers, that provide shareholder support
services or engage in the sale of the fund's shares. It is important to
note, however, that the fund does not pay FMR any separate fees for this
service.
The fund's portfolio turnover rate for fiscal 1994 was 213% . This
rate varies from year to year. High turnover rates increase transaction
costs and may increase taxable capital gains. FMR considers these effects
when evaluating the anticipated benefits of short-term investing.
<r>YOUR ACCOUNT</r>

DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of America's
first mutual funds. Today, Fidelity is the largest mutual fund company in
the country, and is known as an innovative provider of high-quality
financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage Services,
Inc. (FBSI). Fidelity is also a leader in providing tax-sheltered
retirement plans for individuals investing on their own or through their
employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(bullet) For mutual funds, 1-800-544-8888
(bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity has
over 75 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in the fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in the fund through a brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed at right.
The account guidelines that follow may not apply to certain retirement
accounts. If your employer offers the fund through a retirement program,
contact your employer for more information. Otherwise, call Fidelity
directly.
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 200
(bullet) Assets in Fidelity mutual
funds: over $2 25 billion
(bullet) Number of shareholder
accounts: over 1 6 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(checkmark)
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal age
and under 70 with earned income to invest up to $2,000 per tax year.
Individuals can also invest in a spouse's IRA if the spouse has earned
income of less than $250.
(bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(bullet) KEOGH OR CORPORATE PROFIT SHARING AND MONEY PURCHASE PENSION PLANS
allow self-employed individuals or small business owners (and their
employees) to make tax-deductible contributions for themselves and any
eligible employees up to $30,000 per year.
(bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employed income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(bullet) 403(B) CUSTODIAL ACCOUNTS are available to employees of most
tax-exempt institutions, including schools, hospitals, and other charitable
organizations.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
THE FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. The fund's shares are sold without a sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page . If there is no application accompanying this
prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Open your account by exchanging from another Fidelity fund.
IF YOU ARE INVESTING THROUGH A TAX-SHELTERED RETIREMENT PLAN, such as an
IRA, for the first time, you will need a special application. Retirement
investing also involves its own investment procedures. Call 1-800-544-8888
for more information and a retirement application.
If you buy shares by check or Fidelity Money Line(registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business days to
ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $10,000
For Fidelity retirement accounts $10,000
TO ADD TO AN ACCOUNT $1,000
For Fidelity retirement accounts $1,000
Through automatic investment plans $500
MINIMUM BALANCE $5,000
For Fidelity retirement accounts $5,000

UNDERSTANDING THE

SPARTAN APPROACH(Registered trademark)
Fidelity's Spartan Approach is
based on the principle that lower
fund expenses can increase
returns. The Spartan funds keep
expenses low in two ways. First,
higher investment minimums
reduce the effect of a fund's
fixed costs, many of which are
paid on a per-account basis.
Second, unlike most mutual
funds that include transaction
costs as part of overall fund
expenses, Spartan shareholders
pay directly for the transactions
they make.
(checkmark)

<TABLE>
<CAPTION>
<S> <C> <C>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Mail (mail_graphic) (bullet) Complete and sign the (bullet) Make your check
application. Make your payable to "Spartan
check payable to High Income Fund."
"Spartan High Income Indicate your fund
Fund." Mail to the account number on
address indicated on your check and mail to
the application. the address printed on
your account statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Wire (wire_graphic) (bullet) There may be a $5.00 (bullet) There may be a $5.00
fee for each wire fee for each wire
purchase. purchase.
(bullet) Call 1-800-544-7777 to (bullet) Not available for
set up your account retirement accounts.
and to arrange a wire (bullet) Wire to:
transaction. Not Bankers Trust
available for retirement Company,
accounts. Bank Routing
(bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, Specify "Spartan High
Bank Routing Income Fund" and
#021001033, include your account
Account #00163053. number and your
Specify "Spartan High name.
Income Fund" and
include your new
account number and
your name.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

</TABLE>

HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the methods
described on these two pages.
TO SELL SHARES IN A FIDELITY RETIREMENT ACCOUNT, your request must be made
in writing, except for exchanges to other Fidelity funds, which can be
requested by phone or in writing. Call 1-800-544-6666 for a retirement
distribution form.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $5,000
worth of shares in the account to keep it open.
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(bullet) The redemption proceeds are being transferred to a Fidelity
account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
ACCOUNT TYPE SPECIAL REQUIREMENTS

<TABLE>
<CAPTION>
<S> <C> <C>
IF YOU SELL SHARES OF THE FUND AFTER HOLDING THEM LESS THAN 270 DAYS, THE FUND WILL
DEDUCT A REDEMPTION FEE EQUAL TO 1% OF THE VALUE OF THOSE SHARES. IF YOUR ACCOUNT
BALANCE IS LESS THAN $50,000, THERE ARE FEES FOR INDIVIDUAL REDEMPTION TRANSACTIONS:
$5.00 FOR EACH EXCHANGE, BANK WIRE, AND ACCOUNT CLOSEOUT.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

</TABLE>

To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in the fund. Call
1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing. There may be a $5.00 fee for
each exchange out of the fund, unless you place your transaction on
Fidelity's automated exchange services.
Note that exchanges out of the fund are limited to four per calendar year,
and that they may have tax consequences for you. For complete policies and
restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see page .
SYSTEMATIC WITHDRAWAL PLANS let you set up periodic redemptions from your
account.
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against
loss in a declining market, they can be an excellent way to invest for
retirement, a home, educational expenses, and other long-term financial
goals. Certain restrictions apply for retirement accounts. Call
1-800-544-6666 for more information.
REGULAR INVESTMENT PLANS

FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND

MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 Monthly or (bullet) For a new account, complete the
quarterly appropriate section on the fund
application.
(bullet) For existing accounts, call
1-800-544-6666 for an application.
(bullet) To change the amount or frequency of
your investment, call 1-800-544-6666 at
least three business days prior to your
next scheduled investment date.

<TABLE>
<CAPTION>
<S> <C> <C>
DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA

</TABLE>

MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 Every pay (bullet) Check the appropriate box on the fund
period application, or call 1-800-544-6666 for an
authorization form.
(bullet) Changes require a new authorization
form.

<TABLE>
<CAPTION>
<S> <C> <C>
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 Monthly, (bullet) To establish, call 1-800-544-6666 after
bimonthly, both accounts are opened.
quarterly, or (bullet) To change the amount or frequency of
annually your investment, call 1-800-544-6666.

</TABLE>

A BECAUSE ITS SHARE PRICE FLUCTUATES, THE FUND MAY NOT BE AN APPROPRIATE
CHOICE FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
SHAREHOLDER AND ACCOUNT POLICIES

DIVIDENDS, CAPITAL GAINS, AND TAXES
The fund distributes substantially all of its net investment income and
capital gains to shareholders each year. Income dividends are declared
daily and paid monthly. Capital gains are normally distributed in June and
December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. The fund offers four
options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions will
be automatically reinvested in additional shares of the fund. If you do not
indicate a choice on your application, you will be assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested, but you will be sent a check for each dividend
distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions.
4. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and
capital gain distributions will be automatically invested in another
identically registered Fidelity fund.
FOR RETIREMENT ACCOUNTS, all distributions are automatically reinvested.
When you are over 59 years old, you can receive distributions in cash.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions will be reinvested at the NAV as of the
date the fund deducts the distribution from its NAV. The mailing of
distribution checks will begin within seven days.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
Each fund earns interest from
its investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund may
realize capital gains if it sells
securities for a higher price
than it paid for them. These
are passed along as CAPITAL
GAIN DISTRIBUTIONS.
(checkmark)
TAXES
As with any investment, you should consider how your investment in the fund
will be taxed. If your account is not a tax-deferred retirement account,
you should be aware of these tax implications.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax,
and may also be subject to state or local taxes. If you live outside the
United States, your distributions could also be taxed by the country in
which you reside. Your distributions are taxable when they are paid,
whether you take them in cash or reinvest them. However, distributions
declared in December and paid in January are taxable as if they were paid
on December 31.
For federal tax purposes, the fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions
are taxed as long-term capital gains. Every January, Fidelity will send you
and the IRS a statement showing the taxable distributions paid to you in
the previous year.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other
Fidelity funds - are subject to capital gains tax. A capital gain or loss
is the difference between the cost of your shares and the price you receive
when you sell them.
Whenever you sell shares of the fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before the fund deducts a
capital gain distribution from its NAV, you will pay the full price for the
shares and then receive a portion of the price back in the form of a
taxable distribution.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, the fund
may have to limit its investment activity in some types of instruments.
TRANSACTION DETAILS
THE FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates the fund's NAV as of the close of
business of the NYSE, normally 4 p.m. Eastern time.
THE FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
The fund's assets are valued primarily on the basis of market quotations.
If quotations are not readily available, assets are valued by a method that
the Board of Trustees believes accurately reflects fair value. Foreign
securities are valued on the basis of quotations from the primary market in
which they are traded, and are translated from the local currency into U.S.
dollars using current exchange rates.
THE FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require the fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
THE FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. The fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they would
disrupt management of the fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) The fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees the fund or its transfer agent
has incurred.
(bullet) You begin to earn dividends as of the first business day
following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUND THROUGH A BROKER, who may charge you
a fee for this service. If you invest through a broker or other
institution, read its program materials for any additional service features
or fees that may apply.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
FDC may enter confirmed purchase orders on behalf of customers by phone,
with payment to follow no later than the time when the fund is priced on
the following business day. If payment is not received by that time, the
financial institution could be held liable for resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect the
fund, it may take up to seven days to pay you.
(bullet) Shares will earn dividends through the date of redemption;
however, shares redeemed on a Friday or prior to a holiday will continue to
earn dividends until the next business day.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) The fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(bullet) Redemptions may be suspended or payment dates postponed when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.
THE REDEMPTION FEE, if applicable, will be deducted from the amount of your
redemption. This fee is paid to the fund rather than FMR, and it does not
apply to shares that were acquired through reinvestment of distributions.
If shares you are redeeming were not all held for the same length of time,
those shares you held longest will be redeemed first for purposes of
determining whether the fee applies.
THE FEES FOR INDIVIDUAL TRANSACTIONS are waived if your account balance at
the time of the transaction is $50,000 or more. Otherwise, you should note
the following:
(bullet) The $5.00 exchange fee will be deducted from the amount of your
exchange.
(bullet) The $5.00 wire fee will be deducted from the amount of your wire.
(bullet) The $5.00 account closeout fee does not apply to exchanges or
wires.
IF YOUR ACCOUNT BALANCE FALLS BELOW $5,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed and the $5.00 account closeout fee will be charged.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of the fund
for shares of other Fidelity funds. However, you should note the following:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Because excessive trading can hurt fund performance and
shareholders, the fund reserves the right to temporarily or permanently
terminate the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(bullet) The exchange limit may be modified for accounts in certain
institutional retirement plans to conform to plan exchange limits and
Department of Labor regulations. See your plan materials for further
information.
(bullet) The fund reserves the right to refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to invest
the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
(bullet) Your exchanges may be restricted or refused if the fund receives
or anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to the fund.
Although the fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time. The
fund reserves the right to terminate or modify the exchange privilege in
the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
APPENDIX
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.
A - Bonds rated A possess many favorable investment attributes and are to
be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA - Bonds rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of
other terms of the contract over any long period of time may be small.
CAA - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
CA - Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked
short-comings.
C - Bonds rated C are the lowest-rated class of bonds and issued so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
CC - Debt rated CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may
be used to cover a situation where a bankruptcy petition has been filed but
debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The D rating will
also be used upon the filing of a bankruptcy petition if debt service
payments are jeopardized.

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

SPARTAN HIGH INCOME FUND
A FUND OF FIDELITY FIXED INCOME
STATEMENT OF ADDITIONAL INFORMATION
JUNE 21, 1994
This Statement is not a prospectus but should be read in conjunction with
the fund's current Prospectus (dated June 21, 1994 ). Please retain
this document for future reference. The fund's financial statements and
financial highlights, included in the Annual Report for the fiscal year
ended April 30, 1994, are incorporated herein by reference. To obtain
an additional cop y of the Prospectus or the Annual Report,
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 Contract
Contracts With Companies Affiliated With FMR
Description of the Trust
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
Fidelity Management & Research (Far East) Inc. (FMR Far East)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
Fidelity Service Co. (FSC)
SPH-pt b - 694

1INVESTMENT 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 the 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.
The 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. THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed by the government of the United States or its agencies or
instrumentalities) if, as a result, (a) more than 25% of the value of its
total assets would be invested in the securities of a single issuer, or (b)
with respect to 75% of its total assets, more than 5% of the value of its
total assets would be invested in the securities of a single 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 deemed to be 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 obligations issued or
guaranteed by the government of the United States or its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets (taken at current value) would be invested in the securities of
issuers having their principal business activities 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).
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) With respect to 75% of its total assets, the fund does not currently
intend to 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, the fund would own more than 10% of the
outstanding voting securities of such issuer.
(ii) 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.
(iii) 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.
(iv) 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.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 15% 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.
(vi) The fund does not currently intend to invest in securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of 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.
(vii) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) 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 or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(viii) 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.
(ix) 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.
(x) 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.
(xi) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions"
beginning on page . For the fund's limitations on short sales, see the
section entitled "Short Sales" on page .
AFFILIATED BANK TRANSACTIONS. The 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.
FUND'S RIGHTS AS A SHAREHOLDER. The fund does not intend to direct or
administer the day-to-day operations of any company. The fund, however, may
exercise its rights as a shareholder and may communicate its views on
important matters of policy to management, the Board of Directors, and
shareholders of a company when FMR determines that such matters could have
a significant effect on the value of the fund's investment in the company.
The activities that the fund may engage in, either individually or in
conjunction with others, may include, among others, supporting or opposing
proposed changes in a company's corporate structure or business activities;
seeking changes in a company's directors or management; seeking changes in
a company's direction or policies; seeking the sale or reorganization of
the company or a portion of its assets; or supporting or opposing
third - party takeover efforts. This area of corporate activity is
increasingly prone to litigation and it is possible that the fund could be
involved in lawsuits related to such activities. FMR will monitor such
activities with a view to mitigating, to the extent possible, the risk of
litigation against the fund and the risk of actual liability if the fund is
involved in litigation. No guarantee can be made, however, that litigation
against the fund will not be undertaken or liabilities incurred.
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 the fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of the 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 the 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 restricted
securities, government- stripped fixed-rate mortgage-backed securities,
loans and other direct debt instruments, and swap agreements to be
illiquid. However, with respect to over-the-counter options the 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, the fund were in a position where more than 15% of its
net assets were invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, the fund may be obligated to pay all or part of
the registration expense and a considerable period may elapse between the
time it decides to seek registration and the time the fund may be permitted
to sell a security under an effective registration statement. If, during
such a period, adverse market conditions were to develop, the fund might
obtain a less favorable price than prevailed when it decided to seek
registration of the security.
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.
REPURCHASE AGREEMENTS. In a repurchase agreement, the fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed-upon price on an agreed-upon date within a number of days from
the date of purchase. 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 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. The fund may engage in a repurchase agreement with respect to any
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 the fund in
connection with bankruptcy proceedings), it is the 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, the fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement.
The 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.
INTERFUND BORROWING PROGRAM. The fund has received permission from the SEC
to lend money to and borrow money from other funds advised by FMR or its
affiliates. Interfund loans and borrowing normally will extend overnight,
but can have a maximum duration of seven days. Loans may be called on one
day's notice. The fund will lend through the program only when the returns
are higher than those available at the same time from other short-term
instruments (such as repurchase agreements), and will borrow through the
program only when the costs are equal to or lower than the cost of bank
loans. The fund may have to borrow from a bank at a higher interest rate
if an interfund loan is called or not renewed. Any delay in repayment to a
lending fund could result in a lost investment opportunity or additional
borrowing costs.
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 the fund's exposure to long- or
short-term interest rates (in the U.S. or abroad), foreign currency values,
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. The 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 the fund's investment exposure from one
type of investment to another. For example, if the fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease the fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and 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 the 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, currency, or other factors that
determine the amounts of payments due to and from the 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. The 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.
The fund will maintain appropriate liquid assets in a segregated custodial
account to cover its current obligations under swap agreements. If the 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 the 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. The fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, currencies,
precious metals or other commodities, 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. Gold-indexed securities, for
example, typically provide for a maturity value that depends on the price
of gold, resulting in a security whose price tends to rise and fall
together with gold prices. Currency-indexed securities typically are
short-term to intermediate-term debt securities whose maturity values or
interest rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed
securities may be positively or negatively indexed; that is, their maturity
value may increase when the specified currency value increases, resulting
in a security that performs similarly to a foreign-denominated instrument,
or their maturity value may decline when foreign currencies increase,
resulting in a security whose price characteristics are similar to a put on
the underlying currency. Currency-indexed securities may also have prices
that depend on the values of a number of different foreign currencies
relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they
are indexed, and may also be influenced by interest rate changes in the
U.S. and abroad. 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.
Recent issuers of indexed securities have included banks, corporations, and
certain U.S. government agencies. 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, the 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 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 (REFCORP) and the Financing Corporation (FICO) 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.
MORTGAGE-BACKED SECURITIES. The 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 the
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. 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.
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.
ASSET-BACKED SECURITIES consist of undivided fractional interests in pools
of consumer loans (unrelated to mortgage loans) held in a trust. Payments
of principal and interest are passed through to certificate holders and are
typically supported by some form of credit enhancement, such as a letter of
credit, surety bond, limited guaranty, or senior/subordination. The degree
of credit enhancement varies, but generally amounts to only a fraction of
the asset-backed security's par value until exhausted. If the credit
enhancement is exhausted, certificate holders may experience losses or
delays in payment if the required payments of principal and interest are
not made to the trust with respect to the underlying loans. The value of
these securities also may change because of changes in the market's
perception of the creditworthiness of the servicing agent for the loan
pool, the originator of the loans, or the financial institution providing
the credit enhancement. Asset-backed securities are ultimately dependent
upon payment of consumer loans by individuals, and the certificate holder
generally has no recourse to the entity that originated the loans. The
underlying loans are subject to prepayments which shorten the securities'
weighted average life and may lower their returns. (As prepayments flow
through at par, total returns would be affected by the prepayments: If a
security were trading at a premium, its total return would be lowered by
prepayments, and if a security were trading at a discount, its total return
would be increased by prepayments.)
FMR believes that CMOs, asset-backed securities, and mortgage-backed
securities are readily marketable based on the size of the market and the
number of trades transacted each day.
DELAYED-DELIVERY TRANSACTIONS. The fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by the fund to purchase or sell specific securities at a
predetermined price and/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. The fund may receive fees for
entering into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, the fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because the 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 the 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 the 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.
The fund may dispose of or 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.
SECURITIES LENDING. The fund 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 fund 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 the 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 the 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).
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other borrower
to lenders or lending syndicates (loans and loan participations), to
suppliers of goods or services (trade claims or other receivables), or to
other parties. Direct debt instruments are subject to the fund's policies
regarding the quality of debt securities.
Purchasers of loans and other forms of direct indebtedness depend primarily
upon the creditworthiness of the borrower for payment of principal and
interest. Direct debt instruments may not be rated by any nationally
recognized rating service. If the fund does not receive scheduled interest
or principal payments on such indebtedness, the fund's share price and
yield could be adversely affected. Loans that are fully secured offer the
fund more protections than an unsecured loan in the event of non-payment of
scheduled interest or principal. However, there is no assurance that the
liquidation of collateral from a secured loan would satisfy the borrower's
obligation, or that the collateral could be liquidated. Indebtedness of
borrowers whose creditworthiness is poor involves substantially greater
risks and may be highly speculative. Borrowers that are in bankruptcy or
restructuring may never pay off their indebtedness, or may pay only a small
fraction of the amount owed. Direct indebtedness of developing countries
also involves a risk that the governmental entities responsible for the
repayment of the debt may be unable, or unwilling, to pay interest and
repay principal when due.
Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks to the fund.
For example, if a loan is foreclosed, the fund could become part owner of
any collateral, and would bear the costs and liabilities associated with
owning and disposing of the collateral. In addition, it is conceivable that
under emerging legal theories of lender liability, the fund could be held
liable as a co-lender. Direct debt instruments may also involve a risk of
insolvency of the lending bank or other intermediary. Direct debt
instruments that are not in the form of securities may offer less legal
protection to the fund in the event of fraud or misrepresentation. In the
absence of definitive regulatory guidance, the fund relies on FMR's
research in an attempt to avoid situations where fraud or misrepresentation
could adversely affect the fund.
A loan is often administered by a bank or other financial institution that
acts as agent for all holders. The agent administers the terms of the loan,
as specified in the loan agreement. Unless, under the terms of the loan or
other indebtedness, the fund has direct recourse against the borrower, it
may have to rely on the agent to apply appropriate credit remedies against
a borrower. If assets held by the agent for the benefit of the fund were
determined to be subject to the claims of the agent's general creditors,
the fund might incur certain costs and delays in realizing payment on the
loan or loan participation and could suffer a loss of principal or
interest.
Direct indebtedness purchased by the fund may include letters of credit,
revolving credit facilities, or other standby financing commitments
obligating the fund to pay additional cash on demand. These commitments may
have the effect of requiring the fund to increase its investment in a
borrower at a time when it would not otherwise have done so, even if the
borrower's condition makes it unlikely that the amount will ever be repaid.
The fund will set aside appropriate liquid assets in a segregated custodial
account to cover its potential obligations under standby financing
commitments.
The fund limits the amount of total assets that it will invest in any one
issuer or in issuers within the same industry (see limitations 1 and 5).
For purposes of these limitations, the fund generally will treat the
borrower as the "issuer" of indebtedness held by the fund. In the case of
loan participations where a bank or other lending institution serves as
financial intermediary between the fund and the borrower, if the
participation does not shift to the fund the direct debtor-creditor
relationship with the borrower, SEC interpretations require the fund, in
appropriate circumstances, to treat both the lending bank or other lending
institution and the borrower as "issuers" for these purposes. Treating a
financial intermediary as an issuer of indebtedness may restrict the fund's
ability to invest in indebtedness related to a single financial
intermediary, or a group of intermediaries engaged in the same industry,
even if the underlying borrowers represent many different companies and
industries.
FOREIGN INVESTMENTS. Foreign investments can involve significant risks in
addition to the risks inherent in U.S. investments. The value of securities
denominated in or indexed to foreign currencies, and of dividends and
interest from such securities, can change significantly when foreign
currencies strengthen or weaken relative to the U.S. dollar. Foreign
securities markets generally have less trading volume and less liquidity
than U.S. markets, and prices on some foreign markets can be highly
volatile. Many foreign countries lack uniform accounting and disclosure
standards comparable to those applicable to U.S. companies, and it may be
more difficult to obtain reliable information regarding an issuer's
financial condition and operations. In addition, the costs of foreign
investing, including withholding taxes, brokerage commissions, and
custodial costs, are generally higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including those
involving the release of assets in advance of payment, may involve
increased risks in the event of a failed trade or the insolvency of a
broker-dealer, and may involve substantial delays. It may also be difficult
to enforce legal rights in foreign countries.
Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments
adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention. There
may be a greater possibility of default by foreign governments or foreign
government-sponsored enterprises. Investments in foreign countries also
involve a risk of local political, economic, or social instability,
military action or unrest, or adverse diplomatic developments. There is no
assurance that FMR will be able to anticipate these potential events or
counter their effects.
The considerations noted above generally are intensified for investments in
developing countries. Developing countries may have relatively unstable
governments, economies based on only a few industries, and securities
markets that trade a small number of securities.
The fund may invest in foreign securities that impose restrictions on
transfer within the U.S. or to U.S. persons. Although securities subject to
transfer restrictions may be marketable abroad, they may be less liquid
than foreign securities of the same class that are not subject to such
restrictions.
American Depositary Receipts and European Depositary Receipts (ADRs and
EDRs) are certificates evidencing ownership of shares of a foreign-based
issuer held in trust by a bank or similar financial institution. Designed
for use in U.S. and European securities markets, respectively, ADRs and
EDRs are alternatives to the purchase of the underlying securities in their
national markets and currencies.
FOREIGN CURRENCY TRANSACTIONS. The fund may hold foreign currency deposits
from time to time, and may convert dollars and foreign currencies in the
foreign exchange markets. Currency conversion involves dealer spreads and
other costs, although commissions usually are not charged. Currencies may
be exchanged on a spot (i.e., cash) basis, or by entering into forward
contracts to purchase or sell foreign currencies at a future date and
price. Forward contracts generally are traded in an interbank market
conducted directly between currency traders (usually large commercial
banks) and their customers. The parties to a forward contract may agree to
offset or terminate the contract before its maturity, or may hold the
contract to maturity and complete the contemplated currency exchange.
The fund may use currency forward contracts to manage currency risks and to
facilitate transactions in foreign securities. The following discussion
summarizes the principal currency management strategies involving forward
contracts that could be used by the fund.
In connection with purchases and sales of securities denominated in foreign
currencies, the fund may enter into currency forward contracts to fix a
definite price for the purchase or sale in advance of the trade's
settlement date. This technique is sometimes referred to as a "settlement
hedge" or "transaction hedge." FMR expects to enter into settlement hedges
in the normal course of managing the fund's foreign investments. The fund
could also enter into forward contracts to purchase or sell a foreign
currency in anticipation of future purchases or sales of securities
denominated in foreign currency, even if the specific investments have not
yet been selected by FMR.
The fund may also use forward contracts to hedge against a decline in the
value of existing investments denominated in foreign currency. For example,
if the fund owned securities denominated in pounds sterling, it could enter
into a forward contract to sell pounds sterling in return for U.S. dollars
to hedge against possible declines in the pound's value. Such a hedge,
sometimes referred to as a "position hedge," would tend to offset both
positive and negative currency fluctuations, but would not offset changes
in security values caused by other factors. The fund could also hedge the
position by selling another currency expected to perform similarly to the
pound sterling - for example, by entering into a forward contract to sell
Deutschemarks or European Currency Units in return for U.S. dollars. This
type of hedge, sometimes referred to as a "proxy hedge," could offer
advantages in terms of cost, yield, or efficiency, but generally would not
hedge currency exposure as effectively as a simple hedge into U.S. dollars.
Proxy hedges may result in losses if the currency used to hedge does not
perform similarly to the currency in which the hedged securities are
denominated.
Under certain conditions, SEC guidelines require mutual funds to set aside
appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, the fund will
segregate assets to cover currency forward contracts, if any, whose purpose
is essentially speculative. The fund will not segregate assets to cover
forward contracts entered into for hedging purposes, including settlement
hedges, position hedges, and proxy hedges.
Successful use of forward currency contracts will depend on FMR's skill in
analyzing and predicting currency values. Forward contracts may
substantially change the fund's investment exposure to changes in currency
exchange rates, and could result in losses to the fund if currencies do not
perform as FMR anticipates. For example, if a currency's value rose at a
time when FMR had hedged the fund by selling that currency in exchange for
dollars, the fund would be unable to participate in the currency's
appreciation. If FMR hedges currency exposure through proxy hedges, the
fund could realize currency losses from the hedge and the security position
at the same time if the two currencies do not move in tandem. Similarly, if
FMR increases a fund's exposure to a foreign currency, and that currency's
value declines, the fund will realize a loss. There is no assurance that
FMR's use of forward currency contracts will be advantageous to the fund or
that it will hedge at an appropriate time. The policies described in this
section are non-fundamental policies of the fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The 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 fund intends to comply with Rule 4.5 under the
Commodity Exchange Act, which limits the extent to which the fund can
commit assets to initial margin deposits and option premiums.
In addition, the fund will not: (a) sell futures contracts, purchase put
options, or write call options if, as a result, more than 25% 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; or (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. 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 the fund's investments in futures contracts and
options, and the 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 the fund purchases a futures contract, it agrees to
purchase a specified underlying instrument at a specified future date. When
the 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 the 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 Standard & Poor's 500 Composite Stock
Price Index (S&P 500). 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 the fund's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When the 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 fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of the 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, the 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. The 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 the 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. The 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 would generally 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 the 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. The fund may purchase and write options in combination
with each other, or in combination with futures or forward contracts, to
adjust the risk and return characteristics of the overall position. For
example, the 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 the fund's current or
anticipated investments exactly. The 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 other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the 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. The 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 the 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 the 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 the fund to continue to hold a
position until delivery or expiration regardless of changes in its value.
As a result, the 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 the
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.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally
is purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the
right to sell the underlying currency.
The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above. The fund
may purchase and sell currency futures and may purchase and write currency
options to increase or decrease its exposure to different foreign
currencies. The fund may also purchase and write currency options in
conjunction with each other or with currency futures or forward contracts.
Currency futures and options values can be expected to correlate with
exchange rates, but may not reflect other factors that affect the value of
the fund's investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not protect
the fund against a price decline resulting from deterioration in the
issuer's creditworthiness. Because the value of the fund's
foreign-denominated investments changes in response to many factors other
than exchange rates, it may not be possible to match the amount of currency
options and futures to the value of the fund's investments exactly over
time.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The fund will comply with
guidelines established by the Securities and Exchange Commission (SEC) 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
the fund's assets could impede portfolio management or the fund's ability
to meet redemption requests or other current obligations.
SHORT SALES. The fund may enter into short sales with respect to stocks
underlying its convertible security holdings. For example, if FMR
anticipates a decline in the price of the stock underlying a convertible
security the fund holds, it may sell the stock short. If the stock price
subsequently declines, the proceeds of the short sale could be expected to
offset all or a portion of the effect of the stock's decline on the value
of the convertible security. The fund currently intends to hedge no more
than 15% of its total assets with short sales on equity securities
underlying its convertible security holdings under normal circumstances.
When the fund enters into a short sale, it will be required to set aside
securities equivalent in kind and amount to those sold short (or securities
convertible or exchangeable into such securities) and will be required to
continue to hold them while the short sale is outstanding. The fund will
incur transaction costs, including interest expenses, in connection with
opening, maintaining, and closing short sales.
2PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the 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. Commissions for foreign investments
traded on foreign exchanges generally will be higher than for U.S.
investments and may not be subject to negotiation.
The fund may execute portfolio transactions with broker-dealers who provide
research and execution services to the fund 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 fund may be useful to FMR in rendering investment management
services to the fund 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 fund. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid
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 the
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
fund 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
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the fund 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), subsidiaries 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 requirements, the Board of
Trustees has authorized FBSI to execute portfolio transactions on
national securities exchanges in accordance with approved procedures and
applicable SEC rules.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
fund and review the commissions paid by the fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to the fund.
For the fiscal periods ended April 30, 1994 and 1993 the fund's
portfolio turnover rates were 213% and 136% , respectively.
For fiscal 1994, 1993, and 1992, the fund paid no brokerage commissions.
From time to time the Trustees will review whether the recapture for the
benefit of the fund of some portion of the brokerage commissions or similar
fees paid by the fund on portfolio transactions is legally permissible and
advisable. The 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 the fund to seek such recapture.
Although the Trustees and officers of the fund are substantially the same
as those of other funds managed by FMR, investment decisions for the 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 and 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 for
each fund. In some cases this system could have a detrimental effect on
the price or value of the security as far as the fund is concerned. In
other cases, however, the ability of the fund to participate in volume
transactions will produce better executions and prices for the fund. It is
the current opinion of the Trustees that the desirability of retaining FMR
as investment adviser to the fund outweighs any disadvantages that may be
said to exist from exposure to simultaneous transactions.
3VALUATION OF PORTFOLIO SECURITIES
Securities and other assets for which market quotations are readily
available are valued at market values determined by their most recent bid
prices (sales prices if the principal market is an exchange) in the
principal market in which such securities normally are traded. Securities
and other assets for which market quotations are not readily available
(including restricted securities, if any) are appraised at their fair value
as determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees.
Securities may also be valued on the basis of valuations furnished by a
pricing service that uses both dealer-supplied valuations and evaluations
based on expert analysis of market data and other factors if such
valuations are believed to reflect more accurately the fair value of such
securities. Use of a 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 pricing services, may use other pricing
services or may 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.
4PERFORMANCE
The fund may quote its performance in various ways. All performance
information supplied by the fund in advertising is historical and is not
intended to indicate future returns. The fund's share price, yield, and
total returns 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 the fund used in advertising are computed by
dividing the fund's interest and dividend 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 per share (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. Dividends from equity investments are treated as if they
were accrued on a daily basis, solely for the purpose of yield
calculations. 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 the purposes of calculating the 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, the 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.
In calculating the fund's yield, the fund may from time to time use a
portfolio security's coupon rate instead of its yield to maturity in order
to reflect the risk premium on that security. This practice will have the
effect of reducing the fund's yield.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of the fund's returns, including the effect of reinvesting
dividends and capital gain distributions, and any change in the fund's NAV
over a period. Average annual total returns are calculated by determining
the growth or decline in value of a hypothetical historical investment in
the 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 entire period. For
example, a cumulative return of 100% over ten years would produce an
average annual return of 7.18%, which is the steady annual rate of return
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 the 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 the fund.
In addition to average annual returns, the 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. An example of this type of
illustration is given below. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration and may omit or include the effects of the $5.00 account
closeout fee and the 1% redemption fee applicable to shares held less than
270 days.
NET ASSET VALUE. Charts and graphs using the 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 the fund
and reflects all elements of its return. Unless otherwise indicated, the
fund's adjusted NAVs are not adjusted for sales charges, if any.
HISTORICAL FUND RESULTS. The following table shows the fund's yield and
total returns for the periods ended April 30, 1994. Figures include the
effect of the fund's $5.00 account closeout fee, but not the fund's 1%
redemption fee, applicable to shares held less than 270 days.
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS

30-Day Yield One Year Life of Fund* One Year Life of Fund*

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
8.01 % 12.69 % 20.31 % 12.69 % 97.25 %

</TABLE>

* From August 29, 1990 (commencement of operations).
The table below compares the fund's return to the record of the Standard
& Poor's 500 Composite Stock Price Index (S&P 500 (registered
trademark) ), the Dow Jones Industrial Average (DJIA), and the cost of
living (measured by the Consumer Price Index, or CPI) over the same period.
The S&P 500 and DJIA comparisons are provided to show how the fund's
total return compared to the record of a broad average of common stock
prices and a narrower set of stocks of major industrial companies,
respectively, over the same period. Common stocks represent a different
type of investment from the fund, which will normally invest a substantial
portion of its assets in fixed-income securities. Common stocks generally
offer greater growth potential than the fund, but generally fluctuate more
in value and may offer greater potential for loss. In addition, common
stocks generally provide lower income than a bond fund investment such as
the fund. The S&P 500 and DJIA are based on the prices of unmanaged
groups of stocks and, unlike the fund's returns, their returns do not
include the effect of paying brokerage commissions and other costs of
investing.
During the period from August 29, 1990 (commencement of operations) through
April 30, 1994, a hypothetical $10,000 investment in Spartan High Income
Fund would have grown to $ 19,727 assuming all distributions were
reinvested and not including the effect of the fund's $5.00 account
closeout fee or the fund's 1% redemption fee on shares held for less
than 270 days . This was a period of widely fluctuating stock prices and
interest rates and 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.
SPARTAN HIGH INCOME FUND INDICES

5 VALUE OF VALUE OF VALUE OF
6PERIOD INITIAL REINVESTED REINVESTED
7ENDED $10,000 DIVIDEND CAPITAL GAIN TOTAL
8APRIL 30 INVESTMENT DISTRIBUTIONS DISTRIBUTIONS VALUE S&P 500 DJIA
CPI**

1994 $ 11,880 $ 5,808 $ 2,039 $ 19,727 $ 15,862 $ 15,777 $ 11,200

1993 12,220 4,364 919 17,503 14,890 14,283 10,942

1992 11,900 2,664 401 14,966 13,629 13,587 10,600

1991* 10,640 893 0 1 1,533 11,950 11,326 10,274

</TABLE>

* From August 29, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on August 29,
1990, 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
$ 17,614 . 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 $ 4,375 for
income dividends and $ 1,480 for capital gain distributions. Tax
consequences of different investments have not been factored into the
figures above. The figures in the table do not reflect the effect of the
fund's $5.00 account closeout fee or the fund's 1% redemption fee on
shares held for less than 270 days.
The 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, the fund's performance may be compared to mutual fund
performance indices prepared by Lipper.
From time to time, the fund's performance also may 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.
The fund may be compared in advertising to Certificates of Deposit (CDs) or
other investments issued by banks. Mutual funds differ from bank
investments in several respects. For example, the fund may offer greater
liquidity or higher potential returns than CDs . T he 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. For
example, Fidelity's FundMatchSM Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
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.
The 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 340 taxable money market
funds. The BOND FUND REPORT AVERAGES(trademark) /Taxable Bond , which
is reported in the BOND FUND REPORT, covers over 350 taxable 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. The fund,
however, invests in longer-term instruments and its share price changes
daily in response to a variety of factors.
In addition, the fund's performance may be compared in advertising to the
performance of unmanaged indices of bond prices and yields
including :
SALOMON BROTHERS HIGH YIELD COMPOSITE INDEX is an index of high-yielding
utility and corporate bonds with a minimum maturity of seven years and with
total debt outstanding of at least $50 million. Issues included in the
index are rated Baa or lower by Moody's Investors Service, Inc. (Moody's)
or BBB or lower by Standard & Poor's Corporation (S&P).
SALOMON BROTHERS HIGH GRADE CORPORATE BOND INDEX is an index of
high-quality corporate bonds with a minimum maturity of at least ten years
and with total debt outstanding of at least $50 million. Issues included in
the index are rated Aa or better by Moody's or AA or better by S&P. It
is important to note that the fund does not invest in high-quality
securities under normal conditions.
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; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to management, investment
philosophy, and investment techniques. 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.
The fund may present its fund number, Quotron number (trademark), and
CUSIP number, and discuss or quote its current portfolio manager.
The fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a program,
the 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 through periods of low price levels.
The 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.
Although the achievement of favorable investment returns cannot be assured,
FMR believes that investing for income can be an effective discipline to
achieve positive results with respect to all elements of investment return.
The fund is designed to achieve higher yields than the average high current
yield fund through a lower expense format and by remaining as fully
invested as practicable given necessary liquidity considerations. As of
April 30, 1994, FMR managed 32 Spartan funds with approximately
$ 640 billion in assets.
9ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The fund is open for business and its 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, 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 the 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, the fund's NAV may be affected on days when investors
do not have access to the fund to purchase or redeem shares.
If the Trustees determine that existing conditions make cash payment
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 the 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 (1940 Act),
the 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
an exchange, or (ii) the fund suspends the redemption of the 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 polices.
In the Prospectus, the fund has notified shareholders that it reserves 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.
10DISTRIBUTIONS 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 will alternate instructions.
DIVIDENDS. Because the fund's income is primarily derived from interest,
dividends from the fund generally will not qualify for the
dividends-received deduction available to corporations. A portion of the
fund's dividends derived from certain U.S. government obligations may be
exempt from state and local taxation. Gains (losses) attributable to
foreign currency fluctuations are generally taxable as ordinary income and
therefore will increase (decrease) dividend distributions.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the 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 the 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
the fund are taxable to shareholders as dividends, not as capital gains.
Distributions from short-term capital gains do not qualify for the
dividends-received deduction.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends or
interest paid with respect to foreign securities. Because the fund does not
currently anticipate that securities of foreign issuers will constitute
more than 50% of its total assets at the end of its fiscal year,
shareholders should not expect to claim a foreign tax credit or deduction
on their federal income tax returns with respect to foreign taxes withheld.
TAX STATUS OF THE FUND. The fund has qualified and intends to continue to
qualify each year as a "regulated investment company" for tax purposes, so
that it will not be liable for federal tax at the fund level 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, the 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. The 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 the fund's gross income for each
fiscal year. Gains from some forward currency contracts, futures contracts,
and options, are included in this 30% calculation, which may limit the
fund's investments in such instruments. The fund is treated as a separate
entity from the other funds of Fidelity Fixed-Income Trust for tax
purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting the 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. Investors should consult their tax
advisers to determine whether the fund is suitable to their particular tax
situation.
11FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. 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
Fidelity Investments Retail Marketing Company, which provides marketing
services to various companies within the Fidelity organization.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. FMR U.K. and FMR Far East, both wholly owned
subsidiaries of FMR formed in 1986, supply investment research, and may
supply portfolio management services, to FMR in connection with certain
funds advised by FMR. Analysts employed by FMR, FMR U.K., and FMR Far East
research and visit thousands of domestic and foreign companies each year.
FMR Texas Inc., a wholly owned subsidiary of FMR formed in 1989, supplies
portfolio management and research services in connection with certain money
market funds advised by FMR.
12TRUSTEES AND OFFICERS
The Trustees and executive officers of the 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. 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 trust 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 serves as a Director of the New York
City Chapter of the National Multiple Sclerosis Society, and is a member of
the Advisory Council of the International Executive Service Corps. and 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 Investments, Chairman of the Board of
Trustees and a member of the Executive Committee of the Cleveland Clinic
Foundation, a Trustee and a 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 Trustee of Corporate Property Investors, the EPS
Foundation of Trinity College, the Naples Philharmonic Center for the Arts,
and Rensellar 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), 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).
ARTHUR S. LORING, Secretary, is Senior Vice President and General Counsel
of FMR, Vice President - Legal of FMR Corp., and Vice President and
Clerk of FDC.
ROBERT H. MORRISON, Manager, Security Transactions, is an employee of FMR.
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 fund based on their basic trustee fees and length of
service. Currently, Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham, and David L. Yunich participate in the program.
As of April 30, 1994, the Trustees and officers of the fund
owned , in the aggregate , less than 1 % of the total
outstanding shares of the fund .
13MANAGEMENT CONTRACT
The fund employs FMR to furnish investment advisory and other services.
Under its management contract with the fund, FMR acts as investment adviser
and, subject to the supervision of the Board of Trustees, directs the
investments of the fund in accordance with its investment objective,
policies, and limitations. FMR also provides the fund with all necessary
office facilities and personnel for servicing the fund's investments, and
compensates all officers of the trust, all Trustees who are "interested
persons" of the trust or FMR, and all personnel of the trust 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 fund. These services include providing facilities
for maintaining the fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with the fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining the fund's
records and the registration of the fund's shares under federal and state
law; developing management and shareholder services for the fund; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Board of Trustees.
FMR is responsible for the payment of all expenses of the fund with certain
exceptions. Specific expenses payable by FMR include, without limitation,
the fees and expenses of registering and qualifying the fund and its shares
for distribution under federal and state securities laws; expenses of
typesetting for printing prospectuses and statements of additional
information; custodian charges; audit and legal expenses; insurance
expenses; association membership dues; and the expenses of mailing reports
to shareholders, shareholder meetings, and proxy solicitations. FMR also
provides for transfer agent and dividend disbursing services, and portfolio
and general accounting record maintenance through FSC.
FMR pays all other expenses of the fund with the following exceptions: fees
and expenses of the Trustees who are not "interested persons" of the trust
or FMR (the non-interested Trustees); interest on borrowings; taxes;
brokerage commissions (if any); and 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 officers and Trustees with
respect to litigation.
FMR is the fund's manager pursuant to a management contract dated November
1, 1993, which was approved by shareholders on October 20, 1993. For
the services of FMR under the contract, the fund pays FMR a monthly
management fee at the annual rate of .80% of its average net assets
throughout the month. Pursuant to the management contract in effect prior
to November 1, 1993, the fund paid FMR a monthly management fee at the
annual rate of .70% of its average net assets. FMR reduces its fee by an
amount equal to the fees and expenses of the non-interested Trustees. The
table below lists the management fees paid to FMR after the reduction of
these expenses for the fiscal years ended April 30, 1994, 1993, and
1992
Management Fees

Year After Reduction of Expenses

1994 $ 5,054,378

1993 3,295,594

1992 1,404,991

To defray shareholder service costs, FMR or its affiliates also collect the
fund's $5.00 exchange fee, $5.00 account closeout fee, and $5.00 fee for
wire purchases and redemptions. Shareholder transaction fees collected for
fiscal 1994, 1993, and 1992 are indicated in the table below.
Account
Exchange Closeout Wire
Year Fees Fees Fees
1994 $ 28,240 $ 1,620 $ 970
1993 30,420 1,110 1,620
1992 10,355 835 1,450
SUB-ADVISERS. FMR has entered into sub-advisory agreements with FMR U.K.
and FMR Far East. Pursuant to the sub-advisory agreements, FMR may receive
investment advice and research services outside the United States from
sub-advisers.
Currently, FMR U.K. and FMR Far East each focus on issuers in countries
other than the United States such as those in Europe, Asia and the
Pacific Basin.
FMR U.K. and FMR Far East are wholly owned subsidiaries of FMR.
Under the sub-advisory agreements FMR pays the fees of FMR U.K. and FMR
Far East. For providing non-discretionary investment advice and research
services, the sub-advisers are compensated as follows:
(bullet) FMR pays FMR U.K. and FMR Far East fees equal to 110% and
105%, respectively, of FMR U.K.'s and FMR Far East's costs incurred in
connection with providing investment advise and research services.
14DISTRIBUTION AND SERVICE PLAN
The fund has adopted a distribution and service plan (the plan) 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. The Board of Trustees has adopted the plan to allow the 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 by the fund to FMR of management fees should be deemed to be
indirect financing by the fund of the distribution of its shares, such
payment is authorized by the plan.
The plan specifically recognizes that FMR, either directly or through FDC,
may use its management fee revenue, past profits, or other resources,
without limitation, to pay promotional and administrative expenses in
connection with the offer and sale of shares of the fund. In addition, the
plan provides that FMR may use its resources, including its management fee
revenues, to make payments to third parties that provide assistance in
selling the fund's shares, or to third parties, including banks, that
render shareholder support services. The Trustees have not authorized third
party payments to date.
As required by the Rule, the Trustees carefully considered all pertinent
factors relating to implementation of the 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 the 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 the
plan gives 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 the plan by local entities with whom
shareholders have other relationships.
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,
and 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 fund
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 these occurrences. The fund may execute portfolio transactions
with and purchase securities issued by depository institutions that receive
payments under the plan. No preference will be shown in the selection of
investments for the instruments of such depository institutions. 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.
15CONTRACTS WITH COMPANIES AFFILIATED WITH FMR
FSC performs transfer agency, dividend disbursing, and shareholder
servicing functions for the fund. The costs of these services are borne by
FMR pursuant to its management contract with the fund. FSC also calculates
the fund's net asset value per share and dividends, maintains the fund's
general accounting records, and administers the fund's securities lending
program. The costs of these services are also borne by FMR pursuant to its
management contract with the fund.
The 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 agreement calls for FDC to use
all reasonable efforts, consistent with its other business, to secure
purchasers for shares of the 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.
16DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Spartan High Income Fund is a fund of Fidelity
Fixed-Income Trust (the trust), an open-end management investment company
organized as a Massachusetts business corporation on June 25, 1970. On
September 7, 1984, the trust was reorganized as a Massachusetts business
trust, at which time its name was changed from Fidelity Corporate Bond
Fund, Inc. to Fidelity Corporate Bond Fund. On October 23, 1985 the trust's
name was changed to Fidelity Flexible Bond Fund and on August 31, 1986 it
was changed to Fidelity Fixed-Income Trust. There are currently five funds
of the trust: Fidelity Investment Grade Bond Fund, Fidelity Short-Term Bond
Portfolio, Spartan Government Income Fund, Spartan High Income Fund, and
Spartan Short-Intermediate Government Fund. The Declaration of Trust
permits the t rust to create additional funds.
In the event that FMR ceases to be the investment adviser to the trust or a
fund, the right of the trust or fund to use the identifying names
"Fidelity" and "Spartan" may be withdrawn.
The assets of the 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 expenses of the trust. Expenses with respect to the trust are to be
allocated in proportion to the asset value of the respective funds, except
where allocations of direct expense can otherwise be fairly made. The
officers of the trust, subject to the general supervision of the Board 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. In the
event of the dissolution or liquidation of the trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as a "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. The 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 the Trustees include a provision limiting the obligations created
thereby to the trust and its assets. The Declaration of Trust provides for
indemnification out of each fund's property of any shareholder held
personally liable for the obligations of the fund. The Declaration of Trust
also provides that each fund 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 a 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.
The 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 Declaration 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, you receive one vote for each dollar value of
net asset value per share 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 the trust or a fund may, as set forth in the Declaration of Trust,
call meetings of the trust or a fund for any purpose related to the trust
or fund, as the case may be, including, in the case of a meeting of the
entire trust, the purpose of voting on removal of one or more Trustees. The
trust or any 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 trust or the fund, as determined by the current value of
each shareholder's investment in the fund or trust. If not so terminated,
the trust and its funds will continue indefinitely.
CUSTODIAN. Bank of New York, 110 Washington Street, New York, New York, is
custodian of the assets of the fund. The custodian is responsible for the
safekeeping of the fund's assets and the appointment of the subcustodian
bank and clearing agencies. The custodian takes no part in determining the
investment policies of the fund or in deciding which securities are
purchased or sold by the fund. The 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 trust's
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.
AUDITOR. Coopers & Lybrand, One Post Office Square, Boston,
Massachusetts, serves as the trust's independent accountant. The auditor
examines financial statements for the fund and provides other audit, tax,
and related services.
17FINANCIAL STATEMENTS
The fund's financial statements and financial highlights for the fiscal
year ended April 30, 1994 are included in the fund's Annual Report, which
is a separate report supplied with this Statement of Additional
Information. The fund's financial statements and financial highlights are
incorporated herein by reference.
18APPENDIX
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 by
assuming a constant prepayment rate for the life of the mortgage. The
weighted average life of these securities is likely to be substantially
shorter than their stated final maturity.
FIDELITY FIXED-INCOME TRUST:
SPARTAN SHORT-INTERMEDIATE GOVERNMENT FUND AND
SPARTAN GOVERNMENT INCOME FUND
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER

PROSPECTUS PROSPECTUS SECTION

<TABLE>
<CAPTION>
<S> <C>
1................................................. Cover Page
...

2a................................................ Expenses
..

Contents; The Funds at a Glance; Who May Want to Invest
b,c...............................................

3a............................................... Financial Highlights

*
b.................................................
.

Performance
c.................................................
.

4a(i) Charter
..............................................

The Funds at a Glance; Investment Principles and Risks;
(ii).............................................. Securities and Investment Practices; Fundamental Investment
Policies and Restrictions

Securities and Investment Practices
b.................................................
.

Who May Want to Invest; Investment Principles and Risks;
c................................................. Securities and Investment Practices
.

5a Charter
.................................................

Doing Business with Fidelity; Charter
b(i)..............................................

b(ii) Charter; Your Account
............................................

Expenses; Breakdown of Expenses
b(iii)...........................................
.

Charter
c,d...............................................

FMR and Its Affiliates
d.................................................
.

Expenses; Breakdown of Expenses
e.................................................
.

Charter
f..................................................
.

5A Performance
................................................

6a(i)............................................ Charter
...

a(ii) How to Buy Shares; How to Sell Shares; Transaction Details;
............................................ Exchange Restrictions

*
a(iii)...........................................

*
b.................................................

Exchange Restrictions
c................................................

*
d.................................................

Doing Business with Fidelity; How to Buy Shares; How to Sell
e................................................. Shares; Investor Services

Dividends, Capital Gains, and Taxes
f,g...............................................

7a................................................ Charter
..

How to Buy Shares; Transaction Details
b.................................................
.

*
c.................................................
.

How to Buy Shares
d.................................................
.

*
e.................................................
.

Breakdown of Expenses
f..................................................
.

8................................................. How to Buy Shares, Investor Services; Transaction Details;
.. Exchange Restrictions

9................................................. *
..

</TABLE>

* Not Applicable
Part B Statement of Additional Information Section

<TABLE>
<CAPTION>
<S> <C>
10, Cover Page
11........................................

12............................................. *
.

13a-c....................................... Investment Policies and Limitations

Portfolio Transactions
d............................................

14a, Trustees and Officers
b........................................

*
c.............................................

15a, *
b.........................................

Trustees and Officers
c.............................................

16a(i)....................................... FMR
..

Trustees and Officers
a(ii)........................................

a(iii), Management Contracts
b...................................

*
c............................................

*
d,e..........................................

Distribution and Service Plans
f............................................

*
g.............................................

Description of the Trust
h.............................................

Contracts with Companies Affiliated with FMR
i.............................................

17a........................................... Portfolio Transactions
.

*
b............................................

Portfolio Transactions
c............................................

*
d,e.........................................

18a........................................... Description of the Trust
..

*
b.............................................

19a........................................... Additional Purchase and Redemption Information
..

Valuation of Portfolio Securities; Additional Purchase and
b............................................ Redemption Information

*
c.............................................

20............................................. Distributions and Taxes
..

21a(i),(ii).................................. Contracts with Companies Affiliated with FMR
..

*
a(iii),b,c..................................

22a........................................... *
..

Performance
b.............................................

23............................................. Financial Statements
..

</TABLE>

* Not Applicable
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
A Statement of Additional Information dated June 21, 1994 has been filed
with the Securities and Exchange Commission, and is incorporated herein by
reference (is legally considered a part of this prospectus). The Statement
of Additional Information is available free upon request by calling
Fidelity at 1-800-544-8888.
Mutual fund shares are not deposits or obligations of, or guaranteed by,
any deposit o ry institution. Shares are not insured by the FDIC, the
Federal Reserve Board, or any other agency, and are subject to investment
risk, including possible loss of principal.
These funds invest in securities issued or guaranteed by the U.S.
government and its agencies. Spartan Short-Intermediate Government seeks
high current income with preservation of capital. Spartan Government Income
seeks high current income.
SPARTAN(Registered trademark)
SHORT-INTERMEDIATE
GOVERNMENT
FUND
and
SPARTAN(Registered trademark)
GOVERNMENT
INCOME
FUND
PROSPECTUS
JUNE 21, 1994(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA
02109
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
SSG/SPG-pro-694
CONTENTS

KEY FACTS THE FUNDS AT A GLANCE

WHO MAY WANT TO INVEST

EXPENSES Each fund's yearly
operating expenses.

FINANCIAL HIGHLIGHTS A summary
of each fund's financial data.

PERFORMANCE How each fund has
done over time.

THE FUNDS IN DETAIL CHARTER How each fund is
organized.

INVESTMENT PRINCIPLES AND RISKS
Each fund's overall approach to
investing.

BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.

YOUR ACCOUNT DOING BUSINESS WITH FIDELITY

TYPES OF ACCOUNTS Different
ways to set up your account,
including tax-sheltered retirement
plans.

HOW TO BUY SHARES Opening an
account and making additional
investments.

HOW TO SELL SHARES Taking money
out and closing your account.

INVESTOR SERVICES Services to
help you manage your account.

SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS, AND
ACCOUNT POLICIES TAXES

TRANSACTION DETAILS Share price
calculations and the timing of
purchases and redemptions.

EXCHANGE RESTRICTIONS

<r>KEY FACTS</r>

THE FUNDS AT A GLANCE
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946 and
is now America's largest mutual fund manager.
As with any mutual fund, there is no assurance that a fund will achieve its
goal.
SPARTAN SHORT-INTERMED. GOV'T.
GOAL: High current income with preservation of capital.
STRATEGY: Invests mainly in securities guaranteed by the U.S. government or
its agencies while maintaining an average maturity of two to five years.
SIZE: As of April 30, 1994, the fund had over $ 53 million in assets.
SPARTAN GOV'T. INCOME
GOAL: High current income.
STRATEGY: Invests mainly in securities of any maturity issued or guaranteed
by the U.S. government and its agencies.
SIZE: As of April 30, 1994, the fund had over $ 286 million in
assets.
WHO MAY WANT TO INVEST
Either fund may be appropriate for investors who seek high current income
from a portfolio of U.S. government securities. Because Spartan Government
Income can invest in securities with any maturity, it has the potential for
higher yields, but also carries a higher degree of risk.
These funds do not constitute a balanced investment plan. The value of the
funds' investments and the income they generate will vary from day to day,
generally reflecting changes in interest rates, market conditions, and
other political and economic news. When you sell your shares, they may be
worth more or less than what you paid for them.
The Spartan family of funds is designed for cost-conscious investors
looking for higher yields through lower costs. The Spartan
Approach(Registered trademark) requires investors to make high minimum
investments and, in some cases, to pay for individual transactions.
THE SPECTRUM OF
FIDELITY FUNDS
Broad categories of Fidelity
funds are presented here in
order of ascending risk.
Generally, investors seeking
to maximize return must
assume greater risk. The
funds in this prospectus are
in the INCOME category.
(bullet) MONEY MARKET Seeks
income and stability by
investing in high-quality,
short-term investments.
(arrow) INCOME Seeks income by
investing in bonds.
(bullet) GROWTH AND INCOME
Seeks long-term growth and
income by investing in stocks
and bonds.
(bullet) GROWTH Seeks long-term
growth by investing mainly in
stocks.
(checkmark)
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund. See page for more information.
Maximum sales charge on purchases and
reinvested dividends None
Deferred sales charge on redemptions None
Exchange and wire transaction fees $5.00
Checkwriting fee, per check written $2.00
Account closeout fee $5.00
THESE FEES ARE WAIVED if your account balance at the time of the
transaction is $50,000 or more.
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to FMR. Expenses are factored into each fund's
share price or dividends and are not charged directly to shareholder
accounts (see page ).
The following are projections based on historical expenses, and are
calculated as a percentage of average net assets.
SPARTAN SHORT-INTERMED. GOV'T.
Management fee (after reimbursement) .10 %
12b-1 fee None
Other expenses .00%
Total fund operating expenses .10 %
SPARTAN GOV'T. INCOME
Management fee .65 %
12b-1 fee None
Other expenses .00 %
Total fund operating expenses .65 %
EXAMPLES: Let's say, hypothetically, that each fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses after
the number of years indicated, first assuming that you leave your account
open, and then assuming that you close your account at the end of the
period:
SPARTAN SHORT-INTERMED. GOV'T.
Account open Account closed
After 1 year $ 1 $ 6
After 3 years $ 3 $ 8
After 5 years $ 6 $ 11
After 10 years $ 13 $ 18
SPARTAN GOV'T. INCOME
Account open Account closed
After 1 year $ 7 $ 12
After 3 years $ 21 $ 26
After 5 years $ 36 $ 31
After 10 years $ 81 $ 86
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
FMR has voluntarily agreed to temporarily limit Spartan Short-Intermediate
Government 's operating expenses to .10 % of its average net assets.
If this agreement were not in effect, the management fee, other expenses,
and total operating expenses would be .65%, .00%, and .65%, respectively.
Expenses eligible for reimbursement do not include interest, taxes,
brokerage commissions, or extraordinary expenses.
FINANCIAL HIGHLIGHTS
The tables that follow are included in each fund's Annual Report and
have been audited by Coopers & Lybrand, independent accountants.
Their reports on the financial statements and financial highlights are
included in the Annual Reports. The financial statements and financial
highlights are incorporated by reference into (are legally a part of)
the funds' Statement of Additional Information.
SPARTAN SHORT-INTERMEDIATE GOVERNMENT FUND

<TABLE>
<CAPTION>
<S> <C> <C>
1.Selected Per-Share Data and Ratios

2.Years ended April 30 1993D 1994

3.Net asset value, beginning of period $ 10.000 $ 10.090

4.Income from Investment Operations Net investment income .257 .616

5. Net realized and unrealized gain (loss) on investments .083E (.579)

6. Total from investment operations .340 .037

7.Less Distributions
(.250) (.617)
From net investment income

8. In excess of net investment income -- (.010)

9. In excess of net realized gain on investments -- (.010)

10. Total distributions (.250) (.637)

11.Net asset value, end of period $ 10.090 $ 9.490

12.Total returnB,C 3.43% .29
%

13.Net assets, end of period (000 omitted) $ 54,853 $ 53,726

14.Ratio of expenses to average net assets .02% .10
A %

15.Ratio of expenses to average net assets before expense .65% .65
reductions A %

16.Ratio of net investment income to average net assets 7.28% 7.33
A %

17.Portfolio turnover rate 587% 271
A %

</TABLE>

A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS
OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
D FROM DECEMBER 18, 1992 (COMMENCEMENT OF OPERATIONS) TO APRIL 30,
1993
E THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD ENDED DUE TO THE TIMING OF
SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET
VALUES OF THE INVESTMENTS OF THE FUND.
SPARTAN GOVERNMENT INCOME FUND

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
18.Selected Per-Share Data
and Ratios

</TABLE>

<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C>
19.Years ended April 30
1989B 1990 1991 1992 1993 1994

20.Net asset value,
$ 10.000 $ 10.050 $ 10.030 $ 10.640 $ 10.900 $ 10.930
beginning of period

21.Income from
.328 .936 .870 .846 .784 .624
Investment Operations

Net investment income

22. Net realized and
.050 .010 .610 .294 .369 (.720)
unrealized gain

(loss) on investments

23. Total from
.378 .946 1.480 1.140 1.154 (.096)
investment operations

24.Less Distributions
(.328) (.936) (.870) (.840) (.704) (.574)
From net investment

income

25. From net realized
-- (.030) -- (.040) (.420) (.100)
gain on

investments

26. In excess of net
-- -- -- -- -- (.160)
realized

gain on investments

27. Total distributions
(.328) (.966) (.870) (.880) (1.124) (.834)

28.Net asset value, end
$ 10.050 $ 10.030 $ 10.640 $ 10.900 $ 10.930 $ 10.000
of period

29.Total returnC,D
3.83 9.47 15.27 11.05 11.12 (1.14)

% % % % % %

30.Net assets, end of
$ 21,135 $ 282,555 $ 430,443 $ 482,837 $ 457,725 $ 286,654
period

(000 omitted)

31.Ratio of expenses to
.65 .16 .53 .65 .65 .65
average net assets
%A % % % % %

32.Ratio of expenses to
.65 .65 .65 .65 .65 .65
average net
%A % % % % %
assets before expense

reductions

33.Ratio of net
9.26 9.02 8.35 7.77 7.11 6.79
investment income to
%A % % % % %
average net assets

34.Portfolio turnover rate
277 68 96 59 170 354

%A % % %A % %

</TABLE>

A ANNUALIZED
B FROM DECEMBER 20, 1988 (COMMENCEMENT OF OPERATIONS) TO APRIL 30,
1989
C TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS
OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING SOME OF THE PERIODS SHOWN.
PERFORMANCE
Bond fund performance can be measured as TOTAL RETURN or YIELD. The total
returns and yields that follow are based on historical fund results and do
not reflect the effect of taxes or any transaction fees you may have paid.
The figures would be lower if fees were taken into account.
Each fund's fiscal year runs from May 1 through April 30. The tables below
show each fund's performance over past fiscal years compared to a measure
of inflation. The chart on page help s you compare the yields
of these funds to those of their competitors.
SPARTAN SHORT-INTERMED. GOV'T.
Fiscal periods ended Past 1 Life of
April 30, 1994 y ear fund A
Average annual
total return 0.29% 2.71%
Cumulative
total return 0.29% 3.73%
Consumer Price
Index 2.36% n/a
SPARTAN GOV'T. INCOME
Fiscal periods ended Past 1 Past 5 Life of
April 30, 1994 year years fundB
Average annual
total return -1.14% 9.01% 9.14%
Cumulative
total return -1.14% 53.94% 59.83%
Consumer Price
Ind ex 2.36% 3.67% n/a
A FROM DECEMBER 18, 1992
B FROM DECEMBER 20, 1988

UNDERSTANDING
PERFORMANCE
Because these funds invest
in fixed-income securities,
their performance is related
to changes in interest rates.
Funds that hold short-term
bonds are usually less
affected by changes in
interest rates than long-term
bond funds. For that reason,
long-term bond funds typically
offer higher returns and carry
more risk than short-term
bond funds.
(checkmark)
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. Yields are
calculated according to a standard that is required for all stock and bond
funds. Because this differs from other accounting methods, the quoted yield
may not equal the income actually paid to shareholders.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
THE COMPETITIVE FUNDS AVERAGES, which assume reinvestment of distributions,
are published by Lipper Analytical Services, Inc. Spartan
Short-Intermediate Government compares its performance to the Lipper
Short-Term Government Funds Average, and Spartan Government Income compares
to the Lipper General U.S. Government Funds Average. These averages
currently re flect the performance of over 100 and 140 mutual funds with
similar objectives, respectively .
SPARTAN GOVERNMENT INCOME
30-day yields
Percentage (%)
Row: 1, Col: 1, Value: 7.52
Row: 1, Col: 2, Value: 6.38
Row: 2, Col: 1, Value: 7.45
Row: 2, Col: 2, Value: 6.54
Row: 3, Col: 1, Value: 7.649999999999999
Row: 3, Col: 2, Value: 6.58
Row: 4, Col: 1, Value: 7.53
Row: 4, Col: 2, Value: 6.55
Row: 5, Col: 1, Value: 7.359999999999999
Row: 5, Col: 2, Value: 6.34
Row: 6, Col: 1, Value: 7.24
Row: 6, Col: 2, Value: 6.34
Row: 7, Col: 1, Value: 6.54
Row: 7, Col: 2, Value: 6.06
Row: 8, Col: 1, Value: 6.84
Row: 8, Col: 2, Value: 5.91
Row: 9, Col: 1, Value: 7.34
Row: 9, Col: 2, Value: 5.77
Row: 10, Col: 1, Value: 7.149999999999999
Row: 10, Col: 2, Value: 5.81
Row: 11, Col: 1, Value: 6.659999999999999
Row: 11, Col: 2, Value: 5.819999999999999
Row: 12, Col: 1, Value: 6.81
Row: 12, Col: 2, Value: 5.819999999999999
Row: 13, Col: 1, Value: 6.72
Row: 13, Col: 2, Value: 5.56
Row: 14, Col: 1, Value: 6.76
Row: 14, Col: 2, Value: 5.52
Row: 15, Col: 1, Value: 7.17
Row: 15, Col: 2, Value: 5.45
Row: 16, Col: 1, Value: 7.01
Row: 16, Col: 2, Value: 5.39
Row: 17, Col: 1, Value: 6.48
Row: 17, Col: 2, Value: 5.26
Row: 18, Col: 1, Value: 5.83
Row: 18, Col: 2, Value: 5.149999999999999
Row: 19, Col: 1, Value: 5.23
Row: 19, Col: 2, Value: 4.99
Row: 20, Col: 1, Value: 5.29
Row: 20, Col: 2, Value: 5.02
Row: 21, Col: 1, Value: 5.45
Row: 21, Col: 2, Value: 4.88
Row: 22, Col: 1, Value: 5.29
Row: 22, Col: 2, Value: 4.75
Row: 23, Col: 1, Value: 5.930000000000001
Row: 23, Col: 2, Value: 4.79
Row: 24, Col: 1, Value: 5.39
Row: 24, Col: 2, Value: 4.77
Row: 25, Col: 1, Value: 5.27
Row: 25, Col: 2, Value: 4.619999999999999
Row: 26, Col: 1, Value: 5.71
Row: 26, Col: 2, Value: 4.95
Row: 27, Col: 1, Value: 5.85
Row: 27, Col: 2, Value: 5.33
Spartan Gov't.
Income
Competitive
funds average
1992
1993
1994
THE CHART SHOWS THE 30-DAY ANNUALIZED NET YIELDS FOR SPARTAN GOVERNMENT

INCOME AND ITS COMPETITIVE FUNDS AVERAGES AS OF THE LAST DAY OF EACH

MONTH FROM JANUARY 1992 THROUGH APRIL 1994. SPARTAN
SHORT-INTERMEDIATE
GOVERNMENT IS NOT INCLUDED IN THE CHART BECAUSE IT HAS NOT COMPLETED
18
MONTHS OF OPERATIONS.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
<r>THE FUNDS IN DETAIL</r>

CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. In technical terms, each fund is
currently a diversified fund of Fidelity Fixed-Income Trust, an open-end
management investment company organized as a Massachusetts business trust
on September 7, 1984.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
Fidelity will mail proxy materials in advance, including a voting card and
information about the proposals to be voted on. The number of votes you are
entitled to is based upon the dollar value of your investment.
FMR AND ITS AFFILIATES
The funds are managed by FMR, which chooses their investments and handles
their business affairs.
Curt Hollingsworth is manager of Spartan Short-Intermediate Government,
which he has managed since December 1992. Mr. Hollingsworth also manages
Advisor Government Investment, Fidelity Short-Intermediate Government,
Government Securities, Institutional Short-Intermediate Government, Spartan
Limited Maturity Government and Spartan Long-Term Government Bond. Mr.
Hollingsworth joined Fidelity in 1983.
Robert Ives is manager of Spartan Government Income, which he has managed
since October 1993. Mr. Ives also manages Mortgage Securities, Ginnie Mae,
and Spartan Ginnie Mae. Mr. Ives joined Fidelity in 1991, after receiving
an M.B.A. from the University of Chicago. Previously, he was a consultant
to the U.S. Air Force for MITRE Corp. and an engineer at Bell Labs.
Fidelity Distributors Corporation (FDC) distributes and markets Fidelity's
funds and services. Fidelity Service Co. (FSC) performs transfer agent
servicing functions for the funds.
FMR Corp. is the parent company of these organizations. Through ownership
of voting common stock, Edward C. Johnson 3d (President and a trustee of
the trust), Johnson family members, and various trusts for the benefit of
the Johnson family form a controlling group with respect to FMR Corp.
To carry out the funds' transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that a fund
receives services and commission rates comparable to those of other
broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
SPARTAN SHORT-INTERMEDIATE GOVERNMENT seeks as high a level of current
income as is consistent with preservation of capital. FMR normally invests
at least 65% of the fund's total assets in U.S. government securities whose
principal and interest payments are fully guaranteed by the U.S.
government, or in repurchase agreements secured by these securities.
The fund maintains a dollar-weighted average maturity of between two and
five years. This tends to help stabilize its share price.
SPARTAN GOVERNMENT INCOME seeks a high level of current income by
investing principally in securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities. FMR normally invests at
least 65% of the fund's total assets in these securities.
FMR chooses bonds for the fund mainly based on yield to maturity, a
measure of income that takes into account the difference between a bond's
face value and its current market value. Longer-term bonds normally carry
the highest yields to maturity, so the fund often invests in them, although
it can invest in securities of any maturity. FMR manages the fund so that
its sensitivity to interest rate changes roughly matches the average for
government bonds with maturities between five and eight years.
EACH FUND intends to invest exclusively in U.S. government
securities, or in instruments that are backed by, or related to, government
securities. While this policy adds a measure of safety for both funds, it
may also limit their potential performance.
Each fund's yield and share price will change based on changes in interest
rates, market conditions, and other political and economic news. In
general, bond prices rise when interest rates fall, and vice versa. FMR may
use various investment techniques to hedge a fund's risks, but there is no
guarantee that these strategies will work as intended. When you sell your
shares, they may be worth more or less than what you paid for them.
FMR normally invests each fund's assets according to its investment
strategy. Each fund also reserves the right to invest without limitation in
investment-grade money market or short-term debt instruments for temporary,
defensive purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, and strategies FMR may employ in
pursuit of a fund's investment objective. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. Policies and limitations are considered at
the time of purchase; the sale of instruments is not required in the event
of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
funds achieve their goals. As a shareholder, you will receive financial
reports every six months detailing fund holdings and describing recent
investment activities.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. Debt
securities have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term bonds are generally
more sensitive to interest rate changes than short-term bonds.
U.S. GOVERNMENT SECURITIES are high-quality debt securities issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the
U.S. government. Not all U.S. government securities are backed by the full
faith and credit of the United States. For example, securities issued by
the Federal Farm Credit Bank or by the Federal National Mortgage
Association are supported by the instrumentality's right to borrow money
from the U.S. Treasury under certain circumstances. However, securities
issued by the Financing Corporation are supported only by the credit of the
entity that issued them.
ASSET-BACKED AND MORTGAGE SECURITIES may include pools of consumer loans or
mortgages, such as collateralized mortgage obligations and stripped
mortgage-backed securities. The value of these securities may be
significantly affected by changes in interest rates, the market's
perception of the issuers, and the creditworthiness of the parties
involved. These securities may also be subject to prepayment risk.
STRIPPED SECURITIES are the separate income or principal components of a
debt instrument. These involve risks that are similar to those of other
debt securities, although they may be more volatile.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, or other factors that affect security values. These techniques may
involve derivative transactions such as buying and selling options and
futures contracts, entering into swap agreements, and purchasing indexed
securities.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with the
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of a fund and may involve a small investment of
cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect a fund's yield.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security at
one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
ILLIQUID SECURITIES. Some investments may be determined by FMR, under the
supervision of the Board of Trustees, to be illiquid, which means that they
may be difficult to sell promptly at an acceptable price. Difficulty in
selling securities may result in a loss or may be costly to a fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more than
10% of its assets would be invested in illiquid securities.
BORROWING. A fund may borrow from banks or from other funds advised by FMR,
or through reverse repurchase agreements. If a fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: A fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
SPARTAN SHORT-INTERMEDIATE GOVERNMENT seeks as high a level of current
income as is consistent with preservation of capital.
SPARTAN GOVERNMENT INCOME seeks a high level of current income by investing
principally in U.S. government securities (securities issued or guaranteed
by the U.S. government or its agencies or instrumentalities).
EACH FUND may borrow only for temporary or emergency purposes, but not in
an amount exceeding 33% of its total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its share
price or dividends; they are neither billed directly to shareholders nor
deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs.
FMR may, from time to time, agree to reimburse the funds for management
fees above a specified limit. FMR retains the ability to be repaid by a
fund if expenses fall below the specified limit prior to the end of the
fiscal year. Reimbursement arrangements, which may be terminated at any
time without notice, can decrease a fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. Each fund
pays a management fee at a fixed annual rate of its average net assets:
.65% for Spartan Short-Intermediate Government and .65% for Spartan
Government Income. The total management fee rate for Spartan
Short - Intermediate Government for fiscal 1994 , after
reimbursement, was .10%.
FSC performs many transaction and accounting functions for the funds. These
services include processing shareholder transactions and calculating each
fund's share price. FMR, and not the funds, pays for these services.
To offset shareholder service costs, FMR or its affiliates also collect the
funds' $5.00 exchange fee, $5.00 account closeout fee, $5.00 fee for wire
purchases and redemptions, and the $2.00 checkwriting charge. For fisca l
1994, these fees amounted to $3,010, $315, $155, and $385,
respectively, f o r Spartan Short-Intermediate Government and
$25,365, $1,800, $635, and $339, respectively, for Spartan Government
Income.
Each fund has adopted a Distribution and Service Plan. These plans
recognize that FMR may use its resources, including management fees, to pay
expenses associated with the sale of fund shares. This may include payments
to third parties, such as banks or broker-dealers, that provide shareholder
support services or engage in the sale of a fund's shares. It is
important to note, however, that the funds do not pay FMR any separate fees
for this service.
For fiscal 1994, the portfolio turnover rates for Spartan
Short-Intermediate Government and Spartan Government Income were
271% and 354%, respectively. These rates vary from year to year. High
turnover rates increase transaction costs and may increase taxable capital
gains. FMR considers these effects when evaluating the anticipated benefits
of short-term investing .
<r>YOUR ACCOUNT</r>

DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of America's
first mutual funds. Today, Fidelity is the largest mutual fund company in
the country, and is known as an innovative provider of high-quality
financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage Services,
Inc. (FBSI). Fidelity is also a leader in providing tax-sheltered
retirement plans for individuals investing on their own or through their
employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(bullet) For mutual funds, 1-800-544-8888
(bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity has
over 75 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in a fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in a fund through a brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed at right.
The account guidelines that follow may not apply to certain retirement
accounts. If your employer offers a fund through a retirement program,
contact your employer for more information. Otherwise, call Fidelity
directly.
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 200
(bullet) Assets in Fidelity mutual
funds: over $ 225 billion
(bullet) Number of shareholder
accounts: over 16 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(checkmark)
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal age
and under 70 with earned income to invest up to $2,000 per tax year.
Individuals can also invest in a spouse's IRA if the spouse has earned
income of less than $250.
(bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(bullet) KEOGH OR CORPORATE PROFIT SHARING AND MONEY PURCHASE PENSION PLANS
allow self-employed individuals or small business owners (and their
employees) to make tax-deductible contributions for themselves and any
eligible employees up to $30,000 per year.
(bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employed income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(bullet) 403(B) CUSTODIAL ACCOUNTS are available to employees of most
tax-exempt institutions, including schools, hospitals, and other charitable
organizations.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
EACH FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. Each fund's shares are sold without a sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page 17 . If there is no application
accompanying this prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Open your account by exchanging from another Fidelity fund.
IF YOU ARE INVESTING THROUGH A TAX-SHELTERED RETIREMENT PLAN, such as an
IRA, for the first time, you will need a special application. Retirement
investing also involves its own investment procedures. Call 1-800-544-8888
for more information and a retirement application.
If you buy shares by check or Fidelity Money Line(registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business days to
ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $10,000
For Fidelity retirement accounts $10,000
TO ADD TO AN ACCOUNT $1,000
For Fidelity retirement accounts $1,000
Through automatic investment plans $500
MINIMUM BALANCE $5,000
For Fidelity retirement accounts $5,000

UNDERSTANDING THE
SPARTAN APPROACH(Registered trademark)
Fidelity's Spartan Approach is
based on the principle that
lower fund expenses can
increase returns. The Spartan
funds keep expenses low in
two ways. First, higher
investment minimums reduce
the effect of a fund's fixed
costs, many of which are paid
on a per-account basis.
Second, unlike most mutual
funds that include transaction
costs as part of overall fund
expenses, Spartan
shareholders pay directly for
the transactions they make.
(checkmark)

<TABLE>
<CAPTION>
<S> <C> <C>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT

Phone 1-800-544-777 (phone_graphic) (bullet) Exchange from another (bullet) Exchange from another
Fidelity fund account Fidelity fund account
with the same with the same
registration, including registration, including
name, address, and name, address, and
taxpayer ID number. taxpayer ID number.
(bullet) Use Fidelity Money Line
to transfer from your
bank account. Call
before your first use to
verify that this service is
in place on your
account. Maximum
Money Line: $50,000.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Wire (wire_graphic) (bullet) There may be a $5.00 (bullet) There may be a $5.00
fee for each wire fee for each wire
purchase. purchase.
(bullet) Call 1-800-544-7777 to (bullet) Not available for
set up your account retirement accounts.
and to arrange a wire (bullet) Wire to:
transaction. Not Bankers Trust
available for retirement Company,
accounts. Bank Routing
(bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, Specify the complete
Bank Routing name of the fund and
#021001033, include your account
Account #00163053. number and your
Specify the complete name.
name of the fund and
include your new
account number and
your name.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Automatically (automatic_graphic) (bullet) Not available. (bullet) Use Fidelity Automatic
Account Builder. Sign
up for this service when
opening your account,
or call 1-800-544-6666
to add it.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

</TABLE>

HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the methods
described on these two pages.
TO SELL SHARES IN A FIDELITY RETIREMENT ACCOUNT, your request must be made
in writing, except for exchanges to other Fidelity funds, which can be
requested by phone or in writing. Call 1-800-544-6666 for a retirement
distribution form.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $5,000
worth of shares in the account to keep it open.
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(bullet) The redemption proceeds are being transferred to a Fidelity
account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
CHECKWRITING
If you have a checkbook for your account, you may write an unlimited number
of checks. Do not, however, try to close out your account by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS

<TABLE>
<CAPTION>
<S> <C> <C>
IF YOUR ACCOUNT BALANCE IS LESS THAN $50,000, THERE ARE FEES FOR INDIVIDUAL REDEMPTION
TRANSACTIONS: $2.00 FOR EACH CHECK YOU WRITE AND $5.00 FOR EACH EXCHANGE, BANK WIRE,
AND ACCOUNT CLOSEOUT.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
Check (check_graphic) All account types (bullet) Minimum check: $1,000.
except retirement (bullet) All account owners must sign
a signature card to receive a
checkbook.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

</TABLE>

To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in the fund. Call
1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing. There may be a $5.00 fee for
each exchange out of the funds, unless you place your transaction on
Fidelity's automated exchange services.
Note that exchanges out of a fund are limited to four per calendar year,
and that they may have tax consequences for you. For details on policies
and restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see page
25 .
SYSTEMATIC WITHDRAWAL PLANS let you set up periodic redemptions from your
account.
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against
loss in a declining market, they can be an excellent way to invest for
retirement, a home, educational expenses, and other long-term financial
goals. Certain restrictions apply for retirement accounts. Call
1-800-544-6666 for more information.
REGULAR INVESTMENT PLANS

FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND

<TABLE>
<CAPTION>
<S> <C> <C>
DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND

</TABLE>

A BECAUSE THEIR SHARE PRICES FLUCTUATE, THESE FUNDS MAY NOT BE APPROPRIATE
CHOICES FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
<r>SHAREHOLDER AND ACCOUNT POLICIES</r>

Capital gain distributions will be reinvested at the NAV as of the date
the fund deducts the distribution from its NAV. The mailing of distribution
checks will begin within seven days.
TAXES
As with any investment, you should consider how your investment in a fund
will be taxed. If your account is not a tax-deferred retirement account,
you should be aware of these tax implications.
UNDERSTANDING

DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
Each fund earns interest from
its investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund may
realize capital gains if it sells
securities for a higher price
than it paid for them. These
are passed along as CAPITAL
GAIN DISTRIBUTIONS.
(checkmark)
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax,
and may also be subject to state or local taxes. If you live outside the
United States, your distributions could also be taxed by the country in
which you reside. Your distributions are taxable when they are paid,
whether you take them in cash or reinvest them. However, distributions
declared in December and paid in January are taxable as if they were paid
on December 31.
For federal tax purposes, each fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions
are taxed as long-term capital gains. Every January, Fidelity will send you
and the IRS a statement showing the taxable distributions paid to you in
the previous year.
Mutual fund dividends from U.S. government securities are generally free
from state and local income taxes. However, particular states may limit
this benefit, and some types of securities, such as repurchase agreements
and some agency-backed securities, may not qualify for the benefit. In
addition, some states may impose intangible property taxes. You should
consult your own tax adviser for details and up-to-date information on the
tax laws in your state.
During fiscal 1994, 55.3% of Spartan Short-Intermediate Government
's and 20.3% of Spartan Government Income 's income distributions
were from U.S. government securities.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other
Fidelity funds - are subject to capital gains tax. A capital gain or loss
is the difference between the cost of your shares and the price you receive
when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a fund deducts a capital
gain distribution from its NAV, you will pay the full price for the shares
and then receive a portion of the price back in the form of a taxable
distribution.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, a fund may
have to limit its investment activity in some types of instruments.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates each fund's NAV as of the close of
business of the NYSE, normally 4 p.m. Eastern time.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
Each fund's assets are valued primarily on the basis of market quotations.
If quotations are not readily available, assets are valued by a method that
the Board of Trustees believes accurately reflects fair value.
EACH FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they would
disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) Each fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees a fund or its transfer agent has
incurred.
(bullet) You begin to earn dividends as of the first business day
following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUNDS THROUGH A BROKER, who may charge
you a fee for this service. If you invest through a broker or other
institution, read its program materials for any additional service features
or fees that may apply.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
FDC may enter confirmed purchase orders on behalf of customers by phone,
with payment to follow no later than the time when a fund is priced on the
following business day. If payment is not received by that time, the
financial institution could be held liable for resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect a
fund, it may take up to seven days to pay you.
(bullet) Shares will earn dividends through the date of redemption;
however, shares redeemed on a Friday or prior to a holiday will continue to
earn dividends until the next business day.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) Each fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(bullet) Redemptions may be suspended or payment dates postponed when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.
(bullet) If you sell shares by writing a check and the amount of the check
is greater than the value of your account, your check will be returned to
you and you may be subject to additional charges.
THE FEES FOR INDIVIDUAL TRANSACTIONS are waived if your account balance at
the time of the transaction is $50,000 or more. Otherwise, you should note
the following:
(bullet) The $2.00 checkwriting charge will be deducted from your account.
(bullet) The $5.00 exchange fee will be deducted from the amount of your
exchange.
(bullet) The $5.00 wire fee will be deducted from the amount of your wire.
(bullet) The $5.00 account closeout fee does not apply to exchanges or
wires, but it will apply to checkwriting.
IF YOUR ACCOUNT BALANCE FALLS BELOW $5,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed and the $5.00 account closeout fee will be charged.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of a fund for
shares of other Fidelity funds. However, you should note the following:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Because excessive trading can hurt fund performance and
shareholders, each fund reserves the right to temporarily or permanently
terminate the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(bullet) The exchange limit may be modified for accounts in certain
institutional retirement plans to conform to plan exchange limits and
Department of Labor regulations. See your plan materials for further
information.
(bullet) Each fund reserves the right to refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to invest
the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
(bullet) Your exchanges may be restricted or refused if a fund receives or
anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincides
with a "market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.

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

SPARTAN(Registered trademark) SHORT-INTERMEDIATE GOVERNMENT FUND
SPARTAN(Registered trademark) GOVERNMENT INCOME FUND
FUNDS OF FIDELITY FIXED-INCOME TRUSTC
STATEMENT OF ADDITIONAL INFORMATION
JUNE 21, 1994
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated June 21, 1994). Please retain this
document for future reference. The funds' financial statements and
financial highlights, included in each fund's Annual Report, for the fiscal
year ended April 30, 1994, are incorporated herein by reference. To
obtain an additional copy of the Prospectus or an Annual Report, 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 Trust

Financial Statements

Appendix

INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
Fidelity Service Co. (FSC)
SSG/SPG-ptb-694
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.
A 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 POLICIES AND LIMITATIONS OF
SPARTAN 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,
(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
limitation does not apply to purchases of debt securities or to repurchase
agreements.
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 securities of
real estate investment trusts that are not readily marketable, or to invest
in securities of 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 make loans, but 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.
For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT POLICIES AND LIMITATIONS OF SPARTAN GOVERNMENT INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed by the government of the United States or its agencies or
instrumentalities) if, as a result, (a) more than 25% of the value of its
total assets would be invested in the securities of a single issuer, or (b)
with respect to 75% of its total assets, more than 5% of the value of its
total assets would be invested in the securities of a single 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 deemed to be 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 (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 and 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
limitation does not apply to purchases of debt securities or to repurchase
agreements.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) With respect to 75% of its total assets, the fund does not currently
intend to 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, the fund would own more than 10% of the
outstanding voting securities of such issuer.
(ii) 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.
(iii) 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.
(iv) 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.
(v) 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.
(vi) The fund does not currently intend to invest in securities of
real estate investment trusts that are not readily marketable, or to invest
in securities of 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.
(vii) The fund does not currently intend make loans, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
(viii) 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
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.
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions"
beginning on page .
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 (the
"1940 Act"). 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 ("SEC " ), 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. The funds 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, a 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, a 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, a 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.
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.
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 on an agreed-upon date within a number of days from
the date of purchase. 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 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. Each fund may engage in repurchase agreements with respect to
any 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 the 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 a fund's assets and may be
viewed as a form of leverage.
ZERO COUPON BONDS. Zero coupon bonds do not make regular 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. Each fund has 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,
the funds will not treat these obligations as U.S. government securities
for purposes of their 65% portfolio composition test s .
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.
MORTGAGE-BACKED SECURITIES. The funds 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
e ach 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.
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.
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. The 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 money 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.
SECURITIES LENDING. Each fund 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 a fund 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).
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 the funds' investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of the funds' 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 the 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. 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.
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 a 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 a fund 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 a 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 a
fund's accrued obligations under the swap agreement over the accrued amount
a 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 a 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.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Spartan
Short-Intermediate Government Fund and Spartan Government Income
Fund ha ve each 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 , before engaging in any
purchases or sales of futures contracts or options on futures contracts.
The funds intend to comply with Section 4.5 under the Commodity
Exchange Act, which limits the extent to which the fund s can
commit assets to initial margin deposits and option premiums.
In addition, Spartan Short-Intermediate Government Fund will not:
(a) sell futures contracts, purchase put options, or write call options if,
as a result, more than 50% 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)
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.
Spartan Government Income will not enter into any futures contract or
option if, as a result, it would have less than 65% of its total assets
invested in government securities, and will not write call options on more
than 25% of its net assets. The fund limits its options and futures
investments to options and futures contracts relating to U.S. government
securities.
The above limitations on the funds' investments in futures contracts and
options, and the funds' 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 the 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 Municipal Bond Index. 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 a 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 a fund's 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
a fund.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a 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, a
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.
Each 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, a fund will lose the entire premium it
paid. If a fund exercises the option, it completes the sale of the
underlying instrument at the strike price. A 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 would generally 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. A fund may purchase and write options in combination
with each other, or in combination with futures or forward 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 the funds' current or
anticipated investments exactly. The funds may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which they typically
invest, which involves a risk that the options or futures position will not
track the performance of a fund's other 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 the 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 the
funds 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. The funds will comply
with guidelines established by the SEC 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 MANAGEMENT STRATEGIES USING FUTURES CONTRACTS AND OPTIONS. FMR
will use futures contracts and options primarily to increase or decrease a
fund's volatility (the sensitivity of its portfolio to price fluctuations
caused by changes in interest rates). FMR currently intends to use options
and futures contracts to attempt to maintain a fund's overall sensitivity
to interest rate changes in a range similar to the average for intermediate
term government bonds - roughly equivalent to an average maturity of five
to eight years under current market conditions. When a fund holds mainly
long-term bonds, which offer the highest yields to maturity during a normal
interest rate climate, FMR will engage in strategies designed to hedge
against interest rate changes and reduce the fund's volatility. Although
FMR may seek to hedge particular security holdings, its overall goal is to
attempt to control the volatility of the entire portfolio, in order to
maintain the fund's overall sensitivity to interest rate changes in the
moderate range described above. During relatively unusual interest rate
conditions when short-term securities offer the highest yields, FMR will
engage in strategies designed to increase a fund's volatility, if in its
judgment, the fund's sensitivity to interest changes is below its target
range.
FMR will choose among potential futures and options strategies based on its
evaluation of their possible risks and rewards, as well as such factors as
relative prices in the options and futures markets. In addition to
strategies designed to increase or decrease the fund's volatility, FMR may
use transactions in futures and options as an alternative to purchases or
sales of actual securities. In these types of strategies, a fund would use
futures contracts and options to attempt to achieve an overall return -
whether positive or negative - similar to an actual purchase or sale of
securities, while taking advantage of potentially greater liquidity that
the futures or options markets may offer.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of e ach 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), subsidiaries 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 requirements , the
Board of Trustees has authorized FBSI to execute portfolio transactions on
national securities exchanges in accordance with approved procedures and
applicable SEC rules.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
fund s 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 April 30, 1994 and 1993, Spartan
Short-Intermediate Government Fund's portfolio turnover rates were
271 % and 587% (annualized), respectively. For the fiscal years ended
April 30, 1994 and 1993, Spartan Government Income Fund's portfolio
turnover rates were 354 % and 170%, respectively.
For fiscal 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 seek s 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 e ach 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 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 for each
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 outweigh s 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 (NAV) 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. The funds' share price s ,
yield s , and total returns fluctuate in response to market conditions
and other factors, and the value of each fund's shares when redeemed may be
more or less than their original cost.
YIELD CALCULATIONS. Yields for the funds used in advertising 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 per share 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.
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 the
period. Average annual total returns are calculated by determining the
growth or decline in value of a hypothetical 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 total 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, yields, and other
performance information may be quoted numerically or in a table, graph, or
similar illustration, and may omit or include the effect of the $5.00
account closeout fee. Omitting fees will cause the funds' total return
figures to be higher.
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,
the fund s ' adjusted NAVs are not adjusted for sales charges, if any.
HISTORICAL FUND RESULTS. The following table shows each fund's 30-day
yield and total returns for the period s ended April 30, 1994:
SPARTAN SHORT-INTERMEDIATE GOVERNMENT FUND

<TABLE>
<CAPTION>
<S> <C>
Average Annual Total Returns* Cumulative Total Returns*

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
30-Day Yield One Year Life of Fund** One Year Life of Fund**

5.09% 0.27% 2.70 % 0.27 % 3.71 %

</TABLE>

* Total return includes the effect of the fund's $5 account closeout fee on
an average sized account.
** Life of fund figures are from December 18, 1992 (commencement of
operations). If FMR had not reimbursed certain fund expenses during
this period, the fund's yield and total returns would have been lower.
SPARTAN GOVERNMENT INCOME FUND

<TABLE>
<CAPTION>
<S> <C>
Average Annual Total Returns* Cumulative Total Returns*

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
30-Day Yield One Year Five Year Life of Fund** One Year Five Year Life of Fund**

5.94% -1.15 % 9.01% 9.13 % -1.15 % 53.92% 59.81 %

</TABLE>

* Total return includes the effect of the fund's $5 account closeout fee on
an average sized account.
** Life of fund figures are from December 20, 1988 (commencement of
operations). If FMR had not reimbursed certain fund expenses during
this period, the fund's total returns would have been lower.
The tables on the next page show the income and capital elements of Spartan
Short-Intermediate Government Fund's total return from December 18, 1992
(commencement of operations) through April 30, 1994 and Spartan Government
Income Fund's total return from December 20, 1988 (commencement of
operations) through April 30, 1994. The tables compare each fund's return
to the record of the Standard & Poor's 500 Composite Stock Price Index
(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 S&P 500 and DJIA comparisons are provided to show how the funds'
total returns compared to the return of a broad range of common stocks and
a narrower set of stocks of major industrial companies, respectively, over
the same period. Of course, since the funds invest in fixed-income
securities, common stocks represent a different type of investment from the
funds. 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 bond fund investment s such as the funds. Figures
for the S&P 500 and DJIA are based on the prices of unmanaged groups of
stocks and, unlike each fund's returns, their returns do not include the
effect of paying brokerage commissions or other costs of investing.
SPARTAN SHORT-INTERMEDIATE GOVERNMENT FUND. During the period from
December 18, 1992 (commencement of operations) to April 30, 1994, a
hypothetical $10,000 investment in Spartan Short-Intermediate Government
Fund would have grown to $ 10,373 , assuming all distributions were
reinvested. This was a period of fluctuating interest rates and bond
prices and 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.
SPARTAN SHORT-INTERMEDIATE GOVERNMENT FUND INDICES

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of

Initial Reinvested Reinvested

Period Ended $10,000 Dividend Capital Gain Total

April 30 Investment Distributions Distributions Value S&P DJIA CPI**
500

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994 $ 9,490 $ 873 $ 10 10,373 10,744 $ 11,709 $ 10,388

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1993* 10,090 253 0 10,343 10,201 10,60 0 10,148

</TABLE>

* From December 18, 1992 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on December
18, 1992, 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
$ 10,925 . 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 come to $ 877 for income
dividends and $10 for capital gain distributions. If FMR had not
reimbursed certain fund expenses during the periods shown above, the fund's
total returns would have been lower. Tax consequences of different
investments have not been factored into the figures above. The figures in
the table do not reflect the effect of the fund's $5 account closeout fee.
SPARTAN GOVERNMENT INCOME FUND. During the period from December 20, 1988
(commencement of operations) to April 30, 1994, a hypothetical $10,000
investment in Spartan Government Income Fund would have grown to
$ 15,983 , assuming all distributions were reinvested. This was a
period of fluctuating interest rates and bond prices and 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.
SPARTAN GOVERNMENT INCOME FUND INDICES

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of

Initial Reinvested Reinvested

Period Ended $10,000 Dividend Capital Gain Total

April 30 Investment Distributions Distributions Value S&P DJIA CPI**
500

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1994 $ 10,000 $ 5,000 $ 983 $ 15,983 $ 19,160 $ 20,237 $12,232

1993 10,930 4,566 672 16,168 18,191 18,32 0 11,950

1992 10,900 3,565 84 1 4,550 16,651 17,428 11,577

1991 10,640 2,429 33 13,102 14,600 14,528 11,220

1990 10,030 1,305 31 11,366 12,414 12,869 10,697

1989* 10,050 333 0 10,383 11,228 11,283 10,216

</TABLE>

* From December 20, 1988 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on December
20, 1988, 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
$ 16,367 . If the 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 come to $ 4,252 for
income dividends and $ 750 for capital gain distributions. If FMR
had not reimbursed certain fund expenses during the periods shown above,
the fund's total returns would have been lower. Tax consequences of
different investments have not been factored into the figures above. The
figures in the table do not reflect the effect of the fund's $5 account
closeout fee.
The funds may also quote unmanaged indices of bond prices and yields,
including the following:
MERRILL LYNCH GOVERNMENT MASTER INDEX is an index comprised of
publicly-placed, coupon bearing U.S. Treasury notes and bonds and
non-convertible agency obligations, with maturities of at least one year.
Par amounts of the bonds in the index must be no less than $10 million.
The index excludes flower bonds, collateralized mortgage obligations, and
agency pass-throughs.
MERRILL LYNCH SHORT-TERM U.S. TREASURY INDEX is an index comprised of U.S.
Treasury securities with remaining maturities of between 1 and 2.99 years.
MERRILL LYNCH INTERMEDIATE-TERM U.S. TREASURY INDEX is an index comprised
of U.S. Treasury securities with remaining maturities of between 7 and 9.99
years.
MERRILL LYNCH LONG-TERM U.S. TREASURY INDEX is an index comprised of U.S.
Treasury securities with remaining maturities of over 15 years.
MERRILL LYNCH ALL MORTGAGES INDEX is an index comprised of a variety of
mortgage-backed securities including but not limited to Ginnie Mae, Fannie
Mae and Freddie Mac mortgage-backed securities with varying coupons and
maturities.
MERRILL LYNCH ALL GNMAS INDEX is an index comprised of Ginnie Mae
mortgage-backed securities with varying coupons and maturities.
LEHMAN BROTHERS ALL GOVERNMENT BOND INDEX is an index comprised of all
public obligations of the U.S. Treasury, U.S. government agencies,
quasi-federal corporations, and corporate debt guaranteed by the U.S.
government. The index excludes flower bonds, foreign-targeted issues,
mortgage-backed securities, and securities maturing in less than one year.
LEHMAN BROTHERS ONE TO THREE YEAR GOVERNMENT BOND INDEX is an index
comprised of public obligations of the U.S. Treasury, U.S. government
agencies, quasi-federal corporations, and corporate debt guaranteed by the
U.S. government maturing between one and three years. The index excludes
flower bonds, foreign-targeted issues, and mortgage-backed securities.
LEHMAN BROTHERS LONG-TERM TREASURY INDEX is an unmanaged index of long-term
U.S. Treasury bonds including all public obligations of the U.S. Treasury,
excluding zero-coupon bonds, with at least $25 million outstanding and with
maturities between 10 and 30 years. This index may be used to illustrate
the volatility of long-term Treasury securities.
These indices may be used as broad indicators of prices and yields in the
government securities market. Since these indices are unmanaged, no
attempt is made to control the volatility of their component securities as
is done with a fund. Certain securities in which the funds may
invest, particularly mortgage-backed instruments, are excluded from the
indices.
A fund may also compare its performance to the performance of individual
U.S. Treasury securities. Treasury securities are guaranteed by the U.S.
government as to the timely payment of principal and interest. A fund may
offer higher potential returns than Treasury securities, but shares of the
funds are not guaranteed by the U.S. government.
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 mutual
fund performance indices prepared by Lipper.
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. Mutual funds differ from bank
investments in several respects. For example, a fund may offer greater
liquidity or higher potential returns than CDs . The funds do 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. For
example, Fidelity's FundMatchsm Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
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)/Government, which is reported in the MONEY FUND
REPORT(trademark), covers over 340 government money market funds.
The Bond Fund Report AverageS(trademark)/Government, which is reported in
the BOND FUND REPORT(registered trademark), covers over 350
government 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.
The 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
investing plans and dollar-cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. 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(tradmark) number, and CUSIP
number, and discuss or quote its current portfolio manager.
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 had been 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.
In addition to performance rankings, the funds may compare their total
expense ratio to the average total expense ratio of government bond funds
tracked by Lipper. A fund's total expense ratio is a significant factor in
comparing bond fund investments because of its effect on yield. According
to Lipper Directors Analytical Data, Third Edition, 1994, the average
expense ratio for U.S. government bond funds was 1.13% .
As of April 30, 1994, FMR managed 32 Spartan Funds with
approximately $ 20 billion in assets.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Each fund is open for business and its 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, 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 payment
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 either 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 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) a fund suspends
the redemption of the 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 p rospectus, each fund has notified shareholders that it
reserves 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 fund normally will not qualify for the
dividends-received deduction available to corporations.
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 pass-through 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 pass-through 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 the fund's
portfolio. Because the income earned on most U.S. government
securities in which the fund invests is exempt from state and local income
taxes, the portion of your dividends from the 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.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the 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 the 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 the fund are taxable to
shareholders as dividends, not as capital gains. Distributions from
short-term capital gains do not qualify for the dividends-received
deduction.
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 the fund level 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, each
fund intends to distribute substantially all of its net taxable income and
net realized capital gains within each calendar year as well as on a fiscal
year basis. The funds intend 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 the 30% calculation, which
may limit a fund's investments in such instruments. Each fund is treated
as a separate entity from the other portfolios of Fidelity Fixed-Income
Trust for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting the funds and their shareholders,
and no attempt has been made to discuss individual tax consequences.
Investors should consult their tax advisors to determine whether the funds
are suitable to their particular tax situation.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. 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 certain institutional
customers; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. Fidelity Management & Research (U.K.), Inc.
(FMR U.K.) and Fidelity Management & Research (Far East), Inc. (FMR Far
East), both wholly owned subsidiaries of FMR formed in 1986, supply
investment research, and may supply portfolio management services, to FMR
in connection with certain funds advised by FMR. Analysts employed by FMR,
FMR U.K., and FMR Far East research and visit thousands of domestic and
foreign companies each year. FMR Texas Inc., a wholly owned subsidiary of
FMR formed in 1989, supplies portfolio management and research services in
connection with certain money market funds advised by FMR.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the 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. All persons named as Trustees
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 trust 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 serves as a Director of the New York
City Chapter of the National Multiple Sclerosis Society, and is a member of
the Advisory Council of the International Executive Service Corps. and 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 Investments, Chairman of the Board of
Trustees and a member of the Executive Committee of the Cleveland Clinic
Foundation, a Trustee and a 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).
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).
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).
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), 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).
ARTHUR S. LORING, Secretary, is Senior Vice President and General Counsel
of FMR, Vice President-Legal of FMR Corp., and Vice President and Clerk of
FDC.
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 fund based on their basic trustee fees and length of
service. Currently, Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham, and David L. Yunich participate in the program.
As of April 30, 1994, the Trustees and officers o f the funds owned, in
the aggregate, less than 1% of the total outstanding shares of each
fund .
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under FMR's 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 trust or of FMR, and all personnel of the trust 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 each fund. 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 each fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining each
fund's records and the registration of each fund's 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.
FMR is responsible for the payment of all expenses of each fund with
certain exceptions. Specific expenses payable by FMR include, without
limitation, the fees and expenses of registering and qualifying the trust,
the funds, and their shares for distribution under federal and state
securities laws; expenses of typesetting for printing the prospectus and
statement of additional information; custodian charges, audit and legal
expenses; insurance expense; association membership dues; and the expenses
of mailing reports to shareholders, shareholder meetings, and proxy
solicitations. FMR also provides for transfer agent and dividend
disbursing services and portfolio and general accounting record maintenance
through FSC.
FMR pays all other expenses of each fund with the following exceptions:
fees and expenses of all Trustees who are not "interested persons" of the
trust or of FMR (the non-interested Trustees); interest on borrowings;
taxes; brokerage commissions (if any); and such non-recurring 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 officers and
Trustees with respect to litigation.
FMR is Spartan Short-Intermediate Government Fund's manager pursuant to a
management contract dated November 19, 1992, which was approved by FMR,
then sole shareholder on November 19, 1992. FMR is Spartan Government
Income Fund's manager pursuant to a management contract dated November 1,
1989, which was approved by the fund's shareholders on October 18, 1989.
For the services of FMR under the management contract, each fund pays FMR a
monthly management fee at the annual rate of .65% of average net assets
throughout the month. FMR reduces its fee by an amount equal to the fees
and expenses of the non-interested Trustees. For the fiscal period ended
April 30, 1994, Spartan Short-Intermediate Government Fund and Spartan
Government Income Fund paid $ 400,737 and $ 2,577,718 in
management fees, respectively.
FMR may, from time to time, voluntarily reimburse all or a portion of a
fund operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). The tables on the next page
outline expense limitations (as a percentage of the fund 's average
net assets) in effect from Spartan Short-Intermediate Government Fund's
commencement of operations (December 18, 1992) through the date of this
Statement of Additional Information. The tables also show the amount of
management fees incurred under each contract and the amounts reimbursed by
FMR, if any, for each fiscal period from each fund's commencement of
operations through the date of this Statement of Additional Information.
SPARTAN SHORT-INTERMEDIATE GOVERNMENT FUND
From To Expense Limitation

June 1, 1993 -- .10%

April 1, 1993 May 31, 1993 .05%

December 1 8 , 1992 March 31, 1993 .00%

Management Fees Amount of

Fiscal Year Before Reimbursement Reimbursement

1994 $ 400,737 $ 341,347

1993* $56,101 $54,145

* From December 18, 1992 (commencement of operations).
SPARTAN GOVERNMENT INCOME FUND
Amount of

Fiscal Year Management Fees Reimbursement

1994 $ 2,577,718 $ 0

1993 $3,184,918 $0

1992 $3,119,326 $0

* From December 20, 1988 (commencement of operations).
If FMR were not temporarily reimbursing these expenses, Spartan
Short-Intermediate Government Fund's yields would be lower and its total
operating expenses would be .65% of the fund's net assets.
To defray shareholder service costs, FMR or its affiliates also collect
each fund's $5.00 exchange fee, $5.00 account closeout fee, $5.00 fee for
wire purchases and redemptions, and the $2.00 checkwriting charge.
Shareholder transaction fees and charges collected for fiscal 1994 and 1993
for Spartan Short-Intermediate Government, and for fiscal 1994, 1993, and
1992 for Spartan Government Income, are indicated in the tables on the
following page.
SPARTAN SHORT-INTERMEDIATE GOVERNMENT FUND

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Exchange Fees Account Closeout Fees Wire Fees Checkwriting Charge

</TABLE>

1994 $ 3,010 $ 315 $ 155 $ 385

1993 $ 235 $ 5 $ 70 $ 20

SPARTAN GOVERNMENT INCOME FUND

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Exchange Fees Account Closeout Fees Wire Fees Checkwriting Charge

</TABLE>

1994 $ 25,365 $ 1,800 $ 635 $ 339

1993 $33,475 $1,635 $1,905 $ 32

1992 $41,525 $1,440 $2,285 N/A

DISTRIBUTION AND SERVICE PLANS
Each fund has adopted a distribution and service plan (the Plan) 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 a fund except pursuant to a plan adopted by the fund under
the Rule. The Board of Trustees ha s adopted the Plan s to
allow the funds and FMR to incur certain expenses that might be considered
to constitute indirect payment by the funds of distribution expenses.
Under the Plan s , if the payment to FMR of management fees should be
deemed to be indirect financing by a fund of the distribution of its
shares, such payment is authorized by e ach Plan.
Each Plan specifically recognizes that FMR, either directly or
through FDC, may use its management fee revenue, past profits, or other
resources, without limitation, to pay promotional and administrative
expenses in connection with the offer and sale of shares of the funds. In
addition, e ach Plan provides that FMR may use i t s
resources, including its management fee revenues, to make payments to third
parties that provide assistance in selling shares of the funds, or to third
parties, including banks, that render shareholder support services.
Each fund's Plan has been approved by Trustees. As required by the Rule,
the Trustees carefully considered all pertinent factors relating to the
implementation of the Plan prior to its approval, and have determined that
there is a reasonable likelihood that the Plans will benefit the funds and
their shareholders. In particular, the Trustees noted that the
Plan s do not authorize payments by the funds other than those made
to FMR under its management contract with each fund. To the extent
that the Plan s give FMR and FDC greater flexibility in connection
with the distribution of shares of the funds, additional sales of the
funds' shares may result. Additionally, certain shareholder support
services may be provided more effectively under the Plan s by local
entities with whom shareholders have other relationships. Spartan
Short-Intermediate Government Fund's Plan was approved by FMR, as
sole shareholder, on November 19, 1992. Spartan Government Income
Fund's Plan was approved by shareholders on October 18, 1989.
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. The funds may execute portfolio
transactions with and purchase securities issued by depository institutions
that receive payments under the Plan s . No preference will be shown
in the selection of investments for the instruments of such depository
institutions. 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 performs transfer agency, dividend disbursing, and shareholder
servicing functions for the funds. The costs of these services are borne
by FMR pursuant to its management contracts with the funds. FSC also
calculates each fund's NAV and dividends, maintains each fund's general
accounting records, and administers each fund's securities lending program.
The costs of these services are also borne by FMR pursuant to its
management contract with the funds.
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 and Exchange Act of 1934 and is a member of the
National Association of Securities Dealers, Inc. Each fund's distribution
agreement calls for FDC to use all reasonable efforts, consistent with its
other business, to secure purchasers for shares of the fund s , 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 TRUST
TRUST ORGANIZATION. Spartan Short-Intermediate Government Fund and Spartan
Government Income Fund are funds of Fidelity Fixed-Income Trust, an
open-end management investment company originally organized as a
Massachusetts business corporation on June 25, 1970. On September 7, 1984,
the trust was reorganized as a Massachusetts business trust, at which time
its name was changed from Fidelity Corporate Bond Fund, Inc. to Fidelity
Corporate Bond Fund. On October 23, 1985 the trust's name was changed to
Fidelity Flexible Bond Fund, and on August 31, 1986 it was changed to
Fidelity Fixed-Income Trust. Currently, there are five funds of the trust:
Fidelity Investment Grade Bond Fund, Fidelity Short-Term Bond Portfolio,
Spartan Government Income Fund, Spartan High Income Fund, and Spartan
Short-Intermediate Government Fund. The Declaration of Trust permits the
trust to create additional funds.
In the event that FMR ceases to be the investment adviser to the trust or a
fund, the right of the trust or fund to use the identifying names
"Fidelity" and "Spartan" 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 the 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 expenses of the trust. Expenses with respect to the trust are to
be allocated in proportion to the asset value of the respective funds,
except where allocations of direct expense can otherwise be fairly made.
The officers of the trust, subject to the general supervision of the Board
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. In the
event of the dissolution or liquidation of the trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as a "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. The 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 the Trustees include a provision limiting the obligations created
thereby to the trust and its assets. The Declaration of Trust provides for
indemnification out of each fund's property of any shareholder held
personally liable for the obligations of the fund. The Declaration of
Trust also provides that each fund 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 a 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.
The 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 Declaration of Trust protects
Trustee s 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, you receive one vote for each dollar value of
net asset value per share 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 the trust or a fund may, as set forth in the Declaration of
Trust, call meetings of the trust or a fund for any purpose related to the
trust or fund, as the case may be, including, in the case of a meeting of
the entire trust, the purpose of voting on removal of one or more Trustees.
The trust or any 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 the trust
or the fund, as determined by the current value of each shareholder's
investment in the fund or trust. If not so terminated, the trust and its
funds will continue indefinitely.
CUSTODIAN. The Bank of New York, 110 Washington Street, New York, New
York, is custodian of the assets of each fund. 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 a fund or in deciding which
securities are purchased or sold by the fund. The funds 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 trust's
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.
AUDITOR. Coopers and Lybrand, One Post Office Square, Boston,
Massachusetts, serves as the trust's independent accountant. The
auditor examines financial statements for the fund s and provides
other audit, tax, and related services.
FINANCIAL STATEMENTS
The funds' financial statements and financial highlights for the fiscal
year ended April 30, 1994 are included in each fund's Annual Report, which
is a separate report supplied with this Statement of Additional
Information. The funds' 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 a 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 by
assuming a constant prepayment rate for the life of the mortgage. The
weighted average life of these securities is likely to be substantially
shorter than their stated final maturity.

Fidelity Fixed-Income Trust
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a)(1) Financial Statements and Financial Highlights for Fidelity
Investment Grade Bond Fund, for the fiscal year ended April 30, 1994, are
incorporated herein by reference to the fund's Statement of Additional
Information and are filed herein as Exhibit 24(a)(1).
(a)(2) Financial Statements and Financial Highlights for Fidelity
Short-Term Bond Portfolio, for the fiscal year ended April 30, 1994, are
incorporated herein by reference to the fund's Statement of Additional
Information and are filed herein as Exhibit 24(a)(2).
(a)(3) Financial Statements and Financial Highlights for Spartan High
Income Fund, for the fiscal year ended April 30, 1994, are incorporated
herein by reference to the fund's Statement of Additional Information and
are filed herein as Exhibit 24(a)(3).
(a)(4) Financial Statements and Financial Highlights for Spartan
Government Income Fund, for the fiscal year ended April 30, 1994, are
incorporated by reference to the fund's Statement of Additonal Information
and are filed herein as Exhibit 24(a)(4).
(a)(5) Financial Statements and Financial Highlights for Spartan
Short-Intermediate Government Fund, for the fiscal year ended April 30,
1994, are incorporated by reference to the fund's Statement of Additional
Information and are filed herein as Exhibit 24(a)(5).
(b) Exhibits
1. (a) Amended and Restated Declaration of Trust, dated March 17, 1994, is
incorporated herein by reference to Exhibit 1(a) to Post-Effective
Amendment No. 70.
2. By-laws of the trust are incorporated herein by reference to Exhibit 2
to Post-Effective Amendment No. 29.
3. Not applicable.
4. Not applicable.
5. (a) Management Contract, dated November 1, 1993, between Fidelity
Short-Term Bond Portfolio and Fidelity Management & Research Company is
filed herein as Exhibit 5(a).
(b) Management Contract, dated November 1, 1993, between Fidelity
Investment Grade Bond Fund and Fidelity Management & Research Company
is filed herein as Exhibit 5(b).
(c) Management Contract, dated November 1, 1989, between Spartan
Government Fund and Fidelity Management & Research Company is
incorporated herein by reference to Exhibit 5(c) to Post-Effective
Amendment No. 53.
(d) Form of Management Contract, dated November 1, 1993, between Spartan
High Income Fund and Fidelity Management & Research Company is
incorporated herein by reference to Exhibit 5(d) to Post-Effective
Amendment No. 53.
(e) Management Contract between Spartan Short-Intermediate Government
Fund and Fidelity Management & Research Company is incorporated herein
by reference to Exhibit 5(e) to Post-Effective Amendment No. 64.
(f) Sub-Advisory Agreement, dated November 1, 1989, between Fidelity
Management & Research Company and Fidelity Management & Research
(U.K.) on behalf of Fidelity Short-Term Bond Portfolio is incorporated
herein by reference to Exhibit 5(e) to Post-Effective Amendment No. 53.
(g) Sub-Advisory Agreement, dated November 1, 1989, between Fidelity
Management & Research Company and Fidelity Management & Research
(Far East) on behalf of Fidelity Short-Term Bond Portfolio is incorporated
herein by reference to Exhibit 5(f) to Post-Effective Amendment No. 53.
(h) Sub-Advisory Agreement, dated November 1, 1989, between Fidelity
Management & Research Company and Fidelity Management & Research
(U.K.) on behalf of Fidelity Flexible Bond Portfolio is incorporated herein
by reference to Exhibit 5(g) to Post-Effective Amendment No. 53.
(i) Sub-Advisory Agreement, dated November 1, 1989, between Fidelity
Management & Research Company and Fidelity Management & Research
(Far East) on behalf of Fidelity Flexible Bond Portfolio is incorporated
herein by reference to Exhibit 5(h) to Post-Effective Amendment No. 53.
(j) Form of Sub-Advisory Agreement, dated November 1, 1993, between
Fidelity Management & Research Company and Fidelity Management &
Research (U.K.) on behalf of Spartan High Income Fund is incorporated
herein by reference to Exhibit 5(j) to Post-Effective Amendment No. 67.
(k) Form of Sub-Advisory Agreement, dated November 1, 1993, between
Fidelity Management & Research Company and Fidelity Management &
Research (Far East) on behalf of Spartan High Income Fund is incorporated
herein by reference to Exhibit 5(k) to Post-Effective Amendment No. 67.
6. (a) General Distribution Agreement, dated April 1, 1987, between
Fidelity Flexible Bond Portfolio and Fidelity Distributors Corporation is
incorporated herein by reference to Exhibit 6(a) to Post-Effective
Amendment No. 43.
(b) Amendment, dated January 1, 1988, to General Distribution Agreement
between Fidelity Flexible Bond Portfolio and Fidelity Distributors
Corporation is incorporated herein by reference to Exhibit 6(b) to
Post-Effective Amendment No. 43.
(c) General Distribution Agreement, dated April 1, 1987, between Fidelity
Short-Term Bond Portfolio and Fidelity Distributors Corporation is
incorporated herein by reference to Exhibit 6(c) to Post-Effective
Amendment No. 43.
(d) Amendment, dated January 1, 1988, to General Distribution Agreement
between Fidelity Short-Term Bond Portfolio and Fidelity Distributors
Corporation is incorporated herein by reference to Exhibit 6(d) to
Post-Effective Amendment No. 43.
(e) General Distribution Agreement, dated November 7, 1988, between
Spartan Government Fund and Fidelity Distributors Corporation is
incorporated herein by reference to Exhibit 6(f) to Post-Effective
Amendment No. 53.
(f) General Distribution Agreement, dated July 19, 1989, between Spartan
High Income Fund and Fidelity Distributors Corporation is incorporated
herein by reference to Exhibit 6(f) to Post-Effective Amendment No. 58.
(g) Form of General Distribution Agreement between Spartan
Short-Intermediate Government Fund and Fidelity Distributors Corporation is
incorporated herein by reference to Exhibit 6(g) to Post-Effective
Amendment No. 64.
7. Retirement Plan for non-interested Person Trustees, Directors, or
General Partners, effective November 1, 1989, is incorporated herein by
reference to Exhibit 7 to Post-Effective Amendment No. 61.
8. Custodian Agreement, dated July 18, 1991, between Fidelity Fixed-Income
Trust and the Bank of New York is incorporated herein by reference to
Exhibit 8 to Post-Effective Amendment No. 61.
9. (a) Amended Service Agreement, dated June 1, 1989 between Fidelity
Fixed-Income Trust, FMR Corp. and Fidelity Service Co. is incorporated
herein by reference to Exhibit 9(e) to Post-Effective Amendment No. 53.
(b) Schedules A, B, and C to the Amended Service Agreement for Fidelity
Short-Term Bond Portfolio dated June 1, 1989 are incorporated herein by
reference to Exhibit 9(f) to Post-Effective Amendment No. 53.
(c) Schedules A, B, and C to the Amended Service Agreement for Fidelity
Flexible Bond Portfolio dated June 1, 1989 are incorporated herein by
reference to Exhibit 9(g) to Post-Effective Amendment No. 53.
(d) Form of Schedules A, B, and C to the Amended Service Agreement for
Spartan Short-Intermediate Government Fund is incorporated herein by
reference to Exhibit 9(d) to Post-Effective Amendment No. 64.
10. Not applicable.
11. Consent of Coopers & Lybrand is filed herein as Exhibit 11.
12. Not applicable.
13. Not applicable.
14. (a) Individual Retirement Account Custodial Agreement and Disclosure
Statement as currently in effect are incorporated herein by reference to
Exhibit 14(a) to Post-Effective Amendment No. 39.
(b) 403(b)(7) Custodial Account Agreement as currently in effect is
incorporated herein by reference to Exhibit 14(b) to Post-Effective
Amendment No. 58.
(c) Fidelity Defined Contribution Retirement Plan and Trust Agreement as
currently in effect are incorporated herein by reference to Exhibit 14(c)
to Post-Effective Amendment No. 57.
(d) Defined Benefit Pension Plan and Trust as currently in effect are
incorporated herein by reference to Exhibit 14(d) to Post-Effective
Amendment No. 57.
(e) 401(a) Prototype Plan for Tax-Exempt Employers as currently in effect
are incorporated herein by reference to Exhibit 14(e) to Post-Effective
Amendment No. 57.
(f) Fidelity Master Plan for Savings and Investments as currently in
effect are incorporated herein by reference to Exhibit 14(f) to
Post-Effective Amendment No. 58.
(g) Group Individual Retirement Account Custodial Agreement and
Disclosure Statement as currently in effect are incorporated herein by
reference to Exhibit 14(g) to Post-Effective Amendment No. 57.
15. (a) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Short-Term Bond Portfolio is incorporated herein by reference to Exhibit
15(a) to Post-Effective Amendment No. 39.
(b) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Flexible Bond Portfolio is incorporated herein by reference to Exhibit
15(b) to Post-Effective Amendment No. 39.
(c) Distribution and Service Plan pursuant to Rule 12b-1 for Spartan High
Income Fund is incorporated herein by reference to Exhibit 15(d) to
Post-Effective Amendment No. 49.
(d) Distribution and Service Plan pursuant to Rule 12b-1 for Spartan
Government Fund is incorporated herein by reference to Exhibit 15(d) to
Post-Effective Amendment No. 53.
(e) Distribution and Service Plan pursuant to Rule 12b-1 for Spartan
Short-Intermediate Government Fund is incorporated herein by reference to
Exhibit 15(e) to Post-Effective Amendment No. 64.
16. (a) A schedule for computation of performance quotations for Fidelity
Flexible Bond Portfolio and Fidelity Short-Term Bond Portfolio is
incorporated herein by reference to Exhibit 16 to Post-Effective Amendment
No. 44.
(b) A supplement to the schedule of performance quotations is
incorporated herein by reference to Exhibit 16(b) to Post-Effective
Amendment No. 45.
(c) A supplement to the schedule of performance quotations in
incorporated herein by reference to Exhibit 16(b) to Post-Effective
Amendment No. 49.
(d) A schedule for computation of performance quotations for Spartan
Short-Intermediate Government Fund is incorporated herein by reference to
Exhibit 16(d) to Post-Effective Amendment No. 64.

Item 25. Persons Controlled by or under Common Control with Registrant
The Board of Trustees of Registrant is the same as the boards of other
funds advised by FMR, each of which has Fidelity Management & Research
Company as its investment adviser. In addition, the officers of these
funds are substantially identical. Nonetheless, Registrant takes the
position that it is not under common control with these other funds since
the power residing in the respective boards and officers arises as the
result of an official position with the respective funds.
Item 26. Number of Holders of Securities
April 30, 1994
Title of Class: Shares of Beneficial Interest
Name of Series Number of Recordholders

Fidelity Investment Grade Bond Fund 98,638

Fidelity Short-Term Bond Portfolio 121,316

Spartan Government Income Fund 10,459

Spartan High Income Fund 23,380

Spartan Short-Intermediate Government Fund 2,035

Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification shall be
provided to any past or present Trustee or officer. It states that the
Registrant shall indemnify any present or past Trustee or officer to the
fullest extent permitted by law against liability and all expenses
reasonably incurred by him in connection with any claim, action, suit or
proceeding in which he is involved by virtue of his service as a trustee,
an officer, or both. Additionally, amounts paid or incurred in settlement
of such matters are covered by this indemnification. Indemnification will
not be provided in certain circumstances, however. These include instances
of willful misfeasance, bad faith, gross negligence, and reckless disregard
of the duties involved in the conduct of the particular office involved.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.

<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Executive Committee of FMR; President
and Chief Executive Officer of FMR Corp.; Chairman of
the Board and a Director of FMR, FMR Corp., FMR Texas
Inc., Fidelity Management & Research (U.K.) Inc.,
and Fidelity Management & Research (Far East) Inc.;
President and Trustee of funds advised by FMR;

J. Gary Burkhead President of FMR; Managing Director of FMR Corp.;
President and a Director of FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.; Senior Vice
President and Trustee of funds advised by FMR.

Peter S. Lynch Vice Chairman of FMR (1992).

David Breazzano Vice President of FMR (1993) and of a fund advised by
FMR.

Stephan Campbell Vice President of FMR (1993).

Rufus C. Cushman, Jr. Vice President of FMR and of funds advised by FMR;
Corporate Preferred Group Leader.

Will Danoff Vice President of FMR (1993) and of a fund advised by
FMR.

Scott DeSano Vice President of FMR (1993).

Penelope Dobkin Vice President of FMR and of a fund advised by FMR.

Larry Domash Vice President of FMR (1993).

George Domolky Vice President of FMR (1993) and of a fund advised by
FMR.

Charles F. Dornbush Senior Vice President of FMR; Chief Financial Officer of
the Fidelity funds; Treasurer of FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.

Robert K. Duby Vice President of FMR.

Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.

Kathryn L. Eklund Vice President of FMR.

Richard B. Fentin Senior Vice President of FMR (1993) and of a fund advised
by FMR.

Daniel R. Frank Vice President of FMR and of funds advised by FMR.

Gary L. French Vice President of FMR and Treasurer of the funds advised
by FMR. Prior to assuming the position as Treasurer he
was Senior Vice President, Fund Accounting - Fidelity
Accounting & Custody Services Co.

Michael S. Gray Vice President of FMR and of funds advised by FMR.

Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.

William J. Hayes Senior Vice President of FMR; Income/Growth Group
Leader and International Group Leader.

Robert Haber Vice President of FMR and of funds advised by FMR.

Daniel Harmetz Vice President of FMR and of a fund advised by FMR.

Ellen S. Heller Vice President of FMR.

</TABLE>

John Hickling Vice President of FMR (1993) and of funds advised by
FMR.

Robert F. Hill Vice President of FMR; and Director of Technical
Research.

Stephan Jonas Vice President of FMR (1993).

David B. Jones Vice President of FMR (1993).

Steven Kaye Vice President of FMR (1993) and of a fund advised by
FMR.

Frank Knox Vice President of FMR (1993).

Robert A. Lawrence Senior Vice President of FMR (1993); and High Income
Group Leader.

Alan Leifer Vice President of FMR and of a fund advised by FMR.

Harris Leviton Vice President of FMR (1993) and of a fund advised by
FMR.

Bradford E. Lewis Vice President of FMR and of funds advised by FMR.

Robert H. Morrison Vice President of FMR and Director of Equity Trading.

David Murphy Vice President of FMR and of funds advised by FMR.

Jacques Perold Vice President of FMR.

Brian Posner Vice President of FMR (1993) and of a fund advised by
FMR.

Anne Punzak Vice President of FMR and of funds advised by FMR.

Richard A. Spillane Vice President of FMR and of funds advised by FMR; and
Director of Equity Research.

Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised
by FMR.

Thomas Steffanci Senior Vice President of FMR (1993); and Fixed-Income
Division Head.

Gary L. Swayze Vice President of FMR and of funds advised by FMR; and
Tax-Free Fixed-Income Group Leader.

Donald Taylor Vice President of FMR (1993) and of funds advised by
FMR.

Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised
by FMR.

Joel Tillinghast Vice President of FMR (1993) and of a fund advised by
FMR.

Robert Tucket Vice President of FMR (1993).

George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR; and Growth Group Leader.

Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund advised
by FMR.

Guy E. Wickwire Vice President of FMR and of a fund advised by FMR.

Arthur S. Loring Senior Vice President (1993), Clerk and General Counsel of
FMR; Vice President, Legal of FMR Corp.; and Secretary
of funds advised by FMR.

</TABLE>

(2) FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. (FMR U.K.)
FMR U.K. provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The
directors and officers of the Sub-Adviser have held the following positions
of a substantial nature during the past two fiscal years.

<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR U.K.; Chairman of the
Executive Committee of FMR; Chief Executive Officer of FMR
Corp.; Chairman of the Board and a Director of FMR, FMR
Corp., FMR Texas Inc., and Fidelity Management &
Research (Far East) Inc.; President and Trustee of funds advised
by FMR.

J. Gary Burkhead President and Director of FMR U.K.; President of FMR;
Managing Director of FMR Corp.; President and a Director of
FMR Texas Inc. and Fidelity Management & Research (Far
East) Inc.; Senior Vice President and Trustee of funds advised
by FMR.

Richard C. Habermann Senior Vice President of FMR U.K.; Senior Vice President of
Fidelity Management & Research (Far East) Inc.; Director
of Worldwide Research of FMR.

Charles F. Dornbush Treasurer of FMR U.K.; Treasurer of Fidelity Management
& Research (Far East) Inc.; Treasurer of FMR Texas Inc.,
Senior Vice President and Chief Financial Officer of the Fidelity
funds.

David Weinstein Clerk of FMR U.K.; Clerk of Fidelity Management &
Research (Far East) Inc.; Secretary of FMR Texas Inc.

</TABLE>

(3) FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. (FMR Far East)
FMR Far East provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The
directors and officers of the Sub-Adviser have held the following positions
of a substantial nature during the past two fiscal years.

<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR Far East; Chairman of the
Executive Committee of FMR; Chief Executive Officer of
FMR Corp.; Chairman of the Board and a Director of
FMR, FMR Corp., FMR Texas Inc., and Fidelity
Management & Research (U.K.) Inc.; President and
Trustee of funds advised by FMR.

J. Gary Burkhead President and Director of FMR Far East; President of
FMR; Managing Director of FMR Corp.; President and a
Director of FMR Texas Inc., and Fidelity Management
& Research (U.K.) Inc.; Senior Vice President and
Trustee of funds advised by FMR.

Richard C. Habermann Senior Vice President of FMR Far East; Senior Vice
President of Fidelity Management & Research
(U.K.) Inc.; Director of Worldwide Research of FMR.

William R. Ebsworth Vice President of FMR Far East.

Bill Wilder Vice President of FMR Far East (1993).

Charles F. Dornbush Treasurer of FMR Far East; Treasurer of Fidelity
Management & Research (U.K.) Inc.; Treasurer of
FMR Texas Inc.; Senior Vice President and Chief
Financial Officer of the Fidelity funds.

David C. Weinstein Clerk of FMR Far East; Clerk of Fidelity Management
& Research (U.K.) Inc.; Secretary of FMR Texas
Inc.

</TABLE>

Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR and the following other funds:
CrestFunds, Inc.
The Victory Funds
ARK Funds
(b)

Name and Principal Positions and Offices Positions and Offices

Business Address* With Underwriter With Registrant

Edward C. Johnson 3d Director Trustee and President

Nita B. Kincaid Director None

W. Humphrey Bogart Director None

Kurt A. Lange President and Treasurer None

William L. Adair Senior Vice President None

Thomas W. Littauer Senior Vice President None

Arthur S. Loring Vice President and Clerk Secretary

* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Co., 82 Devonshire Street, Boston, MA 02109, or the funds'
custodian The Bank of New York, 110 Washington Street, New York, N.Y.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) The Registrant undertakes for the funds 1) to call a meeting of
shareholders for the purpose of voting upon the question of removal of a
trustee or trustees, when requested to do so by record holders of not less
than 10% of its outstanding shares; and 2) to assist in communications with
other shareholders pursuant to Section 16(c)(1) and (2), whenever
shareholders meeting the qualifications set forth in Section 16(c) seek the
opportunity to communicate with other shareholders with a view toward
requesting a meeting.
(b) The Registrant on behalf of Fidelity Investment Grade Bond Fund,
Fidelity Short-Term Bond Portfolio, Spartan Government Income Fund, Spartan
High Income Fund, and Spartan Short-Intermediate Government Fund, provided
the information required by Item 5A is contained in the annual report,
undertakes to furnish to each person to whom a prospectus has been
delivered, upon their request and without charge, a copy of the
Registrant's latest annual report to shareholders.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for the effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No. 71 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Boston, and Commonwealth of Massachusetts, on the 17th day
of June 1994.
FIDELITY FIXED-INCOME TRUST
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) (Title) (Date)

<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d(dagger) President and Trustee June 17, 1994

Edward C. Johnson 3d (Principal Executive Officer)

</TABLE>

/s/Gary L. French Treasurer June 17, 1994

Gary L. French

/s/J. Gary Burkhead Trustee June 17, 1994

J. Gary Burkhead

/s/Ralph F. Cox * Trustee June 17, 1994

Ralph F. Cox

/s/Phyllis Burke Davis * Trustee June 17, 1994

Phyllis Burke Davis

/s/Richard J. Flynn * Trustee June 17, 1994

Richard J. Flynn

/s/E. Bradley Jones * Trustee June 17, 1994

E. Bradley Jones

/s/Donald J. Kirk * Trustee June 17, 1994

Donald J. Kirk

/s/Peter S. Lynch * Trustee June 17, 1994

Peter S. Lynch

/s/Edward H. Malone * Trustee June 17, 1994

Edward H. Malone

/s/Marvin L. Mann_____* Trustee June 17, 1994

Marvin L. Mann

/s/Gerald C. McDonough* Trustee June 17, 1994

Gerald C. McDonough

/s/Thomas R. Williams * Trustee June 17, 1994

Thomas R. Williams

(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated October 20, 1993 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated October 20, 1993 and filed herewith.
POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment companies:

<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VII Fidelity Municipal Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Securities Fund
Fidelity Commonwealth Trust Fidelity Select Portfolios
Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P.
Fidelity Contrafund Fidelity Summer Street Trust
Fidelity Corporate Trust Fidelity Trend Fund
Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Destiny Portfolios Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Income Fund

</TABLE>

plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individuals serve as Board Members (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, our true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for us and in our names in the appropriate capacities, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
our names and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS our hands on this twentieth day of October, 1993.

/s/Edward C. Johnson 3d /s/Peter S. Lynch

Edward C. Johnson 3d Peter S. Lynch

/s/J. Gary Burkhead /s/Edward H. Malone

J. Gary Burkhead Edward H. Malone

/s/Richard J. Flynn /s/Gerald C. McDonough

Richard J. Flynn Gerald C. McDonough

/s/E. Bradley Jones /s/Thomas R. Williams

E. Bradley Jones Thomas R. Williams

/s/Donald J. Kirk

Donald J. Kirk

POWER OF ATTORNEY
I, the undersigned President and Director, Trustee or General Partner, as
the case may be, of the following investment companies:

</TABLE>

plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as President and Board Member (collectively, the
"Funds"), hereby severally constitute and appoint J. Gary Burkhead, my true
and lawful attorney-in-fact, with full power of substitution, and with full
power to sign for me and in my name in the appropriate capacity, all
Pre-Effective Amendments to any Registration Statements of the Funds, any
and all subsequent Post-Effective Amendments to said Registration
Statements, any Registration Statements on Form N-14, and any supplements
or other instruments in connection therewith, and generally to do all such
things in my name and behalf in connection therewith as said
attorney-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission. I hereby ratify and confirm all that said attorneys-in-fact or
their substitutes may do or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d October 20, 1993

Edward C. Johnson 3d

POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment companies:

<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Magellan Fund
Fidelity Advisor Series III Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series IV Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Select Portfolios
Fidelity Commonwealth Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Congress Street Fund Fidelity Summer Street Trust
Fidelity Contrafund Fidelity Trend Fund
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Devonshire Trust Fidelity U.S. Investments-Government Securities
Fidelity Financial Trust Fund, L.P.
Fidelity Fixed-Income Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Government Securities Fund Spartan U.S. Treasury Money Market
Fidelity Hastings Street Trust Fund
Fidelity Income Fund Variable Insurance Products Fund
Fidelity Institutional Trust Variable Insurance Products Fund II
Fidelity Investment Trust

</TABLE>

plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Board Member (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Ralph F. Cox October 20, 1993

Ralph F. Cox

POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment companies:

<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series IV Fidelity School Street Trust
Fidelity Advisor Series VI Fidelity Select Portfolios
Fidelity Advisor Series VIII Fidelity Sterling Performance Portfolio, L.P.
Fidelity Beacon Street Trust Fidelity Trend Fund
Fidelity Capital Trust Fidelity Union Street Trust
Fidelity Commonwealth Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Contrafund Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Yen Performance Portfolio, L.P.
Fidelity Devonshire Trust Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Institutional Trust

</TABLE>

Phyllis Burke Davis

POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment companies:

<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Special Situations Fund
Fidelity Advisor Series IV Fidelity Sterling Performance Portfolio, L.P.
Fidelity Advisor Series VI Fidelity Trend Fund
Fidelity Advisor Series VII Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Advisor Series VIII Fidelity U.S. Investments-Government Securities
Fidelity Contrafund Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity Yen Performance Portfolio, L.P.
Portfolio, L.P. Spartan U.S. Treasury Money Market
Fidelity Fixed-Income Trust Fund
Fidelity Government Securities Fund Variable Insurance Products Fund
Fidelity Hastings Street Trust Variable Insurance Products Fund II
Fidelity Institutional Trust

</TABLE>

Marvin L. Mann

EXHIBIT 24 (A)(1)

(2_FIDELITY_LOGOS)FIDELITY

INVESTMENT GRADE BOND
FUND
ANNUAL REPORT
APRIL 30, 1994
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on bond market
strategies.

PERFORMANCE 4 How the fund has done over time.

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

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

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

FINANCIAL STATEMENTS 22 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES 26 Footnotes to the financial
statements.

REPORT OF INDEPENDENT 31 The auditor's opinion.
ACCOUNTANTS

THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
INVESTMENT CHANGES

QUALITY DIVERSIFICATION AS OF APRIL 30, 1994
(MOODY'S RATINGS) % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
6 MONTHS AGO

Aaa 34.8 37.2

Aa 3.1 2.2

A 9.6 8.5

Baa 24.6 25.2

Ba 8.3 6.6

B 0.4 0.8

Not rated 9.5 8.4

TABLE EXCLUDES SHORT-TERM INVESTMENTS. UNRATED DEBT SECURITIES THAT ARE
EQUIVALENT TO BA AND BELOW AT APRIL 30, 1994, ACCOUNT FOR 4.5% OF THE
FUND'S INVESTMENTS.
AVERAGE YEARS TO MATURITY AS OF APRIL 30, 1994
6 MONTHS AGO

Years 12.0 12.8

AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL ON THE
FUND'S BONDS IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF APRIL 30, 1994
6 MONTHS AGO

Years 4.4 5.2

Row: 1, Col: 1, Value: 9.1
Row: 1, Col: 2, Value: 2.4
Row: 1, Col: 3, Value: 20.8
Row: 1, Col: 4, Value: 28.8
Row: 1, Col: 5, Value: 38.9
Corporate bonds 37.8%
U.S. government
and agency
obligations 31.8%
Foreign government
obligations 21.8%
Stocks 2.8%
Short term and
other investments 5.8%
Corporate bonds 38.9%
U.S. government
and agency
obligations 28.8%
Foreign government
obligations 20.8%
Stocks 2.4%
Short term and
other investments 9.1%
Row: 1, Col: 1, Value: 5.8
Row: 1, Col: 2, Value: 2.8
Row: 1, Col: 3, Value: 21.8
Row: 1, Col: 4, Value: 31.8
Row: 1, Col: 5, Value: 37.8
* TOTAL FOREIGN
ISSUES 29.7%
** TOTAL FOREIGN
ISSUES 30.5%
INVESTMENTS APRIL 30, 1994

Showing Percentage of Total Value of Investments

NONCONVERTIBLE BONDS - 38.9%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
AEROSPACE & DEFENSE - 0.1%
Grumman Corp. 10 3/8%, 1/1/99 Baa3 $ 1,100 $ 1,171
BASIC INDUSTRIES - 0.3%
CHEMICALS & PLASTICS - 0.3%
Grace (W.R.) & Co. 7.4%, 2/1/00 Baa3 2,500 2,465
CONSTRUCTION & REAL ESTATE - 1.3%
BUILDING MATERIALS - 1.3%
Cemex SA and Tolmex:
10%, 11/15/96 (d) - 1,750 1,776
8 7/8%, 6/10/98 (d) Ba2 10,000 9,775
11,551
DURABLES - 1.5%
AUTOS, TIRES, & ACCESSORIES - 0.5%
Pep Boys - Manny, Moe & Jack
8 7/8%, 4/15/96 Baa2 4,000 4,178
CONSUMER ELECTRONICS - 1.0%
Black & Decker Corp. 7 1/2%, 4/1/03 Ba1 10,000 9,477
TOTAL DURABLES 13,655
ENERGY - 1.8%
ENERGY SERVICES - 1.1%
McDermott International, Inc.:
10 1/4%, 6/1/95 Baa3 7,000 7,254
9 3/8%, 3/15/02 Baa3 2,500 2,599
9,853
OIL & GAS - 0.7%
Oryx Energy Co. 10%, 4/1/01 Ba2 1,000 1,041
Societe Nationale Elf Aquitaine 7 3/4%, 5/1/99 Aa3 5,000 5,125
6,166
TOTAL ENERGY 16,019
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
FINANCE - 18.7%
BANKS - 12.1%
Bancomer SA:
euro 8%, 7/7/98 (d) Ba2 $ 3,500 $ 3,308
9%, 6/1/00 (d) - 7,500 7,181
Bank of Boston Corp. 6 7/8%, 7/15/03 Baa2 5,000 4,680
Bank of New York, Inc. 7 5/8%, 7/15/02 Baa1 5,000 4,963
Central Fidelity Banks, Inc. 8.15%, 11/15/02 Baa2 4,000 4,087
Chemical Banking Corp. 8 5/8%, 5/1/02 A3 5,000 5,252
Citicorp:
9%, 4/15/99 A3 2,000 2,126
8%, 2/1/03 A3 3,000 3,028
Continental Bank N.A. (Chicago):
12 1/2%, 4/1/01 Baa3 7,000 8,738
7 7/8%, 2/1/03 Baa3 3,000 2,990
Crestar Financial Corp. 8 1/4%, 7/15/02 Baa2 7,500 7,677
First Interstate Bancorp:
10 7/8%, 4/15/01 Baa1 3,500 4,083
9 3/8%, 1/23/02 Baa3 1,500 1,641
9 1/8%, 2/1/04 Baa1 7,000 7,577
First Maryland Bancorp 8 3/8%, 5/15/02 Baa1 3,000 3,105
First National Bank of Boston 8 3/8%, 12/15/02 Baa1 5,000 5,147
First USA Bank 5 3/4%, 1/15/99 Baa3 4,000 3,743
HSBC Finance Nederland BV 7.40%,
4/15/03 (d) A3 5,000 4,850
MBNA American Bank, N.A. 7 1/4%, 9/15/02 A3 5,000 4,850
Mercantile Bancorporation, Inc. 7 5/8%,
10/15/02 Baa1 3,000 2,960
Provident Bank 7 1/8%, 3/15/03 Baa2 2,500 2,375
UJB Financial Corp. 8 5/8%, 12/10/02 Baa3 5,500 5,763
Wells Fargo & Co. 8 3/4%, 5/10/02 Baa1 5,000 5,289
Zions Bancorporation 8 5/8%, 10/15/02 BBB- 5,000 5,181
110,594
CREDIT & OTHER FINANCE - 5.8%
Financiera Energetica Nacional 6 5/8%,
12/13/96 (d) - 3,500 3,343
Fleet Mortgage Group 6 1/2%, 9/15/99 A3 250 240
Ford Motor Credit Co. 7 1/2%, 1/15/03 A2 5,000 4,922
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
General Motors Acceptance Corp.:
7.05%, 4/13/95 Baa1 $ 10,000 $ 10,130
7 3/4%, 2/25/97 Baa1 9,000 9,210
6%, 7/13/98 Baa1 5,000 4,776
Household Finance Corp. 7.8%, 11/1/96 A2 4,000 4,115
Secured Finance, Inc. Kroger gtd. secured 9.05%,
12/15/04 Aaa 4,000 4,318
Tenneco Credit Corp.:
10.05%, 8/17/98 Baa2 3,000 3,242
9 5/8%, 8/15/01 Baa2 8,000 8,816
53,112
SAVINGS & LOANS - 0.8%
Great Western Financial Corp. 8.6%, 2/1/02 Baa2 2,000 2,084
Home Savings of America 10 1/2%, 6/12/97 Baa1 5,000 5,367
7,451
TOTAL FINANCE 171,157
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
Caterpillar Inc., 8%, 2/15/23 A3 500 494
MEDIA & LEISURE - 4.1%
BROADCASTING - 0.7%
Tele-communications, Inc.:
7.13%, 2/2/98 Baa3 4,000 3,972
6.58%, 2/15/05 Baa3 2,500 2,400
6,372
LEISURE DURABLES & TOYS - 1.0%
Brunswick Corp. 8 1/8%, 4/1/97 Baa2 3,500 3,568
Mattel, Inc. 6 7/8%, 8/1/97 Baa2 5,000 4,961
8,529
LODGING & GAMING - 0.4%
First Mexican Acceptance Corp. euro:
8 3/4%, 9/15/96 - 2,400 2,402
10 3/4%, 9/15/96 - 1,500 1,510
3,912
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
MEDIA & LEISURE - CONTINUED
PUBLISHING - 2.0%
News America Holdings, Inc. 8 5/8%, 2/1/03 Ba1 $ 10,000 $ 10,073
Time Warner Entertainment Co. LP 9 5/8%,
5/1/02 Baa3 8,000 8,540
18,613
TOTAL MEDIA & LEISURE 37,426
NONDURABLES - 0.6%
TOBACCO - 0.6%
RJR Nabisco, Inc. gtd. 8 3/4%, 4/15/04 Baa3 6,000 5,311
PRECIOUS METALS - 0.2%
Teck Corp. 8.70% 5/1/02 Baa2 1,500 1,545
RETAIL & WHOLESALE - 0.6%
GROCERY STORES - 0.6%
American Stores Co. 9 1/8%, 4/1/02 Baa3 5,000 5,369
TECHNOLOGY - 0.4%
COMPUTERS & OFFICE EQUIPMENT - 0.4%
Comdisco, Inc.:
7 3/4%, 1/29/97 Baa2 2,000 2,038
9 1/4%, 7/6/00 Baa2 2,000 2,140
4,178
TRANSPORTATION - 1.3%
AIR TRANSPORTATION - 0.5%
Qantas Airways Ltd. 6 5/8%, 6/30/98 (d) Baa2 3,000 2,900
United Air Lines, Inc. equipment trust ctfs.,
9.76%, 5/13/06 Baa2 2,000 2,007
4,907
TRUCKING & FREIGHT - 0.8%
Airborne Freight Corp. 8 7/8%, 12/15/02 Baa3 5,500 5,778
Federal Express Corp. 9 7/8%, 4/1/02 Baa3 1,000 1,117
6,895
TOTAL TRANSPORTATION 11,802
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
UTILITIES - 8.0%
ELECTRIC UTILITY - 7.5%
British Columbia Hydro & Power Authority:
15 1/2%, 7/15/11 Aa1 $ 1,000 $ 1,239
15 1/2%, 11/15/11 Aa1 1,000 1,264
Gulf States Utilities Co. 9.72%, 7/1/98 Baa3 10,500 11,201
Hydro-Quebec:
euro gtd. 9 5/8%, 7/15/22 Aa3 CAD 6,000 4,409
8.4%, 1/15/22 A1 25,000 25,008
Long Island Lighting Co.:
10 1/4%, 6/15/94 Baa3 10,800 10,859
7.3%, 7/15/99 Baa3 5,000 4,808
Middle South Energy, Inc. 1st mtg. 11%, 5/1/00 Baa3 1,049 1,050
Systems Energy Resources, Inc. 1st mtg.:
14%, 11/15/94 Baa3 7,500 7,805
10 1/2%, 9/1/96 Baa3 1,000 1,070
68,713
GAS - 0.5%
Transco Energy Co.:
9 1/2%, 12/1/95 Ba3 2,000 2,055
9 3/8%, 8/15/01 Ba3 2,000 2,005
4,060
TOTAL UTILITIES 72,773
TOTAL NONCONVERTIBLE BONDS
(Cost $353,428) 354,916
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 25.6%
U.S. GOVERNMENT AGENCY OBLIGATIONS - 2.2%
Financing Corp.:
9.80%, 4/6/18 Aaa 6,500 7,963
stripped principal payment:
2/8/18 Aaa 10,100 1,608
5/11/18 Aaa 65,140 10,181
19,752
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
U.S. TREASURY OBLIGATIONS - 23.4%
6 3/8%, 8/15/02 Aaa $ 5,000 $ 4,805
9 7/8%, 11/15/15 Aaa 12,500 15,686
8 7/8%, 2/15/19 Aaa 19,100 22,075
8 1/8%, 8/15/19 Aaa 87,250 93,575
7 7/8%, 2/15/21 Aaa 25,000 26,145
8 1/8%, 5/15/21 Aaa 20,000 21,516
stripped coupon payment:
8/15/06 Aaa 9,715 3,919
2/15/08 Aaa 54,000 19,318
stripped principal payment:
2/15/19 Aaa 24,575 3,808
2/15/20 Aaa 21,500 3,105
213,952
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS (Cost $237,420) 233,704
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 3.2%
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 0.1%
12 1/2%, 7/1/11 to 7/1/15 Aaa 838 951
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 3.1%
8%, 4/15/16 to 6/15/17 Aaa 7,853 7,822
9%, 5/15/16 to 1/15/22 Aaa 13,992 14,563
9 1/2%, 3/15/21 to 10/15/21 Aaa 1,940 2,045
10%, 11/15/09 to 8/15/19 Aaa 3,811 4,108
28,538
TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE-
BACKED SECURITIES (Cost $28,867) 29,489
FOREIGN GOVERNMENT OBLIGATIONS - 20.8%
Argentina Republic:
5%, 3/31/05 (d)(e) - 363 265
BOCON 3 1/4%, 4/1/01 B 5,350 3,743
BOTE 1.885%, 5/31/96 (e) - 17,775 8,896
Brady:
4.3125%, 3/31/23 (d)(e) - 1,509 1,064
4 1/4%, 3/31/23 (d)(e) - 34,532 18,259
FOREIGN GOVERNMENT OBLIGATIONS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
Argentina Republic - continued
Chaco Province 11.875%, 9/10/97 (c) - $ 1,000 $ 993
Province of Cordoba, 10%, 1/28/95 - 2,250 2,208
Canadian Government 10 3/4%, 12/15/95 Aaa CAD 22,000 16,777
French Government OAT:
8 1/2%, 11/25/02 Aaa FRF 17,000 3,347
8 1/2%, 10/25/19 Aaa FRF 13,000 2,563
German Government:
8 5/8%, 2/20/96 Aaa DEM 10,100 6,422
8%, 9/22/97 Aaa DEM 30,000 19,273
Kingdom of Thailand 8 1/4%, 3/15/02 A2 10,000 10,215
Manitoba Province:
yankee 8.8%, 1/15/20 A+ 15,000 15,965
6 7/8%, 9/15/02 A1 3,000 2,854
Mexican Government:
Adjustabonos 4.8%, 9/1/94 AA- MXN 6,000 2,406
Brady:
6 1/4%, 12/31/19 Ba3 19,500 12,504
6 1/4%, 12/31/19 Ba3 7,500 4,809
Brady Discount:
5.4375%, 12/31/19 (e) Ba3 18,500 15,448
5.1875%, 12/31/19 (e) Ba3 4,500 3,758
4.3125%, 12/31/19 (e) Ba3 1,500 1,253
Cetes:
8/11/94 to 11/9/95 - MXN 48,421 13,134
Ontario Province:
7 3/8%, 1/27/03 Aa2 8,000 7,850
15 1/8%, 5/1/11 Aa2 7,000 8,453
Quebec Province 9 1/8%, 3/1/00 A1 3,000 3,254
Republic of Uruguay 8 1/4%, 6/8/95 (d) - 4,000 4,040
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $193,966) 189,753
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.1%

MBNA Trust 9 1/2%, 10/25/20 Aaa 565 565
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $584) 565
COMMON STOCKS - 0.4%
SHARES VALUE (NOTE 1)
FINANCE - 0.4%
BANKS - 0.4%
Banco Bilbao Vizcaya International Gibraltar Ltd.
sponsored ADR 150,000 $ 3,994
TOTAL COMMON STOCKS
(Cost $3,785) 3,994
PREFERRED STOCKS - 2.0%
FINANCE - 0.5%
BANKS - 0.5%
Chase Manhattan Corp., Series F adj. rate 22,800 1,151
Continental Bank Corp., Series 1 49,200 2,467
Summit Bancorporation adj. rate (f) 40,000 860
4,478
UTILITIES - 1.5%
ELECTRIC UTILITY - 1.4%
Cleveland Electric Illuminating Co.,
Series L adj. rate 12,193 1,073
Gulf States Utilities Co. $1.75 120,000 2,910
Long Island Lighting Co. $7.95 200,000 5,000
Niagara Mohawk Power Corp., Series A
adj. rate 71,005 1,686
Public Service Co. of New Hampshire, Series A 80,000 2,060
12,729
GAS - 0.1%
ENSERCH Corp., Series E adj. rate 8,400 835
TOTAL UTILITIES 13,564
TOTAL PREFERRED STOCKS
(Cost $16,600) 18,042
OTHER SECURITIES - 0.7%
PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
COLLATERALIZED NOTES - 0.7%
Ridgefield Investments Ltd. sr. notes 0%,
2/2/95 (collateralized by Mexican
govt. securities) (d) $ 3,185 $ 2,679
Wilton Investments Ltd. sr. notes
(collateralized by Mexican govt. and
U.S. govt. securities) Series C, 0%, 6/3/94 (c) 3,570 3,552
TOTAL OTHER SECURITIES
(Cost $6,583) 6,231
COMMERCIAL PAPER - 0.1%
Grupo Embotellador de Mexico SA de CV
5/10/94 (d) 1,000 999
TOTAL COMMERCIAL PAPER
(Cost $999) 999
REPURCHASE AGREEMENTS - 8.2%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 3.56%
dated 4/29/94 due 5/2/94 $ 75,110 75,088
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $917,320) $ 912,781
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
(000S) (000S)
SELL
1,530 U.S. Treasury Bond Contracts June 94 $ 153,000 $ 10,591
THE VALUE OF FUTURES CONTRACTS SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 16.8%
FOREIGN FORWARD CURRENCY CONTRACTS
AMOUNTS IN THOUSANDS SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO SELL
20,768 CAD 7/5/94 $ 14,969 $ 20
180,412 FRF 7/20/94 31,776 (1,140)
TOTAL CONTRACTS TO SELL
(Receivable amount $45,625) $ 46,745 $ (1,120)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 5.1%
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
FRF - French franc
DEM - German Deutsche mark
MXN - Mexican peso
LEGEND
(a) Principal amount is stated in United States dollars unless otherwise
noted.
(b) Standard & Poor's Corporation credit ratings are used in the
absence of a rating by Moody's Investors Service, Inc.
(c) Restricted securities - investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION
ACQUISITION COST
SECURITY DATE (000S)
Chaco Province
11.875%, 9/10/97 3/10/94 $ 1,027
Wilton Investments Ltd. sr.
notes (collateralized by
Mexican govt. and U.S.
govt. securities) Series
C, 0%, 6/3/94 3/3/93 $ 3,553
(d) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $60,439,000 or 6.4% of net
assets.
(e) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(f) Non-income producing.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 47.5% AAA, AA, A 47.4%
Baa 24.6% BBB 25.7%
Ba 8.3% BB 4.2%
B 0.4% B 0.4%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 5.5%. FMR
has determined that unrated debt securities that are lower quality account
for 4.5% of the total value of investment in securities.
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 70.3%
Canada 9.7
Mexico 9.5
Argentina 3.9
Germany 2.8
France 1.2
Thailand 1.1
Others (individually less than 1%) 1.5
TOTAL 100.0%
INCOME TAX INFORMATION
At April 30, 1994, the aggregate cost of investment securities for income
tax purposes was $917,425,000. Net unrealized depreciation aggregated
$4,644,000, of which $24,343,000 related to appreciated investment
securities and $28,987,000 related to depreciated investment securities.
The fund hereby designates $7,908,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNT IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) APRIL 30, 1994

ASSETS

Investment in securities, at value (including repurchase $ 912,781
agreements of $75,088) (cost $917,320) (Notes 1 and
2) - See accompanying schedule

Short foreign currency contracts (Note 2) $ (46,745)
Contracts held, at value

Receivable for contracts held 45,625 (1,120)

Receivable for investments sold 15,662

Receivable for fund shares sold 306

Dividends receivable 28

Interest receivable 16,493

Receivable for daily variation on futures contracts 383

TOTAL ASSETS 944,533

LIABILITIES

Dividends payable 1,051

Accrued management fee 360

Other payables and accrued expenses 380

TOTAL LIABILITIES 1,791

NET ASSETS $ 942,742

Net Assets consist of (Note 1):

Paid in capital $ 929,154

Distributions in excess of net investment income (1,877)

Accumulated undistributed net realized gain (loss) on 10,533
investments

Net unrealized appreciation (depreciation) on:

Investment securities (4,539)

Foreign currency contracts (1,120)

Futures contracts 10,591

NET ASSETS, for 129,082 shares outstanding $ 942,742

NET ASSET VALUE, offering price and redemption price per $7.30
share ($942,742 (divided by) 129,082 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED APRIL 30, 1994

INVESTMENT INCOME $ 2,168
Dividends

Interest (including security lending fees of $23) (Note 6) 76,669

TOTAL INCOME 78,837

EXPENSES

Management fee (Note 4) $ 4,232

Transfer agent fees (Note 4) 2,477

Accounting and security lending fees (Note 4) 309

Non-interested trustees' compensation 7

Custodian fees and expenses 387

Registration fees 40

Audit 59

Legal 16

Interest (Notes 5 and 7) 11

Miscellaneous 92

TOTAL EXPENSES 7,630

NET INVESTMENT INCOME 71,207

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTES 1, 2 AND 3)
Net realized gain (loss) on:

Investment securities 11,877

Foreign currency contracts 350

Futures contracts 4,666 16,893

Change in net unrealized appreciation (depreciation) on:

Investment securities (62,347)

Foreign currency contracts 605

Futures contracts 10,591 (51,151)

NET GAIN (LOSS) (34,258)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ 36,949
OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEARS ENDED APRIL 30,

1994 1993

INCREASE (DECREASE) IN NET ASSETS

Operations $ 71,207 $ 81,250
Net investment income

Net realized gain (loss) on investments 16,893 13,165

Change in net unrealized appreciation (depreciation) (51,151) 54,381
on
investments

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 36,949 148,796
FROM OPERATIONS

Distributions to shareholders (69,241) (81,130)
From net investment income

In excess of net investment income (1,785) -

TOTAL DISTRIBUTIONS (71,026) (81,130)

Share transactions 799,522 863,239
Net proceeds from sales of shares

Reinvestment of distributions 57,516 69,257

Cost of shares redeemed (898,298) (925,165)

Net increase (decrease) in net assets resulting from (41,260) 7,331
share transactions

TOTAL INCREASE (DECREASE) IN NET ASSETS (75,337) 74,997

NET ASSETS

Beginning of period 1,018,079 943,082

End of period (including distributions in excess of net $ 942,742 $ 1,018,079
investment income of $1,877 and $1,263,
respectively)

OTHER INFORMATION
Shares

Sold 102,866 117,042

Issued in reinvestment of distributions 7,428 9,386

Redeemed (115,700) (125,267)

Net increase (decrease) (5,406) 1,161

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED APRIL 30,

1994 1993 1992 1991 1990

SELECTED PER-SHARE DATA

Net asset value, beginning of $ 7.570 $ 7.070 $ 6.830 $ 6.560 $ 6.670
period

Income from Investment .522 .570 .591 .592 .597
Operations
Net investment income

Net realized and unrealized (.254) .499 .244 .277 (.110)
gain (loss) on investments

Total from investment .268 1.069 .835 .869 .487
operations

Less Distributions (.525) (.569) (.595) (.599) (.597)
From net investment income

In excess of net investment (.013) - - - -
income

Total distributions (.538) (.569) (.595) (.599) (.597)

Net asset value, end of period $ 7.300 $ 7.570 $ 7.070 $ 6.830 $ 6.560

TOTAL RETURN 3.35% 15.63% 12.63% 13.82% 7.31%

RATIOS AND SUPPLEMENTAL
DATA

Net assets, end of period $ 943 $ 1,018 $ 943 $ 455 $ 360
(in millions)

Ratio of expenses to average .74% .68% .70% .67% .70%
net assets

Ratio of net investment income 6.94% 7.74% 8.29% 8.84% 8.76%
to average net assets

Portfolio turnover rate 61% 74% 77% 101% 103%

</TABLE>

NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1994

1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Investment Grade Bond Fund (the fund) is a fund of Fidelity Fixed
Income Trust (the trust) and is authorized to issue an unlimited number of
shares. The trust is registered under the Investment Company Act of 1940,
as amended (the 1940 Act), as an open-end management investment company
organized as a Massachusetts business trust. The following summarizes the
significant accounting policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities (including restricted securities) for which market quotations
are not readily available are valued at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practicable to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income, which includes accretion of original
interest discount, is accrued as earned. Dividend and interest income is
recorded net of foreign taxes where recovery of such taxes is not assured.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net investment income. Distributions from realized gains, if
any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
mortgage-backed securities, futures and options transactions, foreign
currency transactions, market discount, and losses deferred due to wash
sales. The fund also utilized earnings and profits distributed to
shareholders on redemption of shares as a part of the dividends paid
deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income may include temporary book and tax
basis differences which will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the following
year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective May 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of April 30, 1993 have been reclassified to reflect
a decrease in paid in capital of $5,568,000, a decrease in distributions in
excess of net investment income of $1,476,000 and a decrease in accumulated
net realized loss on investments of $4,092,000.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may enter into forward foreign
currency contracts. These contracts involve market risk in excess of the
amount reflected in the fund's Statement of Assets and Liabilities. The
face or contract amount in U.S. dollars reflects the total exposure the
fund has in that particular currency contract. The U.S. dollar value of
forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service. Losses may arise due to
changes in the value of the foreign currency or if the counterparty does
not perform under the contract. Purchases and sales of forward foreign
currency contracts having the same settlement date and broker are offset
and presented net on the Statement of Assets and Liabilities. Gain (loss)
on the
OPERATING POLICIES - CONTINUED
FORWARD FOREIGN CURRENCY
CONTRACTS - CONTINUED
purchase or sale of forward foreign currency contracts having the same
settlement date and broker is recognized on the date of offset, otherwise
gain (loss) is recognized on settlement date.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management contracts with FMR, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by
U.S. Treasury or Federal Agency obligations.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures contracts and
write options. These investments involve to varying degrees, elements of
market risk and risks in excess of the amount recognized in the Statement
of Assets and Liabilities. The face or contract amounts reflect the extent
of the involvement the fund has in the particular classes of instruments.
Risks may be caused by an imperfect correlation between movements in the
price of the instruments and the price of the underlying securities and
interest rates. Risks also may arise if there is an illiquid secondary
market for the instruments, or due to the inability of counterparties to
perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management contracts with FMR, may participate
in an interfund lending program. This program provides an alternative
credit facility allowing the fund to borrow from, or lend money to, other
participating funds.
RESTRICTED SECURITIES. The fund is permitted to invest in privately placed
restricted securities. These securities may be resold in transactions
exempt from registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations and
expense, and prompt sale at an acceptable price may be difficult. At the
end of the period, restricted securities (excluding 144A issues) amounted
to $4,545,000 or 0.5% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $576,365,000 and $628,926,000, respectively, of which U.S.
government and government agency obligations aggregated $464,029,000 and
$491,716,000, respectively.
The market value of futures contracts opened and closed amounted to
$207,433,000 and $202,685,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates ranging from
.14% to .37% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .20%.
For the period, the management fee was equivalent to an annual rate of .41%
of average net assets.
On October 20, 1993, shareholders approved an increase in the individual
fund fee rate to .30% effective November 1, 1993. The Board of Trustees
approved a new group fee rate schedule with rates ranging from .1325% to
.3700%. Effective November 1, 1993, FMR has voluntarily agreed to implement
this new group fee rate schedule as it results in the same or a lower
management fee.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that no
payments were made to third parties under the Plan.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEE. FSC maintains the funds' accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
5. INTERFUND LENDING PROGRAM.
The fund participated in the interfund lending program as a borrower. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $17,304,000 and $12,595,000,
respectively. The weighted average interest rate was 3.66%. Interest
expense includes $9,000 paid under the interfund lending program. At period
end, there were no interfund loans outstanding.
6. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund negotiated
lenders' fees. These fees are included in interest income. The fund
receives U.S. Treasury obligations and/or cash as collateral against the
loaned securities, in an amount at least equal to 102% of the market value
of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 100% of the market value of the loaned
securities during the period of the loan. At period end, there were no
loans outstanding.
7. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $13,686,000 and $7,609,000,
respectively. The weighted average interest rate was 3.83%. Interest
expense includes $2,000 paid under the bank borrowing program. At period
end, there were no bank borrowings outstanding.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Fixed Income Trust and the Shareholders of
Fidelity Investment Grade Bond Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Fixed-Income Trust: Fidelity Investment Grade Bond Fund, including
the schedule of portfolio investments, as of April 30, 1994, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended
and the financial highlights for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of the fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles
used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Fixed Income Trust: Fidelity Investment Grade Bond Fund as of
April 30, 1994, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting
principles.
/s/COOPERS & LYBRAND
Coopers & Lybrand
Boston, Massachusetts
June 3, 1994
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Michael Gray, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
The Bank of New York
New York, NY
* INDEPENDENT TRUSTEES
FIDELITY'S TAXABLE BOND FUNDS
Capital & Income
Ginnie Mae
Global Bond
Government Securities
Intermediate Bond
Investment Grade Bond
Mortgage Securities
New Markets Income
Short-Intermediate Government
Short-Term Bond
Short-Term World Income
Spartan(Registered trademark) Ginnie Mae
Spartan Government Income
Spartan High Income
Spartan Investment Grade Bond
Spartan Limited Maturity
Government
Spartan Long-Term Government Bond
Spartan Short-Intermediate
Government
Spartan Short-Term Income
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)

AUTOMATED LINES FOR QUICKEST SERVICE

EXHIBIT 24(A)(2)

(2_FIDELITY_LOGOS)FIDELITY

SHORT-TERM BOND
PORTFOLIO
ANNUAL REPORT
APRIL 30, 1994
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on bond market
strategies.

PERFORMANCE 4 How the fund has done over time.

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

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

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

FINANCIAL STATEMENTS 30 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES 34 Footnotes to the financial
statements.

REPORT OF INDEPENDENT 38 The auditor's opinion.
ACCOUNTANTS

QUALITY DIVERSIFICATION AS OF APRIL 30, 1994
(MOODY'S RATINGS) % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
6 MONTHS AGO

Aaa 8.6 10.1

Aa 5.5 3.4

A 13.2 11.2

Baa 33.1 37.4

Ba 6.4 3.3

B - 0.4

Not rated 12.6 8.2

TABLE EXCLUDES SHORT-TERM INVESTMENTS. UNRATED DEBT SECURITIES THAT ARE
EQUIVALENT TO BA AND BELOW AT APRIL 30, 1994, ACCOUNT FOR 1.9% OF THE
FUND'S INVESTMENTS.
AVERAGE YEARS TO MATURITY AS OF APRIL 30, 1994
6 MONTHS AGO

Years 2.9 2.4

AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL ON THE
FUND'S BONDS IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF APRIL 30, 1994
6 MONTHS AGO

Years 1.9 1.7

Row: 1, Col: 1, Value: 19.6
Row: 1, Col: 2, Value: 19.7
Row: 1, Col: 3, Value: 3.3
Row: 1, Col: 4, Value: 57.4
Corporate bonds 57.4%
U.S. government
and agency
obligations 3.3%
Foreign government
obligations 19.7%
Short-term and
other investments 19.6%
Corporate bonds 58.2%
U.S. government
and agency
obligations 5.3%
Foreign government
obligations 13.1%
Short-term and
other investments 23.4%
Row: 1, Col: 1, Value: 23.4
Row: 1, Col: 2, Value: 13.4
Row: 1, Col: 3, Value: 5.3
Row: 1, Col: 4, Value: 58.2
* TOTAL FOREIGN
INVESTMENTS 40.0%
** TOTAL FOREIGN
INVESTMENTS 29.5%
INVESTMENTS APRIL 30, 1994

Showing Percentage of Total Value of Investment in Securities

CORPORATE BONDS - 56.9%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
CONVERTIBLE BONDS - 0.1%
RETAIL & WHOLESALE - 0.1%
DRUG STORES - 0.1%
Rite Aid Corp. liquid yield option notes
0%, 7/24/06 Baa1 $ 5,000 $ 2,209
NONCONVERTIBLE BONDS - 56.8%
AEROSPACE & DEFENSE - 0.9%
Grumman Corp. 10 3/8%, 1/1/99 Baa3 5,100 5,427
Lockheed Corp. 4 7/8%, 2/15/96 Baa1 12,415 12,125
17,552
BASIC INDUSTRIES - 1.2%
CHEMICALS & PLASTICS - 0.7%
Desc (Soc De Fomento Indust) euro 11%,
12/15/97 - 6,830 6,992
Grace (W.R.) & Co. 7.4%, 2/1/00 Baa3 7,000 6,902
13,894
IRON & STEEL - 0.2%
Grupa Simec 8 7/8%, 12/15/98 (d) - 5,000 4,744
PAPER & FOREST PRODUCTS - 0.3%
Chesapeake Corp. 11 3/4%, 8/1/95 Baa3 4,600 4,865
TOTAL BASIC INDUSTRIES 23,503
CONSTRUCTION & REAL ESTATE - 1.1%
BUILDING MATERIALS - 0.6%
Sunbelt (Cemex) Enterprises 8 1/2%, 5/4/95 (g) - 12,000 11,940
CONSTRUCTION - 0.5%
Empresas ICA Sociedad Controladora:
euro 9 3/4%, 2/11/98 - 5,475 5,482
9 3/4%, 2/11/98 (d) - 3,400 3,404
8,886
TOTAL CONSTRUCTION & REAL ESTATE 20,826
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
DURABLES - 0.4%
AUTOS, TIRES, & ACCESSORIES - 0.4%
Chrysler Corp. 13%, 3/1/97 Baa2 $ 1,015 $ 1,073
Ford Motor Co. (Canada) Ltd. euro
9 1/4%, 9/1/94 A2 1,100 1,114
Grupo Dina (Consorcio) euro 10 1/2%,
11/18/97 - 6,000 5,940
Grupo Imsa SA de CV 8 3/4%, 7/7/98 (d) - 750 714
8,841
ENERGY - 0.9%
ENERGY SERVICES - 0.9%
McDermott International, Inc.:
10 1/4%, 6/1/95 Baa3 15,600 16,166
9 3/8%, 3/15/02 Baa3 1,000 1,040
17,206
FINANCE - 32.4%
ASSET-BACKED SECURITIES - 2.0%
Advanta Trust 7.38%, 11/15/96 (d) Aaa 2,456 2,444
Concord Leasing, Inc. (d):
6.66%, 1/15/98 AAA 2,346 2,313
5.04%, 7/15/98 AAA 4,483 4,315
5.31%, 1/20/99 AAA 3,783 3,683
Discover Card Trust, 6 1/8%, 5/15/98 A2 2,000 1,990
Midlantic Grantor Trust 5.15%, 9/15/97 Baa2 3,411 3,366
SCFC Recreational Vehicle Loan Trust
7 1/4%, 9/15/06 Aaa 983 985
Standard Credit Card Master Trust:
7 7/8%, 7/7/95 Aaa 500 503
8 1/4%, 9/7/95 A2 4,400 4,449
5 7/8%, 7/7/96 Aaa 13,000 13,017
37,065
BANKS - 16.3%
Bancomer SA:
euro:
8%, 7/7/98 (d) Ba2 27,475 25,964
8%, 7/7/98 - 9,100 8,599
9%, 6/1/00 (d) - 5,750 5,506
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
Bank of Boston Corp.:
9 1/2%, 8/15/97 Baa2 $ 2,315 $ 2,490
euro 3.8%, 8/28/98 (e) Baa2 16,350 16,043
10.3%, 9/1/00 Baa2 1,250 1,317
Baybanks, Inc. 4.0625%, 9/30/97 (e) Baa2 8,500 8,394
Chase Manhattan Corp. euro 5%, 5/31/00 (e) Baa2 4,700 4,636
Chemical Bank Corp. euro 0%, 2/16/97 Baa1 1,000 827
Citicorp:
5.7%, 2/12/96 A2 9,000 8,953
euro (e):
5%, 7/10/97 Baa3 1,000 992
5%, 1/30/98 A3 3,500 3,474
5%, 10/25/05 Baa2 3,450 3,321
Citicorp Person to Person euro
5 1/4%, 1/30/97 (e) A3 8,230 8,168
Citizens & Southern Corp. 5 1/4%,
12/19/97 (e) A3 9,650 9,645
Continental Bank Corp.:
11.09%, 10/18/94 Baa3 3,650 3,748
9 3/4%, 3/15/95 Baa3 10,525 10,877
9 7/8%, 6/15/96 Baa3 4,600 4,923
4 1/2%, 5/18/00 (e) Baa3 2,000 1,997
Corestates Capital Corp. 6.24%, 2/13/95 A1 1,400 1,412
Corporacion Andina De Fomento
7 1/4%, 4/30/98 (d) - 4,800 4,620
Crestar Financial Corp. 8 1/4%, 7/15/02 Baa1 2,000 2,047
Czech National Bank Prague euro
7%, 4/6/96 Baa3 4,050 4,050
First Bank Systems, Inc. euro
5 1/4%, 11/29/96 (e) A3 8,850 8,850
First Bank Systems, Inc. 9.89%, 3/6/96 A3 650 690
First Fidelity Bancorporation 9 3/4%, 5/25/95 A3 6,075 6,321
First Interstate Bancorp:
8 7/8%, 3/1/95 A3 4,700 4,771
10 1/2%, 3/1/96 A3 3,815 4,094
10 7/8%, 4/15/01 Baa1 2,840 3,313
Fleet Financial Group, Inc. 5 5/8%, 7/1/95 A3 9,250 9,247
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
Fleet/Norstar Financial Group, Inc.:
11 3/4%, 11/15/94 A3 $ 1,370 $ 1,415
7.65%, 3/1/97 Baa3 5,000 5,129
Kansallis-Osaki-Pankki euro:
8 1/2%, 5/31/95 A3 2,500 2,550
10%, 3/7/96 A3 9,800 10,326
Keycorp.:
8.55%, 5/30/95 A2 1,300 1,339
8.96%, 5/30/96 A2 2,000 2,098
MBNA American Bank, N.A. 7 1/4%, 9/15/02 A3 350 340
Manufacturers Hanover Trust euro
5 1/4%, 7/15/97 (e) Baa2 15,500 15,423
Marine Midland Bank:
euro (e):
5 1/4%, 9/27/96 Baa1 17,750 17,639
4 1/2%, 3/29/99 Baa1 5,000 4,965
8 5/8%, 3/1/97 Baa1 19,567 20,408
Mellon Financial Co.:
9.34%, 12/15/94 A3 1,900 1,947
6 1/8%, 11/15/95 A3 3,750 3,765
6 1/2%, 12/1/97 A3 1,000 987
Mercantile Bancorporation, Inc. 7 5/8%,
10/15/02 Baa1 4,038 3,985
Merchants National Corp. 8.20%, 10/25/94 A1 2,000 2,029
Meridian Bancorp, Inc. 5 1/4%,12/1/96 (e) Baa1 7,450 7,441
Midland International Financial Services BV
euro 5%, 3/6/99 (e) - 4,000 4,000
Midlantic Corp. 9 1/4%, 9/1/99 Baa3 500 530
Moore Financial Group, Inc. 5 1/4%,
11/18/97 (e) Baa1 6,300 6,190
National City Corp. 5 1/4%, 1/31/97 (e) A2 4,100 4,069
Norstar Bancorp, Inc. 9 3/8%, 6/1/94 A3 1,900 1,906
Security Pacific Corp. 10.05%, 5/1/95 A2 3,500 3,658
Shawmut Corp. 8 7/8%, 4/1/96 Baa1 4,325 4,520
TrustCorp, Inc. 11 1/8%, 9/1/95 A1 710 755
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
United Virginia Bankshares, Inc. 8 5/8%,
4/15/98 Baa1 $ 660 $ 691
Wells Fargo and Co. euro 5 1/4%,
4/28/00 (e) Baa2 2,000 1,975
309,369
CREDIT & OTHER FINANCE - 12.8%
Aristar, Inc.:
8.55%, 6/1/95 Baa1 2,590 2,665
7 3/8%, 2/15/97 Baa1 2,000 2,029
Associates Corp. of North America:
12 3/4%, 8/15/94 A2 400 409
12 1/2%, 9/15/94 A1 4,375 4,493
Beneficial Corp. 9 3/8%, 6/2/95 A2 4,400 4,573
CIT Group Holdings, Inc. index amortizing
note 5.02%, 4/6/98 A1 15,350 15,273
Caterpillar Financial Services Corp. 7.14%,
4/10/95 A3 2,950 2,993
Chrysler Financial Corp.:
9%, 10/15/94 Baa2 2,303 2,342
6%, 4/15/96 Baa2 15,000 14,923
6.47%, 5/27/97 Baa3 3,000 2,973
Financiera Energetica Nacional
6 5/8%, 12/13/96 (d) - 7,120 6,800
Ford Motor Credit Co.:
euro 9 5/8%, 2/27/96 A2 3,100 3,271
8%, 8/1/94 A2 1,850 1,864
9 1/8%, 8/15/94 A2 4,005 4,053
9 1/4%, 11/15/94 A2 1,950 1,993
5.7%, 12/12/94 A2 1,000 1,005
9%, 6/28/96 A2 950 1,000
General Motors Acceptance Corp.:
6.4%, 5/2/94 Baa1 1,500 1,500
8.70%, 10/17/94 Baa1 1,000 1,016
8.60%, 12/8/94 Baa1 2,725 2,778
8.95%, 12/19/94 Baa1 2,000 2,045
6 1/2%, 1/17/95 Baa1 1,300 1,310
5.55%, 2/16/95 Baa1 16,900 16,911
7.40%, 4/3/95 Baa1 6,800 6,908
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
General Motors Acceptance Corp. - continued
8.60%, 4/5/95 Baa1 $ 1,700 $ 1,745
9.40%, 5/18/95 Baa1 3,350 3,472
Greyhound Financial Corp.:
6.42%, 5/13/94 Baa2 9,600 9,600
5.2%, 8/24/94 Baa2 12,325 12,325
6.94%, 1/28/98 Baa2 4,000 3,976
6.95%, 1/28/98 Baa2 2,000 1,990
Household Finance Corp.:
6 7/8%, 11/15/94 A2 9,350 9,442
9 1/4%, 2/15/95 A2 16,000 16,472
Industrial Finance Corp. Thailand
7 1/4%, 12/2/96 - THB 60,000 2,341
Margaretten Financial Corp. 6 3/4%, 6/15/00 Baa3 6,000 5,670
McDonnell Douglas Finance Corp.:
9 1/2%, 5/20/94 Baa3 1,000 1,002
8.93%, 12/6/94 Ba2 5,100 5,215
Nafin Finance Trust II
6.35625%, 3/31/99 (d) (e) - 11,487 11,343
Tenneco Credit Corp.:
9%, 7/15/95 Baa2 900 930
10 1/8%, 12/1/97 Baa2 2,500 2,726
10.05%, 8/17/98 Baa2 6,850 7,403
Third Mexican Acceptance Corp. coll. gtd. by
NAFIN 7.37%, 3/15/98 (d) - 3,000 2,880
Third Mexican Acceptance Corp. coll. notes gtd.
by Grupo Sidek SA and Grupo Situr SA
10 1/2%, 3/15/98 (d) - 5,500 5,472
U.S. West Financial Services, Inc.
4.89%, 12/11/97 (e) A2 7,400 7,219
Westinghouse Credit Corp.:
8.01%, 5/18/94 Ba1 1,800 1,802
9.31%, 6/1/94 Ba1 1,200 1,205
8.17%, 6/13/94 Ba1 2,000 2,007
9.15%, 6/21/94 Ba1 1,150 1,156
8.73%, 8/8/94 Ba1 1,000 1,020
8.8%, 10/28/94 Ba1 1,200 1,217
8.65%, 11/1/94 Ba1 1,000 1,015
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
Westinghouse Credit Corp. - continued
8.63%, 12/20/94 Ba1 $ 1,000 $ 1,019
8.79%, 5/22/96 Ba1 12,000 12,405
8.84%, 10/21/96 Ba1 600 621
9.06%, 6/3/98 Ba1 1,000 1,040
8.93%, 6/22/99 Ba1 2,000 2,050
242,907
INSURANCE - 0.3%
ITT Hartford Group, Inc. 7 1/4%, 12/1/96 A1 5,700 5,774
SAVINGS & LOANS - 1.0%
Ahmanson (H.F.) & Co. 9 7/8%, 11/15/99 Baa3 650 719
Golden West Financial Corp. 10 1/4%, 5/15/97 A3 5,350 5,836
Great Western Bank F.S.B. 9 1/2%, 8/22/94 Baa1 800 811
Home Savings of America 10 1/2%, 6/12/97 Baa1 6,850 7,353
World Savings & Loan 5 1/4%, 2/15/96 A1 5,000 4,950
19,669
TOTAL FINANCE 614,784
HEALTH - 0.3%
MEDICAL EQUIPMENT & SUPPLIES - 0.3%
Cardinal Distribution, Inc. 8%, 3/1/97 Baa1 5,000 5,134
INDUSTRIAL MACHINERY & EQUIPMENT - 0.6%
ELECTRICAL EQUIPMENT - 0.2%
Westinghouse Electric Corp.:
7 3/4%, 4/15/96 Ba1 2,000 2,028
6 7/8%, 9/1/03 Ba1 2,200 1,961
3,989
INDUSTRIAL MACHINERY & EQUIPMENT - 0.4%
Tenneco Corp. gtd.:
euro 10 3/4%, 6/15/95 Baa2 3,510 3,685
11%, 11/15/95 Baa2 3,400 3,621
7,306
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 11,295
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - 5.1%
BROADCASTING - 2.0%
Tele-Communications, Inc.:
7.13%, 2/02/98 Baa3 $ 6,000 $ 5,959
7 3/8%, 2/15/00 Baa3 5,000 4,823
Time Warner, Inc.:
9 1/2%, 11/1/94 Ba1 1,150 1,171
6.05%, 7/1/95 (d) Ba1 26,000 25,964
37,917
LEISURE DURABLES & TOYS - 1.4%
Brunswick Corp. 8 1/8%, 4/1/97 Baa2 11,525 11,748
Mattel, Inc. 6 7/8%, 8/1/97 Baa2 15,150 15,034
26,782
PUBLISHING - 1.7%
News American Holdings, Inc. gtd. 9 1/8%,
10/15/99 Ba1 23,155 24,130
Time Warner Entertainment Co. LP
9 5/8%, 5/1/02 Baa3 7,825 8,353
32,483
TOTAL MEDIA & LEISURE 97,182
NONDURABLES - 2.5%
BEVERAGES - 0.3%
Fomento Economico Mexicano SA de CV euro
9 1/2%, 7/22/97 - 4,170 4,154
Grupo Embotellador de Mexico SA de CV
10 3/4%, 11/19/97 (d) Ba2 2,000 2,060
6,214
TOBACCO - 2.2%
Empresas La Moderna SA
10 1/4%, 11/12/97 (d) - 4,200 4,326
Philip Morris Companies, Inc.:
9.15%, 9/19/94 A2 500 508
9.4%, 10/1/95 A2 7,150 7,471
8 7/8%, 7/1/96 A2 1,990 2,078
RJR Nabisco, Inc. 9 1/4%, 5/1/95 Baa3 26,000 26,501
40,884
TOTAL NONDURABLES 47,098
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - 1.6%
GENERAL MERCHANDISE STORES - 0.6%
Controladora Comercial Mexicana SA de CV
euro 8 3/4%, 4/21/98 - $ 2,800 $ 2,695
Dayton Hudson Corp. 8.94%, 6/30/94 A3 900 906
El Puerto de Liverpool SA de CV
7 1/4%, 10/19/96 (d) - 5,200 4,953
K mart Corp. 12 1/8%, 3/1/95 A3 800 841
Sears Canada, Inc. 11%, 5/18/99 - CAD 1,180 905
10,300
GROCERY STORES - 1.0%
American Stores Co.:
8.21%, 4/16/97 Baa3 1,000 1,035
8 1/4%, 4/21/98 Baa3 4,700 4,864
8.44%, 4/24/98 Baa3 4,700 4,894
Supervalu, Inc. 5 7/8%, 11/15/95 A3 8,900 8,882
19,675
TOTAL RETAIL & WHOLESALE 29,975
SERVICES - 0.4%
ADVERTISING - 0.1%
Valassis Inserts 9 3/8%, 3/15/99 Ba2 1,600 1,658
LEASING & RENTAL - 0.3%
Hertz Corp. 8%, 4/1/95 Baa1 3,910 3,989
Ryder System, Inc. 9 3/8%, 1/15/98 Baa1 1,000 1,025
5,014
TOTAL SERVICES 6,672
TECHNOLOGY - 1.8%
COMPUTERS & OFFICE EQUIPMENT - 1.1%
Comdisco, Inc.:
6 1/2%, 6/15/94 Baa2 6,500 6,511
9.66%, 6/20/94 Baa2 3,000 3,018
8.95%, 5/15/95 Baa2 2,500 2,574
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
Comdisco, Inc. - continued
9 3/4%, 1/15/97 Baa2 $ 3,900 $ 4,159
7 3/4%, 1/29/97 Baa2 4,000 4,076
20,338
ELECTRONICS - 0.4%
Grupo Condumex SA de CV (d):
6 1/4%, 7/27/96 - 760 714
7 3/8%, 7/27/98 - 2,600 2,369
Toshiba Corp. euro 10 3/8%, 12/5/95 A1 3,900 4,124
7,207
PHOTOGRAPHIC EQUIPMENT - 0.3%
Eastman Kodak Co. 9 1/8%, 3/1/98 A3 5,350 5,492
TOTAL TECHNOLOGY 33,037
TRANSPORTATION - 1.7%
AIR TRANSPORTATION - 0.9%
AMR Corp.:
9.76%, 1/11/96 Baa3 900 938
7 3/4%, 12/1/97 Baa3 6,100 6,078
9 1/2%, 7/15/98 Baa3 1,280 1,337
American Airlines, Inc. secured equipment ctf.
14 3/8%, 1/6/05 Baa1 5,650 6,252
Qantas Airways Ltd. 6 5/8%, 6/30/98 (d) Baa2 3,500 3,384
17,989
SHIPPING - 0.1%
Transportation Maritama Mexico euro
8 3/8%, 10/28/97 (c) - 1,560 1,501
TRUCKING & FREIGHT - 0.7%
Consolidated Freightways, Inc.:
8.83%, 12/15/94 Baa3 3,700 3,774
9 1/8%, 8/15/99 Baa3 1,255 1,298
Federal Express Corp.:
9 3/4%, 5/15/96 Baa3 4,600 4,878
9.96%, 5/18/98 Baa3 2,800 3,052
13,002
TOTAL TRANSPORTATION 32,492
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - 5.9%
ELECTRIC UTILITY - 4.3%
Commonwealth Edison Co.:
8.2%, 6/1/94 Baa1 $ 14,000 $ 14,035
8.98%, 8/1/94 Baa1 2,000 2,019
Gulf States Utilities Co. 9.72%, 7/1/98 Baa3 7,500 8,001
Long Island Lighting Co.:
10 1/4%, 6/15/94 Baa3 18,650 18,753
11 3/4%, 11/15/94 Baa3 10,300 10,638
8 3/4%, 5/1/96 Baa2 5,300 5,548
7.3%, 7/15/99 Baa3 5,000 4,808
Middle South Energy, Inc. 1st mtg. 11%, 5/1/00 Baa3 1,997 1,999
Public Service Co. of New Hampshire 1st mtg.
8 7/8%, 5/15/96 Baa3 6,550 6,786
Systems Energy Resources, Inc. 1st mtg. 14%,
11/15/94 Baa3 3,800 3,954
United Illuminating Co. 7 3/8%, 1/15/98 Baa3 6,550 6,513
83,054
GAS - 1.6%
Houston Natural Gas Corp. 12 1/8%, 4/15/95 Baa2 2,400 2,533
Panhandle Eastern Pipe Line Co. 9 7/8%,
10/15/96 Baa2 21,500 22,106
Southwest Gas Co. 9 3/4%, 6/15/02 Ba1 4,650 4,944
29,583
TOTAL UTILITIES 112,637
TOTAL NONCONVERTIBLE BONDS 1,078,234
TOTAL CORPORATE BONDS
(Cost $1,100,339) 1,080,443
U.S. TREASURY OBLIGATIONS - 1.1%
9 1/4%, 8/15/98
(Cost $20,420) Aaa 18,400 20,243
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 1.1%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
FEDERAL HOME LOAN MORTGAGE CORPORATION - 0.2%
9 1/2%, 1/1/06 Aaa $ 4,343 $ 4,532
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 0.3%
9%, 4/1/01 to 10/1/06 Aaa 4,873 5,082
12%, 3/1/17 Aaa 761 857
5,939
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 0.6%
7%, 9/15/22 to 4/15/24 Aaa 6,060 5,686
7 1/2%, 10/15/22 to 12/15/23 Aaa 4,537 4,395
8%, 3/15/17 Aaa 131 131
10,212
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $21,371) 20,683
U.S. GOVERNMENT AGENCY - COLLATERALIZED MORTGAGE OBLIGATIONS - 1.1%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 0.8%
9.3%, 4/15/19 Aaa 14,122 15,366
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 0.3%
7%, 6/25/19 Aaa 2,500 2,488
7 1/2%, 2/25/21 Aaa 2,500 2,517
5,005
TOTAL U.S. GOVERNMENT AGENCY -
COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $20,587) 20,371
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.0%
MBNA Trust 9 1/2%, 10/25/20
(Cost $511) Aaa 494 494
FOREIGN GOVERNMENT OBLIGATIONS - 19.7%
Argentina Republic BOCON:
3.24%, 4/1/01 - ARP 35,477 21,450
3.24%, 9/1/02 - ARP 71,649 35,567
3.24%, 4/1/07 - ARP 12,341 5,238
FOREIGN GOVERNMENT OBLIGATIONS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
Canadian Province of Quebec 8.35%, 4/4/95 Aa3 $ 2,800 $ 2,877
Danish Government Bullet:
8%, 5/15/03 Aa1 DKK 140,725 22,882
7%, 12/15/04 Aa1 DKK 187,450 28,507
French Government OAT:
8 1/2%, 11/25/02 Aaa FRF 6,900 1,358
8 1/2%, 4/25/03 Aaa FRF 233,314 45,916
6 3/4%, 10/25/03 Aaa FRF 25,000 4,411
5 1/2%, 4/25/04 Aaa FRF 12,000 1,930
Indonesia treasury bills:
0%, 5/13/94 - IDR 4,500,000 2,078
0%, 5/19/94 - IDR 16,350,000 7,538
0%, 1/13/95 - IDR 7,000,000 2,996
Italian Government 11%, 6/1/03 - ITL 14,960,000 10,081
Korea Development Bank:
8.67%, 3/15/95 A1 4,075 4,185
8.68%, 3/15/95 A1 2,800 2,876
7%, 7/15/99 A1 7,000 6,827
Malaysia Government treasury bills:
0%, 5/13/94 - MYR 4,000 1,494
0%, 6/24/94 - MYR 10,050 3,732
Mexican Government:
Adjustabono (h):
6.70%, 5/4/94 AA- MXN 23,286 9,770
5.1%, 7/11/96 AA- MXN 12,052 4,659
Cetes:
0%, 10/6/94 to 3/16/95 - MXN 135,521 38,253
0%, 9/7/95 - MXN 5,173 1,302
0%, 10/11/95 - MXN 83,470 20,751
0%, 11/9/95 - MXN 10,200 2,510
0%, 12/7/95 - MXN 59,133 14,408
0%, 1/11/96 - MXN 14,605 3,516
0%, 2/29/96 Baa1 MXN 52,200 12,358
New Zealand Government 8%, 4/15/04 Aa3 NZD 46,890 28,437
Swedish Government 10 3/4%, 1/23/97 Aa2 SEK 65,800 9,176
United Kingdom 12%, 11/20/98 Aaa GBP 9,530 16,785
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $408,280) 373,868
SUPRANATIONAL OBLIGATIONS - 0.5%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
International Bank for Reconstruction &
Development 4 1/2%, 3/20/03
(Cost $9,560) Aaa JPY 980,000 $ 9,934
MUNICIPAL BONDS - 1.4%
Louisiana Pub. Facs. Auth. Rev. 9.95%, 6/1/96 Baa1 15,000 15,982
Philadelphia Electric Co. 1st & ref. mortgage
8 3/4%, 11/1/94 Baa1 2,715 2,762
Shreveport Louisiana Water & Sewer Rev.
taxable refunding, 0%, 12/1/96 Aaa 3,500 2,931
Virginia State Public School Authority
4 1/4%, 1/1/98 Aa 4,000 3,925
TOTAL MUNICIPAL BONDS
(Cost $26,049) 25,600
OTHER SECURITIES - 8.0%
COLLATERALIZED NOTES - 5.1%
Ridgefield Investments Ltd. sr. notes 0%, 2/2/95
(collateralized by Mexican govt. securities) (d) 34,495 29,011
Wilton Investments Ltd. sr. notes (collateralized
by Mexican gov't. and U.S. gov't. securities)
Series C, 0%, 6/3/94 (g) 68,960 68,626
97,637
INDEXED SECURITIES - 2.9%
AIG Matched Funding Corp. note 11.018%,
9/16/94 (coupon inversely indexed to HELIBOR
and principal indexed to value of 3-year Finnish
securities, both multiplied by 4) (f) 300 260
Bankers Trust Company note:
14.4375% 7/15/94 (indexed to CSK denom.
CEZ a.s. bond 16 1/2%, 6/25/98) 1,250 1,288
9.53034%, 8/23/94 (coupon inversely indexed
to CAD Banker's Acceptance rate and principal
indexed to value of 3-year Canadian securities,
both multiplied by 4) (f) 2,800 2,436
5.6832%, 2/23/95 (coupon inversely indexed
to GBP LIBOR and principal indexed to value
of 2-year United Kingdom securities, both
multiplied by 4) (f) 3,600 3,059
OTHER SECURITIES - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
INDEXED SECURITIES - CONTINUED
Bankers Trust Company note - continued
0.325%, 3/27/95 (coupon inversely indexed
to PIBOR and principal indexed to value of
1-year French securities, both multiplied
by 5.5) (f) $ 4,900 $ 4,758
Bayerische Landesbank cert. of dep. 6.705%,
2/16/95 (coupon inversely indexed to HELIBOR
and principal indexed to value of 2-year Finnish
securities, both multiplied by 3) (f) 6,850 5,459
Citibank Nassau (f):
0%, 12/29/94 (coupon inversely indexed to
CAD Banker's Acceptance rate and principal
indexed to value of 1-year Canadian securities,
both multiplied by 6) 2,300 1,788
5.98%, 2/16/95 (coupon inversely indexed to
GBP LIBOR and principal indexed to value of
2-year United Kingdom securities, both
mulitiplied by 4) 5,000 4,132
6.11%, 2/24/95 (coupon inversely indexed to
GBP LIBOR and principal indexed to value to
2-year United Kingdom securities, both
mulitiplied by 4) 1,200 994
0%, 3/3/95 (coupon inversely indexed to
ITL LIBOR and principal indexed to value of
2-year Italian securities, both
mulitiplied by 4) 4,970 4,624
0%, 3/21/95 (coupon inversely indexed to
PIBOR and principal indexed to value of
1-year French securities, both multiplied
by 5.5) 4,900 4,795
Disney Corp. note 0%, 9/30/94 (coupon
inversely indexed to STIBOR and principal
indexed to value of 2-year Swedish securities,
both multiplied by 5) (f) 6,000 5,103
First Interstate Bancorp floating rate note 4.2%,
2/26/96 (inversely indexed to JPY) (e) 12,900 5,160
Instituto Bancario San Paolo di Torino cert. of dep.
5.99%, 5/23/94 (indexed to spot minus 12-month
oil futures prices) 9,500 8,905
OTHER SECURITIES - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
INDEXED SECURITIES - CONTINUED
Merck & Co., Inc. note 3.78%, 1/25/95 (inversely
indexed to 2-year SEK swap rate, multiplied
by 10) $ 2,100 $ 1,953
54,714
TOTAL OTHER SECURITIES
(Cost $165,076) 152,351
CERTIFICATES OF DEPOSIT - 3.3%
Bangkok Bank Ltd. 8 1/2%, 10/3/94 THB 260,000 10,359
Bank Bumiputra BHD 5 3/4%, 7/5/94 MYR 20,000 7,488
First USA Bank 4.3%, 2/3/95 9,000 8,910
First Bank System 13.2%, 5/2/94 2,000 2,002
Siam Commerce Bank Co. Ltd.:
7 3/8%, 11/7/94 THB 40,000 1,590
6 3/4%, 11/29/94 THB 430,000 16,823
Thai Military Bank Ltd.:
6 7/8%, 6/15/95 THB 270,000 10,588
8.52%, 9/20/96 THB 30,000 1,201
8%, 10/28/96 THB 100,000 3,960
TOTAL CERTIFICATES OF DEPOSIT
(Cost $63,586) 62,921
COMMERCIAL PAPER - 3.8%
Bancomer:
0%, 12/21/95 MXN 11,552 2,756
0%, 12/28/95 MXN 31,058 7,390
Bangkok Bank Ltd. 0%, 7/4/94 THB 15,844 621
Bank Negara Malaysia:
0%, 9/7/94 MYR 45,700 16,703
0%, 5/11/94 MYR 9,960 3,711
0%, 5/25/94 MYR 10,000 3,716
0%, 6/22/94 MYR 40,700 15,117
0%, 6/24/94 MYR 6,540 2,429
Citibank Thailand 0%, 6/28/94 THB 50,000 1,963
Grupo Embotellador de Mexico SA de CV
promissory note 0%, 5/10/94 (d) 2,675 2,671
Grupo Simek 0%, 6/15/94 5,000 4,938
COMMERCIAL PAPER - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (A) (000S) (000S)
Nacional Financiera SNC:
0%, 5/19/94 MXN 8,371 $ 2,536
0%, 7/23/96 MXN 4,054 896
Public Bank BHD 0%, 7/13/94 MYR 16,000 5,975
Thai Airways International, Ltd. 0%, 8/1/94 THB 13,128 512
TOTAL COMMERCIAL PAPER
(Cost $73,196) 71,934
REPURCHASE AGREEMENTS - 3.1%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 3.56% dated
4/29/94 due 5/2/94 $ 59,678 59,660
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,968,635) $ 1,898,502
FORWARD FOREIGN CURRENCY CONTRACTS
AMOUNTS IN THOUSANDS SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO BUY
9,568 CAD 5/9/94 $ 6,916 $ (136)
(Payable amount $7,052)
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 0.4%
CONTRACTS TO SELL
1,425,775 BEF 5/24/94 41,752 (1,341)
10,791 CAD 5/9/94 7,800 320
184,434 DKK 5/11/94 28,439 (1,313)
7,969 DEM 5/31/94 to 8/1/94 4,808 (187)
374,701 FRF 7/27/94 65,983 (1,324)
10,461,994 ITL 5/24/94 6,579 (417)
2,092,655 JPY 5/20/94 to 8/1/94 20,688 (419)
73,010 SEK 5/25/94 9,560 (427)
TOTAL CONTRACTS TO SELL
(Receivable amount $180,501) $ 185,609 $ (5,108)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 9.8%
CURRENCY ABBREVIATIONS
ARP - Argentinean peso
BEF - Belgian franc
GBP - British pound
CAD - Canadian dollar
DKK - Danish krone
FRF - French franc
DEM - German Deutsche mark
IDR - Indonesian rupiah
ITL - Italian lira
JPY - Japanese yen
MYR - Malaysian ringgit
MXN - Mexican peso
NZD - New Zealand dollar
SEK - Swedish krona
THB - Thai baht
LEGEND
(g) Principal amount is stated in United States dollars unless otherwise
noted.
(h) Standard & Poor's Corporation credit ratings are used in the
absence of a rating by Moody's Investors Service, Inc.
(i) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
(j) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $159,654,000 or 8.1% of net
assets.
(k) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(l) Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate multiplied by a specified
factor. If the floating rate is high enough, the coupon rate may be zero or
be a negative amount that is carried forward to reduce future interest
and/or principal payments. The price may be considerably more volatile than
the price of a comparable fixed rate security.
(m) Restricted securities - investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Sunbelt (Cemex)
Enterprises 8 1/2%,
5/4/95 12/8/93 $ 9,540,000
Wilton Investments Ltd.
sr. notes Series C,
0%, 6/3/94 3/3/93 $ 64,194,000
(n) Principal amount shown is original face amount and does not reflect the
inflation adjustments.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 27.3% AAA, AA, A 28.0%
Baa 33.1% BBB 32.8%
Ba 6.4% BB 3.1%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
For some foreign government obligations, FMR has assigned the ratings of
the sovereign credit of the issuing government. The percentage not rated by
either S&P or Moody's amounted to 11.3% including long-term debt
categorized as other securities. FMR has determined that unrated debt
securities that are lower quality account for 1.4% of the total value of
investment in securities.
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 60.0%
Mexico 15.0
United Kingdom 3.6
Argentina 3.3
Malaysia 3.2
France 2.8
Denmark 2.7
Thailand 2.6
New Zealand 1.5
Supranational 0.5
Others (individually less than 1%) 4.8
TOTAL 100.0%
INCOME TAX INFORMATION
At April 30, 1994, the aggregate cost of investment securities for income
tax purposes was $1,968,648,000. Net unrealized depreciation aggregated
$70,146,000, of which $10,393,000 related to appreciated investment
securities and $80,539,000 related to depreciated investment securities.
At April 30, 1994, the fund had a capital loss carryforward of
approximately $22,261,000 of which $4,373,000, $873,000, $6,892,000,
$7,352,000 and $2,771,000 will expire on April 30, 1996, 1997, 1998, 1999
and 2002 respectively.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) APRIL 30, 1994

ASSETS

Investment in securities, at value (including repurchase $ 1,898,502
agreements of $59,660) (cost $1,968,635) (Notes 1
and 2) - See accompanying schedule

Long foreign currency contracts held, at value (cost 6,916
$7,052) (Note 2)

Short foreign currency contracts (Note 2) $ (185,609)
Contracts held, at value

Receivable for contracts held 180,501 (5,108)

Cash 4,428

Receivable for investments sold 69,156

Interest receivable 15,299

TOTAL ASSETS 1,989,193

LIABILITIES

Payable for foreign currency contracts held (Note 2) 7,052

Payable for investments purchased 11,883

Net payable for closed foreign currency contracts 32

Payable for fund shares redeemed 4,680

Dividends payable 1,497

Accrued management fee 795

Other payables and accrued expenses 1,062

TOTAL LIABILITIES 27,001

NET ASSETS $ 1,962,192

Net Assets consist of (Note 1):

Paid in capital $ 2,073,632

Distributions in excess of net investment income (8,733)

Accumulated undistributed net realized gain (loss) on (27,330)
investments

Net unrealized appreciation (depreciation) on:

Investment securities (70,133)

Foreign currency contracts (5,244)

NET ASSETS, for 216,204 shares outstanding $ 1,962,192

NET ASSET VALUE, offering price and redemption price per $9.08
share ($1,962,192 (divided by) 216,204 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED APRIL 30, 1994

INVESTMENT INCOME $ 167,373
Interest (Note 5)

EXPENSES

Management fee (Note 4) $ 10,325

Transfer agent fees (Note 4) 5,803

Accounting fees and expenses (Note 4) 555

Non-interested trustees' compensation 14

Custodian fees and expenses 824

Registration fees 114

Audit 72

Legal 33

Miscellaneous 110

TOTAL EXPENSES 17,850

NET INVESTMENT INCOME 149,523

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTES 1 AND 3)
Net realized gain (loss) on:

Investment securities (12,186)

Foreign currency contracts (2,460) (14,646)

Change in net unrealized appreciation (depreciation) on:

Investment securities (95,513)

Foreign currency contracts (479) (95,992)

NET GAIN (LOSS) (110,638)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ 38,885
OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEARS ENDED APRIL 30,

1994 1993

INCREASE (DECREASE) IN NET ASSETS

Operations $ 149,523 $ 125,625
Net investment income

Net realized gain (loss) on investments (14,646) (6,191)

Change in net unrealized appreciation (depreciation) (95,992) 11,236
on
investments

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 38,885 130,670
FROM OPERATIONS

Distributions to shareholders

From net investment income (138,857) (125,365)

In excess of net investment income (8,052) -

TOTAL DISTRIBUTIONS (146,909) (125,365)

Share transactions 2,498,928 2,481,775
Net proceeds from sales of shares

Reinvestment of distributions 124,898 106,299

Cost of shares redeemed (2,543,350) (1,587,320)

Net increase (decrease) in net assets resulting from 80,476 1,000,754
share transactions

TOTAL INCREASE (DECREASE) IN NET ASSETS (27,548) 1,006,059

NET ASSETS

Beginning of period 1,989,740 983,681

End of period (including distributions in excess of net $ 1,962,192 $ 1,989,740
investment income of $(8,733) and $(3,021),
respectively)

OTHER INFORMATION
Shares

Sold 263,357 261,365

Issued in reinvestment of distributions 13,198 11,208

Redeemed (269,588) (167,604)

Net increase (decrease) 6,967 104,969

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED APRIL 30,

1994 1993 1992 1991 1990

SELECTED PER-SHARE DATA

Net asset value, beginning of $ 9.510 $ 9.430 $ 9.180 $ 9.170 $ 9.180
period

Income from Investment .588 .744 .810 .792 .778
Operations
Net investment income

Net realized and unrealized (.392) .063 .251 .040 (.010)
gain (loss) on investments

Total from investment .196 .807 1.061 .832 .768
operations

Less Distributions (.592) (.727) (.811) (.822) (.778)
From net investment income

In excess of net investment (.034) - - - -
income

Total distributions (.626) (.727) (.811) (.822) (.778)

Net asset value, end of period $ 9.080 $ 9.510 $ 9.430 $ 9.180 $ 9.170

TOTAL RETURN 1.99% 8.85% 12.00% 9.49% 8.58%

RATIOS AND SUPPLEMENTAL
DATA

Net assets, end of period $ 1,962 $ 1,990 $ 984 $ 235 $ 197
(in millions)

Ratio of expenses to average .80% .77% .86% .83% .83%
net assets

Ratio of net investment income 6.70% 7.68% 8.23% 8.65% 8.28%
to average net assets

Portfolio turnover rate 73% 63% 87% 164% 148%

</TABLE>

NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1994

8. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Short-Term Bond Portfolio (the fund) is a fund of Fidelity
Fixed-Income Trust (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company Act
of 1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities (including restricted securities) for which market quotations
are not readily available are valued at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practicable to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Interest income, which includes accretion of original
issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net investment income. Distributions from realized gains, if
any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
generally accepted accounting principles. These differences are primarily
due to differing treatments for paydown gains/losses on certain securities,
foreign currency transactions, market discount and losses deferred due to
wash sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income may include temporary book and tax
basis differences which will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the following
year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective May 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of April 30, 1993 have been reclassified to reflect
an increase in paid in capital of $158,000, a decrease in distributions in
excess of net investment income of $2,476,000 and an increase in
accumulated net realized loss on investments of $2,634,000.
9. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may enter into forward foreign
currency contracts. These contracts involve market risk in excess of the
amount reflected in the fund's Statement of Assets and Liabilities. The
face or contract amount in U.S. dollars reflects the total exposure the
fund has in that particular currency contract. The U.S. dollar value of
forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service. Losses may arise due to
changes in the value of the foreign currency or if the counterparty does
not perform under the contract.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and presented net on the Statement of
Assets and Liabilities. Gain (loss) on the purchase or sale of forward
foreign currency contracts having the same settlement date and broker is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase.
OPERATING POLICIES - CONTINUED
REPURCHASE AGREEMENTS - CONTINUED
The fund's investment adviser, Fidelity Management & Research Company
(FMR), is responsible for determining that the value of these underlying
securities remains at least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with other
registered investment companies having management contracts with FMR, may
transfer uninvested cash balances into a joint trading account. These
balances are invested in one or more repurchase agreements that are
collateralized by U.S. Treasury or Federal Agency obligations.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the
SEC, the fund, along with other registered investment companies having
management contracts with FMR, may participate in an interfund lending
program. This program provides an alternative credit facility allowing the
fund to borrow from, or lend money to, other participating funds.
INDEXED SECURITIES. The fund may invest in indexed securities whose value
is linked either directly or inversely to changes in foreign currencies,
interest rates, commodities, indices, or other reference instruments.
Indexed securities may be more volatile than the reference instrument
itself, but any loss is limited to the amount of the original investment.
RESTRICTED SECURITIES. The fund is permitted to invest in privately placed
restricted securities. These securities may be resold in transactions
exempt from registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations and
expense, and prompt sale at an acceptable price may be difficult. At the
end of the period, restricted securities (excluding 144A issues) amounted
to $80,566,000 or 4.1% of net assets.
10. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,314,563,000 and $1,306,715,000, respectively, of which U.S.
government and government agency obligations aggregated $249,667,000 and
$269,359,000, respectively.
11. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is based on the monthly average net assets of all the mutual
funds advised by FMR and, prior to October 20, 1993, was based on the
weighted average of a series of rates ranging from .15% to .37%. On October
20, 1993, the shareholders of the fund approved a revised group fee rate
schedule with rates ranging from .14% to .37%, which had been
FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
voluntarily implemented by FMR on January 1, 1992. The annual individual
fund fee rate is .30%. For the period, the management fee was equivalent to
an annual rate of .46% of average net assets.
Effective November 1, 1993, FMR has voluntarily agreed to implement a new
group fee rate schedule approved by the Board of Trustees with rates
ranging from .1325% to .3700%, as it results in the same or a lower
management fee.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $217,000 for the
period.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEE. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
12. INTERFUND LENDING PROGRAM.
The fund participated in the interfund lending program as a lender. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $25,209,000 and $ 16,244,000,
respectively. The weighted average interest rate was 3.4%. Interest earned
from the interfund lending program amounted to $14,000 and is included in
interest income on the Statement of Operations.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Fixed-Income Trust and the Shareholders of
Fidelity Short-Term Bond Portfolio:
We have audited the accompanying statement of assets and liabilities of
Fidelity Fixed-Income Trust: Fidelity Short-Term Bond Portfolio, including
the schedule of portfolio investments, as of April 30, 1994, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended
and the financial highlights for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of the fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles
used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Fixed-Income Trust: Fidelity Short-Term Bond Portfolio as of
April 30, 1994, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND
Boston, Massachusetts
June 3, 1994
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
The Bank of New York
New York, NY
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY'S TAXABLE BOND FUNDS
Capital & Income
Ginnie Mae
Global Bond
Government Securities
Intermediate Bond
Investment Grade Bond
Mortgage Securities
New Markets Income
Short-Intermediate Government
Short-Term Bond
Short-Term World Income
Spartan Ginnie Mae
Spartan Government Income
Spartan High Income
Spartan Investment Grade Bond
Spartan Limited Maturity
Government
Spartan Long-Term Government Bond
Spartan Short-Intermediate
Government
Spartan Short-Term Income
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)

EXHIBIT 24 (A)(3)

(2_FIDELITY_LOGOS)SPARTAN

HIGH INCOME
FUND
ANNUAL REPORT
APRIL 30, 1994
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on bond market
strategies.

PERFORMANCE 4 How the fund has done over time.

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

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

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

FINANCIAL STATEMENTS 25 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES 29 Footnotes to the financial
statements.

REPORT OF INDEPENDENT 32 The auditor's opinion.
ACCOUNTANTS

TOP FIVE HOLDINGS AS OF APRIL 30, 1994
(BY ISSUER, EXCLUDING REPURCHASE % OF FUND'S % OF FUND'S
AGREEMENTS) INVESTMENTS INVESTMENTS
IN THESE HOLDINGS
6 MONTHS AGO

SCI Television, Inc. 4.9 3.7

GACC Holding Co. 4.0 1.2

U.S. Home Corp. 3.6 5.4

Boyd Gaming Corp. 3.6 3.0

Bally's Grand, Inc. 3.6 1.6

TOP FIVE INDUSTRIES AS OF APRIL 30, 1994
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE INDUSTRIES
6 MONTHS AGO

Media 29.0 27.3

Energy 9.3 7.1

Construction & Real Estate 9.3 10.6

Retail & Wholesale 8.9 8.6

Finance 5.8 5.1

QUALITY DIVERSIFICATION AS OF APRIL 30, 1994
(MOODY'S RATINGS) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

Aaa, Aa, A - -

Baa - -

Ba 3.3 8.1

B 29.5 35.1

Caa, Ca, C 6.7 5.0

Nonrated 37.4 34.7

UNRATED DEBT SECURITIES THAT ARE EQUIVALENT TO BA AND BELOW AT APRIL 30,
1994, ACCOUNT FOR 31.6% OF THE FUND'S INVESTMENTS
ASSET ALLOCATION
AS OF APRIL 30, 1994 AS OF OCTOBER 31, 1993

Nonconvertible
Bonds 69.6%
Convertible Bonds,
Preferred Stock 8.4%
Common Stock 4.9%
Short-term and
other investments 17.1%
Nonconvertible
Bonds 72.0%
Convertible Bonds,
Preferred Stock 7.7%
Common Stock 3.4%
Short-term and
other investments 16.9%
Row: 1, Col: 1, Value: 17.1
Row: 1, Col: 2, Value: 4.9
Row: 1, Col: 3, Value: 8.4
Row: 1, Col: 4, Value: 69.59999999999999
Row: 1, Col: 1, Value: 16.9
Row: 1, Col: 2, Value: 3.4
Row: 1, Col: 3, Value: 7.7
Row: 1, Col: 4, Value: 72.0
INVESTMENTS APRIL 30, 1994

Showing Percentage of Total Value of Investments

CORPORATE BONDS - 70.0%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
CONVERTIBLE BONDS - 0.4%
MEDIA & LEISURE - 0.4%
LODGING & GAMING - 0.4%
Bally Manufacturing Corp. 10%, 12/15/06 Caa $ 2,840,000 $ 2,705,100
NONCONVERTIBLE BONDS - 69.6%
AEROSPACE & DEFENSE - 0.2%
Fairchild Corp. 12%, 10/15/01 B3 1,560,000 1,505,400
BASIC INDUSTRIES - 2.4%
CHEMICALS & PLASTICS - 1.6%
American Pacific Corp. 11%, 12/15/02 (f) - 2,300,000 2,300,000
Rexene Corp.:
pay-in-kind 10%, 11/15/02 - 820,000 700,419
9%, 11/15/99 - 1,240,000 1,187,300
Trans Resources, Inc. 14 1/2%, 9/1/96 B2 5,400,000 5,859,000
10,046,719
PAPER & FOREST PRODUCTS - 0.8%
Crown Packaging Ltd. 10 3/4%, 11/1/00 B3 5,000,000 4,950,000
TOTAL BASIC INDUSTRIES 14,996,719
CONSTRUCTION & REAL ESTATE - 9.2%
BUILDING MATERIALS - 1.0%
Adience, Inc. 11%, 6/15/00 - 2,823,003 2,230,167
USG Corp.:
9 1/4%, 9/15/01 B2 2,070,000 1,984,612
10 1/4%, 12/15/02 B2 1,867,000 1,867,000
6,081,779
CONSTRUCTION - 5.4%
Engle Homes, Inc., 11 3/4%, 12/15/00 (f) B2 3,000,000 2,940,000
Forecast Group LP 11 3/8, 12/15/00 B3 4,000,000 3,740,000
MDC Holdings Inc.:
11 1/8%, 12/15/03 - 2,000,000 1,920,000
8 3/4%, 12/15/05 - 2,400,000 2,388,000
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
CONSTRUCTION & REAL ESTATE - CONTINUED
CONSTRUCTION - CONTINUED
U.S. Home Corp.:
mortgage:
7 3/4%, 7/1/96 - $ 982,346 $ 926,322
7 3/4%, 7/1/97 - 4,997,741 4,713,719
9 3/4%, 6/15/03 Ba3 17,500,000 16,625,000
33,253,041
REAL ESTATE - 2.8%
Baldwin Co. 10 3/8%, 8/1/03 B- 4,480,000 4,032,000
Littlefield Co. 10%, 8/31/94 (e):
Series A - 4,380,000 4,380,000
Series B - 4,070,000 4,070,000
Trizec, Ltd. 0%, 6/1/13 (b)(e) - 10,000,000 4,850,000
17,332,000
TOTAL CONSTRUCTION & REAL ESTATE 56,666,820
DURABLES - 1.3%
TEXTILES & APPAREL - 1.3%
Forstmann & Co., Inc. 14 3/4%, 4/15/99 (g) Caa 1,090,000 1,231,700
Hat Brands, Inc.:
12 5/8%, 9/15/02 (e) - 3,000,000 3,225,000
12 5/8%, 9/15/02 - 3,470,000 3,730,250
8,186,950
ENERGY - 7.6%
ENERGY SERVICES - 4.9%
Falcon Drilling, Inc. 9 3/4%, 1/15/01 (f) B2 12,295,000 11,557,300
TransTexas Gas Corp. 10 1/2%, 9/1/00 B1 18,810,000 18,715,950
30,273,250
INDEPENDENT POWER - 1.2%
Consolidated Hydro 12%, 7/15/03 (d) - 12,425,000 7,206,500
OIL & GAS - 1.5%
Mesa Capital Corp. 12 3/4%, 6/30/98 (d) B3 6,270,000 5,533,275
Triton Energy Corp, 0%, 11/1/97 B1 5,560,000 3,780,800
9,314,075
TOTAL ENERGY 46,793,825
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - 3.1%
CREDIT & OTHER FINANCE - 1.1%
GPA Delaware, Inc.:
8 3/4%, 12/15/98 Caa $ 530,000 $ 434,600
8 5/8%, 1/15/99 - 2,300,000 1,750,507
8 1/2%, 3/3/99 - 3,900,000 3,184,233
New Street Capital Corp. unit 12%, 2/28/98 (e) - 1,570,000 1,570,000
6,939,340
INSURANCE - 1.7%
Chartwell Reinsurance Corp. 10 1/4%, 3/1/04 Ba3 3,130,000 2,957,850
Reliance Group 9 3/4%, 11/15/03 B1 8,000,000 7,320,000
10,277,850
SECURITIES INDUSTRY - 0.3%
ECM Corp. extendible 14%, 6/1/02 (f) - 1,790,591 2,008,148
TOTAL FINANCE 19,225,338
INDUSTRIAL MACHINERY & EQUIPMENT - 3.1%
ELECTRICAL EQUIPMENT - 1.0%
Ampex, Inc.:
20%, 4/29/99 - 588,000 588,000
unit 14%, 1/15/98 (d)(e) - 4,010,000 2,486,200
Telex Communications Group:
14 1/2%, 6/1/99 - 930,000 978,825
15/16%, 9/30/99 - 2,400,000 2,400,000
6,453,025
INDUSTRIAL MACHINERY & EQUIPMENT - 2.1%
IMO Industries, Inc.:
12 1/4%, 8/15/97 Caa 5,290,000 5,263,550
12%, 11/1/00 Caa 3,560,000 3,577,800
Maritime Group Ltd. 13 1/2%, 2/15/97 (f) - 2,160,000 2,102,263
Rexnord Holdings, Inc. 11 7/8%, 3/1/99 (e) - 650,000 659,750
Thermadyne Holdings Corp.:
10 1/4%, 5/1/02 - 187,290 191,036
10 3/4%, 11/1/03 - 259,694 264,888
Welbilt Corp. 12 1/4%, 11/1/99 Ba3 880,000 959,200
13,018,487
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 19,471,512
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - 26.7%
BROADCASTING - 8.9%
Helicon Group L.P./Helicon Cap Corp. 11%,
11/1/03 (g) Caa $ 3,000,000 $ 2,655,000
PTI Holdings, Inc. 7%, 12/17/02 - 2,360,151 1,427,891
Robin Media Group, Inc. 11 1/8%, 4/1/97 - 10,450,000 10,371,625
SCI Television, Inc. secured 11%, 6/30/05 - 31,211,118 30,586,896
SPI Holding, Inc. pay-in-kind 11 1/2%, 12/01/02 B- 3,280,000 2,952,000
Scott Cable Communications, Inc. 12 1/4%,
4/15/01 - 900,000 796,500
Univision Network Holdings LP 7%, 12/17/02 - 10,752,740 6,505,408
55,295,320
ENTERTAINMENT - 0.3%
Live Entertainment, Inc. 10%, 9/1/98 - 2,420,600 2,105,923
LODGING & GAMING - 11.8%
Bally's Casino Holdings, 10 1/2%, 6/15/98 (f) B3 20,410,000 12,654,200
Bally's Gaming International, Inc. 10 3/8%,
7/15/98 - 7,500,000 7,500,000
Bally's Grand, Inc. 10 3/8%, 12/15/03 (f) B2 22,000,000 20,790,000
Boyd Gaming Corp. 10 3/4%, 9/3/03 - 20,000,000 20,500,000
Host Marriott Corp.10 1/2%, 5/1/06 B1 1,500,000 1,470,000
Host Marriott Hospitality, Inc. 10 5/8%, 2/1/00 B1 2,500,000 2,462,500
Lady Luck Gaming Finance Corp. 10 1/2%,
3/1/01 (f) B1 2,470,000 2,297,100
Resorts International, Inc. secured pay-in-kind (b):
15%, 4/15/96 Ca 3,209,800 1,957,978
6%, 4/15/96 Ca 5,769,100 3,519,151
73,150,929
PUBLISHING - 4.0%
GACC Holding Co. 9 3/4%, 3/1/04 (e) - 25,000,000 24,625,000
RESTAURANTS - 1.7%
Family Restaurants, Inc. 9.75%, 2/1/02 B1 5,000,000 4,575,000
Flagstar Corp.:
10 3/4%, 9/15/01 B1 5,000,000 4,900,000
11 1/4%, 11/1/04 B2 830,000 805,100
10,280,100
TOTAL MEDIA & LEISURE 165,457,272
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
NONDURABLES - 2.6%
FOODS - 0.9%
Doskocil Cos., Inc. 9 3/4%, 7/15/00 B2 $ 5,860,000 $ 5,391,200
HOUSEHOLD PRODUCTS - 1.7%
Revlon Consumer Products Corp. 9 3/8%,
4/1/01 B2 3,000,000 2,587,500
Revlon World Wide secured 0%, 3/15/98 B3 17,220,000 7,662,900
10,250,400
TOTAL NONDURABLES 15,641,600
RETAIL & WHOLESALE - 7.6%
APPAREL STORES - 2.3%
Apparel Retailers, Inc. 12 3/4%, 8/15/05 Caa 16,482,000 9,559,560
Lamont's Apparel Corp. 10 1/4%, 11/1/99 - 2,893,000 2,719,420
Specialty Retailers, Inc., 11%, 8/15/03 B3 2,190,000 2,102,400
14,381,380
DRUG STORES - 2.2%
Thrifty Payless Holdings, Inc.:
11 3/4%, 4/15/03 B2 5,610,000 5,722,200
12 1/4%, 4/15/04 B3 8,000,000 8,160,000
13,882,200
GENERAL MERCHANDISE STORES - 1.3%
Hills Stores Co. 10 1/4%, 9/30/03 - 2,685,000 2,658,150
Parisian, Inc. 9 7/8%, 7/15/03 B3 6,070,000 5,463,000
8,121,150
GROCERY STORES - 1.8%
Farm Fresh Holdings Corp.:
12 1/4%, 10/1/00 B2 7,640,000 7,487,200
14 1/4%, 10/1/02 (f) - 3,496,956 3,423,240
10,910,440
TOTAL RETAIL & WHOLESALE 47,295,170
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
SERVICES - 1.4%
LEASING & RENTAL - 0.1%
GPA Group 8.28%, 2/13/97 (f) - $ 900,000 $ 746,487
SERVICES - 1.3%
Scotsman Holdings, Inc. unit 0%, 3/1/04 (f) - 2,730,000 2,648,100
Town & Country Corp.:
11 1/2%, 9/15/97 B 955,000 926,350
13%, 5/31/98 CCC+ 2,755,875 2,686,979
13%, 12/15/98 Ca 2,110,000 2,057,250
8,318,679
TOTAL SERVICES 9,065,166
TECHNOLOGY - 1.7%
COMPUTERS & OFFICE EQUIPMENT - 0.2%
San Jacinto Holdings, Inc.:
8%, 12/31/00 - 960,000 835,200
pay-in-kind 8%, 12/31/00 - 213,704 169,587
1,004,787
ELECTRONICS - 1.5%
Berg Electronics 11 3/8%, 5/1/03 B3 8,990,000 9,259,700
TOTAL TECHNOLOGY 10,264,487
TRANSPORTATION - 0.4%
AIR TRANSPORTATION - 0.4%
Continental Airlines, Inc. 2nd priority
equipment certificate 11%, 3/15/95 (b) Caa 480,000 14,400
NWA Inc., 8 5/8%, 8/1/96 Caa 1,780,000 1,659,850
US Air, Inc. 9 5/8%, 9/1/94 B1 730,000 635,100
2,309,350
UTILITIES - 2.3%
CELLULAR - 2.3%
Horizon Cellular Telephone 11 3/8%, 10/1/00 (d) Caa 10,200,000 6,834,000
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
CELLULAR - CONTINUED
Mobilemedia Communications, Inc. 15%,
12/1/03 (d) B3 $ 13,000,000 $ 7,410,000
14,244,000
TOTAL NONCONVERTIBLE BONDS 431,123,609
TOTAL CORPORATE BONDS
(Cost $442,254,932) 433,828,709
COMMON STOCKS - 4.9%
SHARES
BASIC INDUSTRIES - 0.1%
CHEMICALS & PLASTICS - 0.1%
Atlantis Group, Inc. (Trivest/ Winston) (a)(e) 39,687 406,792
PAPER & FOREST PRODUCTS - 0.0%
Crown Packaging Holdings Ltd. (warrants) (a)(f) 4,576 160,160
TOTAL BASIC INDUSTRIES 566,952
CONSTRUCTION & REAL ESTATE - 0.1%
BUILDING MATERIALS - 0.1%
Adience, Inc. (a) 319,287 399,109
CONSTRUCTION - 0.0%
U.S. Home Corp. (a) 34 710
TOTAL CONSTRUCTION & REAL ESTATE 399,819
DURABLES - 0.4%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Lear Seating Corp. (a) 29,370 569,044
TEXTILES & APPAREL - 0.3%
Cherokee, Inc. (warrants) (a) 23,829 4,179
Hat Brands, Inc. (a):
(warrants) (e) 29,995 344,945
Unit Trust 1,500,000 1,500,000
1,849,124
TOTAL DURABLES 2,418,168
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENERGY - 0.5%
ENERGY SERVICES - 0.2%
Petrolane, Inc. 118,148 $ 1,299,628
OIL & GAS - 0.3%
Mesa, Inc. (a) 21,560 132,055
Occidental Petroleum Corp. 100,000 1,775,000
1,907,055
TOTAL ENERGY 3,206,683
FINANCE - 0.3%
INSURANCE - 0.2%
American Premier Underwriters, Inc. 21,000 561,750
Vesta Insurance Group Corp. 20,000 455,000
1,016,750
SECURITIES INDUSTRY - 0.1%
ECM Corp. LP interest (a)(f) 5,400 540,000
TOTAL FINANCE 1,556,750
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Specialty Equipment Companies, Inc. (a) 69,959 524,693
Telex Communications Group (warrants) (a)(e) 7,097 34,681
559,374
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
Terex Corp. (rights) (a) 13,020 16,275
Thermadyne Holdings Corp. (a) 4,613 59,969
76,244
POLLUTION CONTROL - 0.0%
Envirosource, Inc. (a) 2,700 8,438
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 644,056
MEDIA & LEISURE - 1.8%
BROADCASTING - 1.0%
Great American Communication (a) 391,411 6,458,282
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - CONTINUED
LODGING & GAMING - 0.8%
Bally Gaming International, Inc. (warrants) (a) 225,000 $ 1,800,000
Bally's Grand, Inc. (a) 123,978 1,363,758
Bally's Grand, Inc. (warrants) (a) 8,406 33,624
Boyd Gaming Corp. (a) 110,400 1,697,400
4,894,782
TOTAL MEDIA & LEISURE 11,353,064
NONDURABLES - 0.7%
BEVERAGES - 0.5%
Heileman G Brewing, Inc. unit (a)(e) 150 3,000,000
FOODS - 0.0%
Chiquita Brands International, Inc. 184 2,530
TOBACCO - 0.2%
Philip Morris Companies, Inc. 25,000 1,362,500
TOTAL NONDURABLES 4,365,030
RETAIL & WHOLESALE - 0.5%
APPAREL STORES - 0.2%
Lamont's Apparel, Inc. (a) 562,103 983,680
GENERAL MERCHANDISE STORES - 0.0%
Hills Stores Co. (a) 1,276 25,999
Southland Corp. (warrants) (a) 4,000 11,000
36,999
GROCERY STORES - 0.3%
FF Holdings Corp. (a)(f) 455 910
Grand Union Capital Corp. Class B (a) 2,009 1,286,765
Grand Union Co. (warrants) (a) 1,079 701,890
Purity Supreme, Inc. (warrants) (a)(e) 7,693 154
1,989,719
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
Finlay Enterprises, Inc. 4,460 62,440
TOTAL RETAIL & WHOLESALE 3,072,838
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 0.3%
Town & Country Jewelry Manufacturing Corp. (a) 583,839 $ 1,532,577
TECHNOLOGY - 0.1%
ELECTRONICS - 0.1%
Berg Electronics Holdings Corp. (a)(f) 475,080 712,620
TRANSPORTATION - 0.0%
AIR TRANSPORTATION - 0.0%
CHC Helicopter Corp. (warrants) (a) 30,960 134,346
Continental Airlines, Inc. Class A (a) 868 15,733
150,079
UTILITIES - 0.0%
ELECTRIC UTILITY - 0.0%
Northeast Utilities Associates (warrants) (a) 57,076 110,585
GAS - 0.0%
UGI Corp. (warrants) (a) 37,100 37,100
TOTAL UTILITIES 147,685
TOTAL COMMON STOCKS
(Cost $26,176,651) 30,126,321
PREFERRED STOCKS - 8.0%
CONVERTIBLE PREFERRED STOCKS - 2.8%
MEDIA & LEISURE - 0.1%
LODGING & GAMING - 0.1%
Bally Manufacturing Corp., Series D, exch. $4.00 10,373 388,988
NONDURABLES - 1.9%
FOODS - 0.7%
Chiquita Brands International, Inc.:
$2.875 89,800 4,130,800
cumulative 8,300 120,350
4,251,150
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - 1.2%
Pantry Pride, Inc. pay-in-kind $14.875 73,110 $ 7,384,110
TOTAL NONDURABLES 11,635,260
RETAIL & WHOLESALE - 0.8%
GROCERY STORES - 0.8%
Supermarkets General Holdings Corp. exch.
pay-in-kind $3.52 198,979 5,073,965
TOTAL CONVERTIBLE PREFERRED STOCKS 17,098,213
NONCONVERTIBLE PREFERRED STOCKS - 5.2%
BASIC INDUSTRIES - 0.5%
IRON & STEEL - 0.1%
Stelco, Inc., Series B, 7.76% 23,803 395,942
PAPER & FOREST PRODUCTS - 0.4%
Stone Savannah River Pulp & Paper Corp.
Series A, exch. $15.375 35,063 2,419,347
TOTAL BASIC INDUSTRIES 2,815,289
CONSTRUCTION & REAL ESTATE - 0.0%
CONSTRUCTION - 0.0%
UDC Homes, Inc. Prime exch. (a) 1,222 12,526
ENERGY - 1.2%
OIL & GAS - 1.2%
Gulf Canada Resources Ltd. Series 1,
adj. rate (a) 2,804,130 7,185,583
Gulf Canada Resources Ltd. (a)(e) 53,931 141,569
7,327,152
FINANCE - 2.4%
BANKS - 1.1%
Riggs National Corp. 272,512 6,880,928
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
FINANCE - CONTINUED
SAVINGS & LOANS - 1.3%
California Federal Bank $10.625 (a) 80,000 $ 8,040,000
TOTAL FINANCE 14,920,928
TECHNOLOGY - 1.2%
ELECTRONICS - 1.2%
Berg Electronics Holding Corp. exch. pay-in-kind
$3.4687 289,587 7,239,675
TOTAL NONCONVERTIBLE PREFERRED STOCKS 32,315,570
TOTAL PREFERRED STOCKS
(Cost $50,271,865) 49,413,783
OTHER SECURITIES - 6.8%
PURCHASED BANK DEBT - 6.8%
El Paso Electric Co. secured loan 10,775,212 9,670,879
Macy (R.H.) & Co., Inc.:
49 Store Loan 5,480,000 5,379,100
LBO Swap Claim 242,038 240,828
10 Store Loan 1,716,583 1,707,999
10 Store Swap Claim 586,864 583,930
Working Capital Loan 6,633,147 6,442,482
Trivest 1992 Special Fund Ltd. (e) 13.6(h) 3,475,681
Trizec Corp. Ltd. (Westpac) term loan 6/3/95 (b) 10,000,000 8,750,000
USG Sale/Leaseback loan mortgage note 6,100,000 6,100,000
TOTAL OTHER SECURITIES
(Cost $34,692,500) 42,350,899
REPURCHASE AGREEMENTS - 10.3%
MATURITY VALUE (NOTE 1)
AMOUNT
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 3.56% dated
4/29/94 due 5/2/95 $ 63,762,911 $ 63,744,000
TOTAL INVESTMENTS - 100.0%
(Cost $617,139,948) $ 619,463,712
LEGEND
(a) Non-income producing
(b) Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
(c) Standard & Poor's Corporation credit ratings are used in the
absence of a rating by Moody's Investors Service, Inc.
(d) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
(e) Restricted securities - investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Ampex, Inc. unit
14%, 1/15/98 7/22/92 $ 2,681,086
Atlantis Group, Inc.
(Trivest/ Winston) 4/6/93 $ 46,451
GACC Holding Co.
9 3/4%,
3/1/04 2/3/94 $ 24,418,750
Gulf Canada
Resources Ltd 10/15/93 $ 133,814
Hat Brands, Inc.
(warrants) 9/2/92 -
ACQUISITION ACQUISITION
SECURITY DATE COST
Hat Brands, Inc.
12 5/8%,
9/15/02 2/22/94 $ 3,000,000
Heileman G
Brewing, Inc. unit 1/21/94 $ 3,000,000
Littlefield Co.
10%, 8/31/94
Series A 2/28/94 $ 4,380,000
Littlefield Co.
10%, 8/31/94
Series B 2/28/94 $ 4,070,000
New Street Capital
Corp. unit 12%,
2/28/98 2/25/94 $ 1,570,000
Purity Supreme,
Inc. (warrants) 7/29/92 $ 77
Rexnord Holdings,
Inc. 11 7/8%,
3/1/99 10/15/92 $ 585,000
Telex Communications
Group (warrants) 4/15/92 $ 27,740
Trivest 1992
Special Fund Ltd. 7/30/92 $ 3,431,506
Trizec, Ltd. 0%,
6/1/13 10/14/93 $ 1,125,000
(f) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $64,880,528 or 10.1% of net
assets.
(g) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(h) Represents number of units held.
(i) Affiliated company (see Note 6 of Notes to Financial Statements).
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 0.0% AAA, AA, A 0.0%
Baa 0.0% BBB 0.0%
Ba 3.3% BB 5.9%
B 29.5% B 27.8%
Caa 5.5% CCC 3.5%
Ca, C 1.2% CC, C 0.0%
D 0.9%
The percentage not rated by either S&P or Moody's amounted to 35.8%
including long-term debt categorized as other securities. FMR has
determined that unrated debt securities that are lower quality account for
35.8% of the total value of investment in securities
INCOME TAX INFORMATION
At April 30, 1994, the aggregate cost of investment securities for income
tax purposes was $617,396,195. Net unrealized appreciation aggregated
$2,067,517, of which $22,650,974 related to appreciated investment
securities and $20,583,457 related to depreciated investment securities.
The fund hereby designates $4,374,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1994

ASSETS

Investment in securities, at value (including repurchase $ 619,463,712
agreements of $63,744,000) (cost $617,139,948)
(Notes 1 and 2) - See accompanying schedule

Cash 930,190

Receivable for investments sold 26,316,953

Dividends receivable 469,222

Interest receivable 8,611,671

Redemption fees receivable 2,393

TOTAL ASSETS 655,794,141

LIABILITIES

Payable for investments purchased $ 13,930,388

Dividends payable 735,734

Accrued management fee 443,000

TOTAL LIABILITIES 15,109,122

NET ASSETS $ 640,685,019

Net Assets consist of (Note 1):

Paid in capital $ 624,165,632

Undistributed net investment income 6,547,551

Accumulated undistributed net realized gain (loss) on 7,648,072
investments

Net unrealized appreciation (depreciation) on investment 2,323,764
securities

NET ASSETS, for 53,928,029 shares outstanding $ 640,685,019

NET ASSET VALUE, offering price and redemption price per $11.88
share ($640,685,019 (divided by) 53,928,029 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED APRIL 30, 1994

INVESTMENT INCOME $ 5,643,490
Dividends

Interest 53,596,875

TOTAL INCOME 59,240,365

EXPENSES

Management fee (Note 4) $ 5,054,378

Non-interested trustees' compensation 309

Interest (Note 8) 5,087

TOTAL EXPENSES 5,059,774

NET INVESTMENT INCOME 54,180,591

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 45,427,612
(NOTES 1 AND 3)
Net realized gain (loss) on investment securities

Change in net unrealized appreciation (depreciation) on (25,158,437)
investment securities

NET GAIN (LOSS) 20,269,175

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ 74,449,766
OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED APRIL 30,

1994 1993

INCREASE (DECREASE) IN NET ASSETS

Operations $ 54,180,591 $ 45,047,600
Net investment income

Net realized gain (loss) on investments 45,427,612 23,700,762

Change in net unrealized appreciation (depreciation) (25,158,437) 3,794,948
on
investments

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 74,449,766 72,543,310
FROM
OPERATIONS

Distributions to shareholders (52,719,224) (46,092,646)
From net investment income

In excess of net investment income (4,190,784) -

From net realized gain (40,280,405) (12,768,054)

TOTAL DISTRIBUTIONS (97,190,413) (58,860,700)

Share transactions 376,388,246 410,126,182
Net proceeds from sales of shares

Reinvestment of distributions 80,688,781 49,300,975

Cost of shares redeemed (397,341,830) (243,634,815)

Redemption fees (Note 1) 2,273,295 1,008,940

Net increase (decrease) in net assets resulting from 62,008,492 216,801,282
share
transactions

TOTAL INCREASE (DECREASE) IN NET ASSETS 39,267,845 230,483,892

NET ASSETS

Beginning of period 601,417,174 370,933,282

End of period (including under (over) distribution of net $ 640,685,019 $ 601,417,174
investment income of $6,547,551 and $(2,126,326),
respectively)

OTHER INFORMATION
Shares

Sold 30,409,458 34,317,770

Issued in reinvestment of distributions 6,545,733 4,146,822

Redeemed (32,248,109) (20,413,918)

Net increase (decrease) 4,707,082 18,050,674

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEARS ENDED APRIL 30, AUGUST 29, 1990
(COMMENCEMENT
OF
OPERATIONS) TO
APRIL 30,

1994 1993 1992 1991

SELECTED PER-SHARE DATA

Net asset value, beginning of $ 12.220 $ 11.900 $ 10.640 $ 10.000
period

Income from Investment 1.101 1.175 1.292 .811
Operations
Net investment income

Net realized and unrealized .357 .672 1.614 .602

gain (loss) on
investments

Total from investment 1.458 1.847 2.906 1.413
operations

Less Distributions (.976) (1.183) (1.342) (.796)
From net investment
income

In excess of net investment (.078) - - -

income

From net realized gain on (.790) (.370) (.320) -
investments

Total distributions (1.844) (1.553) (1.662) (.796)

Redemption fees added to .046 .026 .016 .023
paid in capital

Net asset value, end of $ 11.880 $ 12.220 $ 11.900 $ 10.640
period

TOTAL RETURN (dagger) 12.70% 16.96% 29.76% 15.33%

RATIOS AND SUPPLEMENTAL
DATA

Net assets, end of period $ 640,685 $ 601,417 $ 370,933 $ 100,840
(000 omitted)

Ratio of expenses to average .75% .70% .70% .70%*
net assets

Ratio of net investment 8.07% 9.57% 11.43% 11.98%*
income to average net
assets

Portfolio turnover rate 213% 136% 99% 72%*

</TABLE>

* ANNUALIZED
(dagger) TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1994

1. SIGNIFICANT ACCOUNTING
POLICIES.
Spartan High Income Fund (the fund) is a fund of Fidelity Fixed-Income
Trust (the trust) and is authorized to issue an unlimited number of shares.
The trust is registered under the Investment Company Act of 1940, as
amended (the 1940 Act), as an open-end management investment company
organized as a Massachusetts business trust. The following summarizes the
significant accounting policies of the fund:
SECURITY VALUATION. Securities for which quotations are readily available
are valued by a pricing service at their market values as determined by
their most recent bid prices in the principal market (sales prices if the
principal market is an exchange) in which such securities are normally
traded. Securities (including restricted securities) for which market
quotations are not readily available are valued at their fair value as
determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees. Short-term securities
maturing within sixty days are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practicable to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Interest income, which includes accretion of original
issue discount, is accrued as earned and dividend income is recorded on the
ex-dividend date. The fund may place a debt obligation on non-accrual
status and reduce related interest income by ceasing current accruals and
writing off interest receivables when the collection of all or a portion of
interest has become doubtful based on consistently applied procedures,
under the general supervision of the Trustees of the fund. A debt
obligation is removed from non-accrual status when the issuer resumes
interest payments or when collectibility of interest is reasonably assured.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net investment income. Distributions from realized gains, if
any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
market discount. The fund also utilized earnings and profits distributed to
shareholders on redemption of shares as a part of the dividends paid
deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income may include temporary book and tax
basis differences which will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the following
year.
REDEMPTION FEES. Shares held in the fund less than 270 days are subject to
a redemption fee equal to 1% of the proceeds of the redeemed shares. The
fee, which is retained by the fund, is accounted for as an addition to paid
in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective May 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of April 30, 1993 have been reclassified to reflect
an increase in paid in capital of $330,242, a decrease in undistributed net
investment income of $5,790,028 and a decrease in accumulated net realized
gain on investments of $6,120,270.
2. OPERATING POLICIES.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
2. OPERATING POLICIES -
CONTINUED
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with other
registered investment companies having management contracts with FMR, may
transfer uninvested cash balances into a joint trading account. These
balances are invested in one or more repurchase agreements that are
collateralized by U.S. Treasury or Federal Agency obligations.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management contracts with FMR, may participate
in an interfund lending program. This program provides an alternative
credit facility allowing the fund to borrow from, or lend money to, other
participating funds.
RESTRICTED SECURITIES. The fund is permitted to invest in privately placed
restricted securities. These securities may be resold in transactions
exempt from registration or to the public if the securities are registered.
Disposal of these securities may involve time-
consuming negotiations and expense, and prompt sale at an acceptable price
may be difficult. At the end of the period, restricted securities
(excluding 144A issues) amounted to $53,269,772 or 8.3% of net assets.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,533,442,576 and $1,332,258,987, respectively, There were no
purchases and sales of U.S. government and government agency obligations.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management &
Research Company (FMR) pays all expenses except the compensation of the
non-interested Trustees and certain exceptions such as interest, taxes,
brokerage commissions and extraordinary expenses. FMR receives a fee that
is computed daily at an annual rate of .70% of the fund's average net
assets.
On October 20, 1993, shareholders approved a new management contract that
raises the monthly fee received by FMR from .70% to .80%. This change was
effective on November 1, 1993.
FMR also bears the cost of providing shareholder services to the fund. For
the period, FMR or its affiliates collected certain transaction fees from
shareholders which aggregated $35,775.
5. INTERFUND LENDING PROGRAM.
The fund participated in the interfund lending program as a borrower. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $15,357,000 and $7,849,667,
respectively. The weighted average interest rate was 3.84%.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Fixed-
Income Trust and the Shareholders of Spartan High Income Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Fixed-Income Trust: Spartan High Income Fund, including the
schedule of portfolio investments, as of April 30, 1994, and the related
statement of operations for the year then ended, the statement of changes
in net assets for each of the two years in the period then ended and the
financial highlights for each of the three years in the period then ended
and for the period April 29, 1990 (commencement of operations) to April 30,
1991. These financial statements and financial highlights are the
responsibility of the fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1994 by correspondence with the custodian
and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Fixed-Income Trust: Spartan High Income Fund as of April 30,
1994, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the three years in the period then ended
and for the period April 29, 1990 (commencement of operations) to April 30,
1991, in conformity with generally accepted accounting principles.
/s/COOPERS & LYBRAND
Coopers & Lybrand
Boston, Massachusetts
June 7, 1994
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
The Bank of New York
New York, NY
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY'S TAXABLE BOND FUNDS
Capital & Income
Ginnie Mae
Global Bond
Government Securities
Intermediate Bond
Investment Grade Bond
Mortgage Securities
New Markets Income
Short-Intermediate Government
Short-Term Bond
Short-Term World Income
Spartan Ginnie Mae
Spartan Government Income
Spartan High Income
Spartan Investment Grade Bond
Spartan Limited Maturity
Government
Spartan Long-Term Government Bond
Spartan Short-Intermediate
Government
Spartan Short-Term Income
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)

EXHIBIT 24 (A)(4)

(2_FIDELITY_LOGOS)SPARTAN(Registered trademark)

GOVERNMENT INCOME
FUND
ANNUAL REPORT
APRIL 30, 1994
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on bond market
strategies.

PERFORMANCE 4 How the fund has done over time.

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

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

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

FINANCIAL STATEMENTS 14 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES 18 Footnotes to the financial
statements.

REPORT OF INDEPENDENT 21 The auditor's opinion.
ACCOUNTANTS

COUPON DISTRIBUTION AS OF APRIL 30, 1994
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
6 MONTHS AGO

Under 6% 5.0 4.6

6 - 6.99% 21.0 5.0

7 - 7.99% 32.6 9.8

8 - 8.99% 8.3 35.2

9 - 9.99% 11.3 12.7

10 - 10.99% 8.2 12.7

11 - 11.99% 1.2 4.9

12 - 12.99% 2.3 5.8

Over 13% 0.3 1.8

Zero Coupon Bonds 0.1 5.9

COUPON DISTRIBUTION SHOWS THE RANGE OF STATED INTEREST RATES ON THE FUND'S
INVESTMENTS, EXCLUDING REPURCHASE AGREEMENTS.
AVERAGE YEARS TO MATURITY AS OF APRIL 30, 1994
6 MONTHS AGO

Years 8.7 13.4

AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL ON THE
FUND'S BONDS IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF APRIL 30, 1994
6 MONTHS AGO

Years 5.5 5.3

DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, A BOND WITH A FIVE-YEAR DURATION WILL
LOSE ABOUT 5% OF ITS VALUE.
ASSET ALLOCATION
AS OF APRIL 30, 1994 AS OF OCTOBER 31, 1993
Row: 1, Col: 1, Value: 9.699999999999999
Row: 1, Col: 2, Value: 9.5
Row: 1, Col: 3, Value: 28.7
Row: 1, Col: 4, Value: 42.8
Row: 1, Col: 5, Value: 52.1
Mortgage-backed
securities 50.2%
U.S. government
and government
agency
obligations 36.6%
Collateralized
mortgage obligations
(CMOs) 11.6%
Other 1.6%
Mortgage-backed
securities 52.1%
U.S. government
and government
agency
obligations 28.7%
Collateralized
mortgage obligations
(CMOs) 9.5%
Other 9.7%
Row: 1, Col: 1, Value: 1.6
Row: 1, Col: 2, Value: 11.6
Row: 1, Col: 3, Value: 36.6
Row: 1, Col: 4, Value: 50.2
Row: 1, Col: 5, Value: 50.2
*
**
* GNMA SECURITIES 21.1%
** GNMA SECURITIES 24.6%
INVESTMENTS APRIL 30, 1994

Showing Percentage of Total Value of Investment in Securities

U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 28.7%
SHARES VALUE (NOTE 1)
U.S. TREASURY OBLIGATIONS - 13.6%
4 3/4%, 2/15/97 $ 15,700,000 $ 15,165,258
6 3/8%, 8/15/02 20,000,000 19,218,800
8 1/8%, 8/15/19 6,265,000 6,719,212
41,103,270
U.S. GOVERNMENT AGENCY OBLIGATIONS - 15.1%
Agency for International Development (guaranteed by U.S.
government):
6%, 2/15/99 2,700,000 2,608,497
6.60%, 2/15/08 2,000,000 1,884,280
6.80%, 2/15/12 17,000,000 15,497,370
Federal National Mortgage Association 0%, 11/30/99 606,000 406,141
Financing Corp.:
10.70%, 10/6/17 2,645,000 3,493,053
9.40%, 2/8/18 1,000,000 1,169,060
9.80%, 4/6/18 3,000,000 3,675,000
10.35%, 8/3/18 5,000,000 6,431,250
9.65%, 11/2/18 2,800,000 3,389,750
8.60%, 9/26/19 400,000 438,750
Government Trust Certificates (guaranteed by the Defense
Security Assistance Agency) 9 5/8%, 5/15/02 1,855,000 2,040,500
United States Department of Veterans Affairs
6%, 11/15/16 5,500,000 4,739,453
45,773,104
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS (Cost $87,953,983) 86,876,374
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 52.1%

FEDERAL HOME LOAN MORTGAGE CORPORATION - 8.9%
8%, 2/1/17 to 3/1/17 1,822,150 1,822,715
8 1/2%, 5/1/16 to 11/1/19 3,663,553 3,729,943
9%, 4/1/20 1,383,954 1,439,410
9 1/2%, 8/1/13 to 11/1/19 2,573,178 2,712,535
10%, 7/1/09 to 8/1/21 6,798,643 7,257,420
10 1/2%, 10/1/15 to 12/1/20 6,640,138 7,233,573
11 1/2%, 8/1/19 737,826 819,445
12%, 9/1/03 to 12/1/15 324,156 366,887
12 1/4%, 3/1/11 to 11/1/15 837,999 946,992
12 1/2%, 2/1/14 303,078 351,570
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - CONTINUED
SHARES VALUE (NOTE 1)
FEDERAL HOME LOAN MORTGAGE CORPORATION - CONTINUED
13%, 12/1/97 to 6/1/15 $ 154,512 $ 180,788
13 1/2%, 10/1/11 2,093 2,452
26,863,730
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 22.1%
6%, 10/1/23 119,544 105,609
6 1/2%, 4/1/09 to 4/1/24 12,928,984 12,132,472
7%, 11/1/23 to 3/1/24 30,144,787 28,474,827
7%, 5/1/24 (a) 19,400,000 18,320,778
10%, 7/1/04 393,260 416,856
11%, 8/1/10 1,443,981 1,609,130
11 1/4%, 5/1/14 703,345 782,029
12%, 2/1/14 to 3/1/17 3,844,691 4,334,891
13%, 9/1/13 128,830 147,994
13 1/2%, 5/1/11 to 1/1/15 401,413 462,131
66,786,717
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 21.1%
7%, 5/15/23 to 2/15/24 33,348,446 31,295,194
7 1/2%, 3/15/23 to 11/15/23 13,113,967 12,704,167
8%, 9/15/23 12,053,177 11,992,911
8 1/2%, 1/15/06 to 7/15/08 311,326 318,676
9%, 1/15/11 to 9/15/17 4,440,722 4,634,516
9 1/2%, 8/15/09 to 7/15/20 1,777,112 1,875,212
10%, 1/15/16 to 4/15/16 8,246 8,891
11%, 12/15/09 to 6/15/13 120,042 136,679
11 1/2%, 4/15/10 to 4/15/13 195,551 225,375
12%, 4/15/14 20,128 23,450
12 1/2%, 12/15/13 to 8/15/15 656,119 774,226
63,989,297
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $161,881,843) 157,639,744
U.S. GOVERNMENT AGENCY - COLLATERALIZED MORTGAGE OBLIGATIONS - 9.5%
SHARES VALUE (NOTE 1)
FEDERAL HOME LOAN MORTGAGE CORPORATION - 4.4%
9%, 5/15/19 to 4/15/20 $ 13,000,000 $ 13,324,360
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 2.6%
7.5195%, 8/25/99 60,732 57,696
8.5769%, 8/25/99 INFL (b) 11,349,000 7,830,810
7,888,506
UNITED STATES DEPARTMENT OF VETERANS AFFAIRS - 2.5%
6 1/2%, 7/15/20 9,500,000 7,415,937
TOTAL U.S. GOVERNMENT AGENCY -
COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $32,969,942) 28,628,803
REPURCHASE AGREEMENTS - 9.7%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 3.56%
dated 4/29/94 due 5/2/94 $ 29,450,734 29,442,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $312,247,768) $ 302,586,921
LEGEND
(j) Security sold on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
(k) Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate multiplied by a specified
factor. The price may be considerably more volatile than the price of a
comparable fixed rate security.
INCOME TAX INFORMATION
At April 30, 1994, the aggregate cost of investment securities for income
tax purposes was $312,018,518. Net unrealized depreciation aggregated
$9,431,597, of which $1,454,160 related to appreciated investment
securities and $10,885,757 related to depreciated investment securities.
The fund intends to elect to defer to its fiscal year ending April 30, 1995
$5,271,000 of losses recognized during the period November 1, 1993 to April
30, 1994.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1994

ASSETS

Investment in securities, at value (including repurchase $ 302,586,921
agreements of $29,442,000) (cost $312,247,768)
(Notes 1 and 2) - See accompanying schedule

Commitment to sell securities on a delayed delivery $ (18,320,778)
basis

Receivable for securities sold on a delayed delivery 18,496,688 175,910
basis (Note 2)

Receivable for investments sold, regular delivery 43,497,629

Cash 798,782

Interest receivable 2,539,722

TOTAL ASSETS 349,598,964

LIABILITIES

Payable for investments purchased 62,590,380

Dividends payable 195,874

Accrued management fee 158,944

TOTAL LIABILITIES 62,945,198

NET ASSETS $ 286,653,766

Net Assets consist of (Note 1):

Paid in capital $ 303,252,369

Undistributed net investment income 1,429,535

Accumulated undistributed net realized gain (loss) on (8,543,201)
investments

Net unrealized appreciation (depreciation) on:

Investment securities (9,660,847)

Delayed delivery 175,910

NET ASSETS, for 28,658,140 shares outstanding $ 286,653,766

NET ASSET VALUE, offering price and redemption price per $10.00
share ($286,653,766 (divided by) 28,658,140 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED APRIL 30, 1994

INVESTMENT INCOME $ 29,558,048
Interest

EXPENSES

Management fee (Note 4) $ 2,577,718

Non-interested trustees' compensation 2,768

TOTAL EXPENSES 2,580,486

NET INVESTMENT INCOME 26,977,562

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTES 1, 2 AND 3)
Net realized gain (loss) on:

Investment securities (6,621,773)

Futures contracts (71,447) (6,693,220)

Change in net unrealized appreciation (depreciation) on:

Investment securities (19,007,245)

Futures contracts 11,817

Delayed delivery commitments 175,681 (18,819,747)

NET GAIN (LOSS) (25,512,967)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ 1,464,595
OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED APRIL 30,

1994 1993

INCREASE (DECREASE) IN NET ASSETS

Operations $ 26,977,562 $ 34,916,818
Net investment income

Net realized gain (loss) on investments (6,693,220) 17,400,134

Change in net unrealized appreciation (depreciation) (18,819,747) (1,458,641)
on
investments

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,464,595 50,858,311
FROM OPERATIONS

Distributions to shareholders: (21,081,236) (31,550,880)
From net investment income

From net realized gain (3,856,086) (18,668,668)

In excess of net realized gain (6,127,536) -

TOTAL DISTRIBUTIONS (31,064,858) (50,219,548)

Share transactions 76,411,385 214,494,539
Net proceeds from sales of shares

Reinvestment of distributions 26,884,876 45,438,596

Cost of shares redeemed (244,767,610) (285,683,487)

Net increase (decrease) in net assets resulting from (141,471,349) (25,750,352)
share transactions

TOTAL INCREASE (DECREASE) IN NET ASSETS (171,071,612) (25,111,589)

NET ASSETS

Beginning of period 457,725,378 482,836,967

End of period (including undistributed net investment $ 286,653,766 $ 457,725,378
income of $1,429,535 and $3,614,110, respectively)

OTHER INFORMATION
Shares

Sold 7,048,083 19,567,964

Issued in reinvestment of distributions 2,500,119 4,175,048

Redeemed (22,782,018) (26,128,849)

Net increase (decrease) (13,233,816) (2,385,837)

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED APRIL 30,

1994 1993 1992 1991 1990

SELECTED PER-SHARE DATA

Net asset value, beginning of $ 10.930 $ 10.900 $ 10.640 $ 10.030 $ 10.050
period

Income from Investment .624 .784 .846 .870 .936
Operations
Net investment income

Net realized and unrealized (.720) .370 .294 .610 .010
gain (loss) on investments

Total from investment (.096) 1.154 1.140 1.480 .946
operations

Less Distributions (.574) (.704) (.840) (.870) (.936)
From net investment income

From net realized gain on (.100) (.420) (.040) - (.030)
investments

In excess of net realized (.160) - - - -
gain
on investments

Total distributions (.834) (1.124) (.880) (.870) (.966)

Net asset value, end of period $ 10.000 $ 10.930 $ 10.900 $ 10.640 $ 10.030

TOTAL RETURN(dagger)(double dagger) (1.14) 11.12 11.05 15.27 9.47
% % % % %

RATIOS AND SUPPLEMENTAL
DATA

Net assets, end of period $ 286,654 $ 457,725 $ 482,837 $ 430,443 $ 282,555
(000 omitted)

Ratio of expenses to average .65% .65 .65 .53 .16
net assets % % % %

Ratio of expenses to average .65% .65 .65 .65 .65
net assets before expense % % % %
reductions

Ratio of net investment income 6.79% 7.11 7.77 8.35 9.02
to average net assets % % % %

Portfolio turnover rate 354% 170 59 96 68
% % % %

</TABLE>

(dagger) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
(double dagger) TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1994

6. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Government Income Fund (the fund) is a fund of Fidelity
Fixed-Income Trust (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company Act
of 1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities for which market quotations are not readily available are valued
at their fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Interest income, which includes accretion of original
issue discount, is accrued as earned.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net investment income. Distributions from realized gains, if
any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
paydown gains/losses on certain securities and futures and options
transactions. The fund also utilized earnings and profits distributed to
shareholders on redemption of shares as a part of the dividends paid
deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income may include temporary book and tax
basis differences which will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the following
year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective May 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of April 30, 1993 have been reclassified to reflect
an increase in paid in capital of $1,301,851, a decrease in undistributed
net investment income of $3,630,380 and an increase in accumulated net
realized gain on investments of $2,328,529.
7. OPERATING POLICIES.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management contracts with FMR, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by
U.S. Treasury or Federal Agency obligations.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The fund
may receive compensation for interest forgone in a delayed delivery
transaction. The fund identifies securities as segregated in its custodial
records with a value at least equal to the amount of the purchase
commitment.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures contracts and
write options. These investments in-
volve, to varying degrees, elements of market risk and risks in excess of
the amount recognized in the Statement of Assets and Liabilities. The face
or con-
tract amounts reflect the extent of the involvement the fund has in the
particular classes of instruments. Risks may be caused by an imperfect
correlation between movements in the price of the instruments and the price
of the underlying securities and interest rates. Risks also may arise if
there is an illiquid
OPERATING POLICIES - CONTINUED
FUTURES CONTRACTS AND OPTIONS - CONTINUED
secondary market for the instruments, or due to the inability of
counterparties to perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
8. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of long-term U.S. government and government agency
obligations aggregated $1,374,936,315 and $1,574,601,610, respectively.
The market value of futures contracts closed amounted to $4,500,000.
9. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR pays all expenses
except the compensation of the non-interested Trustees and certain
exceptions such as interest, taxes, brokerage commissions and extraordinary
expenses. FMR receives a fee that is computed daily at an annual rate of
.65% of each fund's average net assets.
FMR also bears the cost of providing shareholder services to the fund. For
the period, FMR or its affiliates collected certain transaction fees from
shareholders which aggregated $28,139.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Fixed-
Income Trust and the Shareholders of Spartan Government Income Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Fixed-Income Trust: Spartan Government Income Fund, including the
schedule of portfolio investments, as of April 30, 1994, and the related
statement of operations for the year then ended, the statement of changes
in net assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility
of the fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included con- firmation of
securities owned as of April 30, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement

presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Fixed-Income Trust: Spartan Government Income Fund as of April
30, 1994, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting
principles.
/s/COOPERS & LYBRAND
Coopers & Lybrand
Boston, Massachusetts
June 3, 1994
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
The Bank of New York
New York, NY
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY'S TAXABLE BOND FUNDS
Capital & Income
Ginnie Mae
Global Bond
Government Securities
Intermediate Bond
Investment Grade Bond
Mortgage Securities
New Markets Income
Short-Intermediate Government
Short-Term Bond
Short-Term World Income
Spartan Ginnie Mae
Spartan Government Income
Spartan High Income
Spartan Investment Grade Bond
Spartan Limited Maturity
Government
Spartan Long-Term Government Bond
Spartan Short-Intermediate
Government
Spartan Short-Term Income
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)

EXHIBIT 24 (A)(5)

(2_FIDELITY_LOGOS)SPARTAN(Registered trademark)

SHORT-INTERMEDIATE
GOVERNMENT
FUND
ANNUAL REPORT
APRIL 30, 1994
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on bond market
strategies.

PERFORMANCE 4 How the fund has done over time.

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

INVESTMENT CHANGES 11 A summary of major shifts in the
fund's investments over the last six
months.

INVESTMENTS 12 A complete list of the fund's
investments with their market value.

FINANCIAL STATEMENTS 13 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES 17 Footnotes to the financial
statements.

REPORT OF INDEPENDENT 20 The auditor's opinion.
ACCOUNTANTS

COUPON DISTRIBUTION AS OF APRIL 30, 1994
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
6 MONTHS AGO

Under 6% 0.0 2.3

6 - 6.99% 0.3 0.3

7 - 7.99% 22.5 22.5

8 - 8.99% 6.8 48.5

9 - 9.99% 38.7 21.9

10 - 10.99% 12.2 3.5

11 and over 0.4 0.7

COUPON DISTRIBUTION SHOWS THE RANGE OF STATED INTEREST RATES ON THE FUND'S
INVESTMENTS, EXCLUDING REPURCHASE AGREEMENTS.
AVERAGE YEARS TO MATURITY AS OF APRIL 30, 1994
6 MONTHS AGO

Years 4.6 4.8

AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL ON THE
FUND'S BONDS IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF APRIL 30, 1994
6 MONTHS AGO

Years 2.7 2.3

DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, A BOND WITH A FIVE-YEAR DURATION WILL
LOSE ABOUT 2.7% OF ITS VALUE.
ASSET ALLOCATION
AS OF APRIL 30, 1994 AS OF OCTOBER 31, 1993
Row: 1, Col: 1, Value: 19.1
Row: 1, Col: 2, Value: 28.4
Row: 1, Col: 3, Value: 52.5
Row: 1, Col: 1, Value: 1.0
Row: 1, Col: 2, Value: 56.7
Row: 1, Col: 3, Value: 43.0
Mortgage-backed
securities 52.5%
U.S. government
and government
agency obligations 28.4%
Short-term and
other investments 19.1%

Mortgage-backed
securities 43.0%
U.S. government
and government
agency obligations 56.7%
Short-term and
other investments 0.3%

INVESTMENTS APRIL 30, 1994

Showing Percentage of Total Value of Investments

U.S. TREASURY OBLIGATIONS - 28.4%
SHARES VALUE (NOTE 1)
9 1/4%, 1/15/96 to 8/15/98
(Cost $15,640,311) $ 14,250,000 $ 15,122,370
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 52.5%
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 52.5%
6 1/2%, 11/15/23 201,163 182,053
7%, 9/15/15 to 8/15/23 3,587,408 3,366,536
7 1/2%, 6/15/15 to 4/15/23 8,861,186 8,584,280
8%, 6/15/17 to 8/15/22 2,369,428 2,359,064
8 1/2%, 2/15/17 to 7/15/17 1,248,885 1,277,178
9%, 7/15/15 to 10/15/22 3,650,069 3,789,189
9 1/2%, 8/15/21 to 10/15/21 1,602,796 1,689,444
10%, 6/15/13 to 4/15/21 5,745,549 6,186,093
10 1/2%, 11/15/19 283,633 315,096
13%, 9/15/14 186,942 220,705
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES (Cost $29,470,471) 27,969,638
REPURCHASE AGREEMENTS - 19.1%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 3.56% dated
4/29/94 due 5/2/94 $ 10,160,013 10,157,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $55,267,782) $ 53,249,008
INCOME TAX INFORMATION
At April 30, 1994, the aggregate cost of investment securities for income
tax purposes was $55,317,938. Net unrealized depreciation aggregated
$2,068,930, of which $4,383 related to appreciated investment securities
and $2,073,313 related to depreciated investment securities.
At April 30, 1994, the fund had a capital loss carryforward of
approximately $168,000 all of which will expire on April 30, 2002.
The fund has elected to defer to its fiscal year ending April 30, 1995
$1,519,000 of losses recognized during the period November 1, 1993 to April
30, 1994.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1994

ASSETS

Investment in securities, at value (including repurchase $ 53,249,008
agreements of $10,157,000) (cost $55,267,782)
(Notes 1 and 2) - See accompanying schedule

Cash 170

Interest receivable 564,406

TOTAL ASSETS 53,813,584

LIABILITIES

Payable for fund shares redeemed $ 47,289

Dividends payable 36,141

Accrued management fee 4,590

TOTAL LIABILITIES 88,020

NET ASSETS $ 53,725,564

Net Assets consist of (Note 1):

Paid in capital $ 57,570,912

Distributions in excess of net investment income (87,429)

Accumulated undistributed net realized gain (loss) on (1,739,145)
investments

Net unrealized appreciation (depreciation) on investment (2,018,774)
securities

NET ASSETS, for 5,663,829 shares outstanding $ 53,725,564

NET ASSET VALUE, offering price and redemption price per $9.49
share ($53,725,564 (divided by) 5,663,829 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED APRIL 30, 1994

INVESTMENT INCOME $ 4,585,781
Interest

EXPENSES

Management fee (Note 4) $ 400,737

Non-interested trustees' compensation 25

Interest (Note 5) 466

Total expenses before reductions 401,228

Expense reductions (Note 6) (341,347) 59,881

NET INVESTMENT INCOME 4,525,900

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (2,409,978)
(NOTES 1 AND 3)
Net realized gain (loss) on investment securities

Change in net unrealized appreciation (depreciation) on (1,986,615)
investment securities

NET GAIN (LOSS) (4,396,593)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ 129,307
OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 18,
APRIL 30, 1994 1992
(COMMENCEMENT
OF
OPERATIONS) TO
APRIL 30, 1993

INCREASE (DECREASE) IN NET ASSETS

Operations $ 4,525,900 $ 628,222
Net investment income

Net realized gain (loss) on investments (2,409,978) (21,639)

Change in net unrealized appreciation (depreciation) (1,986,615) (32,159)
on
investments

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 129,307 574,424
FROM OPERATIONS

Distributions to shareholders (3,830,040) (592,663)
From net investment income

In excess of net investment income (64,564) -

In excess of net realized gain (57,694) -

TOTAL DISTRIBUTIONS (3,952,298) (592,663)

Share transactions 74,995,739 63,540,502
Net proceeds from sales of shares

Reinvestment of distributions 2,805,719 547,657

Cost of shares redeemed (75,106,348) (9,216,475)

Net increase (decrease) in net assets resulting from 2,695,110 54,871,684
share transactions

TOTAL INCREASE (DECREASE) IN NET ASSETS (1,127,881) 54,853,445

NET ASSETS

Beginning of period 54,853,445 -

End of period (including under (over) distribution of net $ 53,725,564 $ 54,853,445
investment income of $(87,429) and $35,559,
respectively)

OTHER INFORMATION
Shares

Sold 7,484,068 6,296,291

Issued in reinvestment of distributions 344,283 54,263

Redeemed (7,602,226) (912,850)

Net increase (decrease) 226,125 5,437,704

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 18,
APRIL 30, 1992
(COMMENCEMENT
OF
OPERATIONS) TO
APRIL 30,

1994 1993

SELECTED PER-SHARE DATA

Net asset value, beginning of period $ 10.090 $ 10.000

Income from Investment Operations .616 .257
Net investment income

Net realized and unrealized gain (loss) on (.579) .083(s diamond)
investments

Total from investment operations .037 .340

Less Distributions (.617) (.250)
From net investment income

In excess of net investment income (.010) -

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

Total distributions (.637) (.250)

Net asset value, end of period $ 9.490 $ 10.090

TOTAL RETURN (dagger) (double dagger) .29% 3.43%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (000 omitted) $ 53,726 $ 54,853

Ratio of expenses to average net assets ** .10% .02%*

Ratio of expenses to average net assets before expense .65% .65%*
reductions **

Ratio of net investment income to average net assets 7.33% 7.28%*

Portfolio turnover rate 271% 587%*

</TABLE>

* ANNUALIZED
** SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS.
(dagger) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
(double dagger) TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(s diamond) THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND
WITH THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD ENDED DUE TO THE
TIMING OF SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1994

10. SIGNIFICANT ACCOUNTING
POLICIES.
Spartan Short-Intermediate Government Fund (the fund) is a fund of Fidelity
Fixed-Income Trust (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company Act
of 1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities for which market quotations are not readily available are valued
at their fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Interest income, which includes accretion of original
issue discount, is accrued as earned.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net investment income. Distributions from realized gains, if
any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
paydown gains/losses on certain securities. The fund also utilized earnings
and profits distributed to shareholders on redemption of shares as a part
of the dividend paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income may include temporary book and tax
basis differences which will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the following
year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective May 1,
1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure,
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
and Financial Statement Presentation of Income, Capital Gain, and Return of
Capital Distributions by Investment Companies. As a result, the fund
changed the classification of distributions to shareholders to better
disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of April 30, 1993 have been reclassified to reflect
a decrease in paid in capital of $193, a decrease in undistributed net
investment income of $58,231 and a decrease in accumulated net realized
loss on investments of $58,424.
11. OPERATING POLICIES.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management contracts with FMR, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by
U.S. Treasury or Federal Agency obligations.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The fund
may receive compensation for interest forgone in a delayed delivery
transaction. The fund identifies securities as segregated in its custodial
records with a value at least equal to the amount of the purchase
commitment.
12. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of long-term U.S. government and government agency
obligations aggregated $155,442,752 and $157,506,555, respectively.
13. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management &
Research Company (FMR) pays all expenses except the compensation of the
non-interested Trustees and certain exceptions such as interest, taxes,
brokerage commissions and extraordinary expenses. FMR receives a fee that
is computed daily at an annual rate of .65% of the fund's average net
assets.
FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
Effective June 1, 1993, FMR voluntarily agreed to temporarily limit the
fund's total expenses (excluding interest, taxes, brokerage commissions,
and extraordinary expenses) to an annual rate of .10% of the fund's average
net assets.
FMR also bears the cost of providing shareholder services to the fund. For
the period, FMR or its affiliates collected certain transaction fees from
shareholders which aggregated $3,548.
14. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $2,584,000 and $2,305,000,
respectively. The weighted average interest rate was 3.65%.
15. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse the fund's operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) above a specified percentage of average net assets. During the
period, this expense limitation ranged from .05% to .10% of average net
assets and the reimbursement reduced expenses by $341,347.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Fixed-Income Trust and the Shareholders of
Spartan Short-Intermediate Government Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Fixed-Income Trust: Spartan Short-Intermediate Government Fund,
including the schedule of portfolio investments, as of April 30, 1994, and
the related statement of operations for the year then ended, the statement
of changes in net assets and the financial highlights for the year then
ended and for the period December 18, 1992 (commencement of operations) to
April 30, 1993. These financial statements and financial highlights are the
responsibility of the fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1994 by correspondence with the custodian
and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Fixed-Income Trust: Spartan Short-Intermediate Government Fund
as of April 30, 1994, the results of its operations for the year then
ended, the changes in its net assets and the financial highlights for the
year then ended and for the period December 18, 1992 (commencement of
operations) to April 30, 1993, in conformity with generally accepted
accounting principles.
/s/COOPERS & LYBRAND
Coopers & Lybrand
Boston, Massachusetts
June 3, 1994
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
The Bank of New York
New York, NY
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY'S TAXABLE BOND FUNDS
Capital & Income
Ginnie Mae
Global Bond
Government Securities
Intermediate Bond
Investment Grade Bond
Mortgage Securities
New Markets Income
Short-Intermediate Government
Short-Term Bond
Short-Term World Income
Spartan Ginnie Mae
Spartan Government Income
Spartan High Income
Spartan Investment Grade Bond
Spartan Limited Maturity
Government
Spartan Long-Term Government Bond
Spartan Short-Intermediate
Government
Spartan Short-Term Income
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)

EXHIBIT 5(A)
MANAGEMENT CONTRACT
between
FIDELITY FIXED-INCOME TRUST:
Fidelity Short-Term Bond Portfolio
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
Modification made this 1st day of November 1993, by and between Fidelity
Fixed-Income Trust, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Fidelity Short-Term Bond Portfolio (hereinafter
called the "Portfolio"), and Fidelity Management & Research Company, a
Massachusetts corporation (hereinafter called the "Adviser").
Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby
consent, pursuant to Paragraph 6 of the existing Management Contract dated
November 1, 1989, to a modification of said Contract in the manner set
forth below. The Modified Management Contract shall, when executed by duly
authorized officers of the Fund and the Adviser, take effect on the later
of November 1, 1993 or the first day of the month following approval:
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio office
space and all necessary office facilities, equipment and personnel for
servicing the investments of the Portfolio; and shall pay the salaries and
fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser, at its own expense, shall place all orders for the
purchase and sale of portfolio securities for the Portfolio's account with
brokers or dealers selected by the Adviser, which may include brokers or
dealers affiliated with the Adviser. The Adviser shall use its best efforts
to seek to execute portfolio transactions at prices which are advantageous
to the Portfolio and at commission rates which are reasonable in relation
to the benefits received. In selecting brokers or dealers qualified to
execute a particular transaction, brokers or dealers may be selected who
also provide brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) to the Portfolio
and/or the other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Adviser determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Adviser and its affiliates have
with respect to accounts over which they exercise investment discretion.
The Trustees of the Fund shall periodically review the commissions paid by
the Portfolio to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits to the
Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, composed of a Group fee rate and an Individual Fund
fee rate.
(a) Group Fee Rate. The Group fee rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the charter of each investment company) determined
as of the close of business on each business day throughout the month. The
Group fee rate shall be determined on a cumulative basis pursuant to the
following schedule.
Average Net Assets Annualized Fee Rate
$0 - 3 billion .370%
3 - 6 .340%
6 - 9 .310%
9 - 12 .280%
12 - 15 .250%
15 - 18 .220%
18 - 21 .200%
21 - 24 .190%
24 - 30 .180%
30 - 36 .175%
36 - 42 .170%
42 - 48 .165%
48 - 66 .160%
66 - 84 .155%
84 - 120 .150%
120 - 174 .145%
Over 174 .140%
(b) Individual Fund Fee Rate. The Individual Fund fee rate shall be .30%.
The sum of the Group fee rate, calculated as described above to the
nearest millionth, and the Individual Fund fee rate shall constitute the
annual management fee rate. One twelfth of the annual management fee shall
be applied to the average of the net assets of the Portfolio (computed in
the manner set forth in the Declaration of Trust of the Fund) determined as
of the close of business on each business day throughout the month.
In case of termination of this Contract during any month, the fee for that
month shall be reduced proportionately on the basis of the number of
business days during which it is in effect, and the fee computed upon the
average net assets for the business days it is so in effect for that month.
4. It is understood that the Portfolio will pay all its expenses other
than those expressly stated to be payable by the Adviser hereunder, which
expenses payable by the Portfolio shall, include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses relating to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices, and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until June 30,
1994 and indefinitely thereafter, but only so long as the continuance after
such date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract without payment of any
penalty, by action of its Trustees or Board of Directors, as the case may
be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust and
agrees that the obligations assumed by the Fund pursuant to this Contract
shall be limited in all cases to the Portfolio and its assets, and the
Adviser shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Portfolio or any other Portfolios of
the Fund. In addition, the Adviser shall not seek satisfaction of any such
obligation from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust are separate and distinct from those of any and all
other Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
FIDELITY FIXED-INCOME TRUST
on behalf of Fidelity Short-Term Bond Portfolio

By /s/J. Gary Burkhead
J. Gary Burkhead
Senior Vice President

FIDELITY MANAGEMENT & RESEARCH COMPANY

By /s/J. Gary Burkhead
J. Gary Burkhead
President

EXHIBIT 5(B)
MANAGEMENT CONTRACT
between
FIDELITY FIXED-INCOME TRUST:
Fidelity Investment Grade Bond Fund
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
Modification made this 1st day of November 1993, by and between Fidelity
Fixed-Income Trust, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Fidelity Investment Grade Bond Fund (hereinafter
called the "Portfolio"), and Fidelity Management & Research Company, a
Massachusetts corporation (hereinafter called the "Adviser").
Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby
consent, pursuant to Paragraph 6 of the existing Management Contract
modified September 1, 1992, to a modification of said Contract in the
manner set forth below. The Modified Management Contract shall, when
executed by duly authorized officers of the Fund and the Adviser, take
effect on the later of November 1, 1993 or the first day of the month
following approval:
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio office
space and all necessary office facilities, equipment and personnel for
servicing the investments of the Portfolio; and shall pay the salaries and
fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser, at its own expense, shall place all orders for the
purchase and sale of portfolio securities for the Portfolio's account with
brokers or dealers selected by the Adviser, which may include brokers or
dealers affiliated with the Adviser. The Adviser shall use its best efforts
to seek to execute portfolio transactions at prices which are advantageous
to the Portfolio and at commission rates which are reasonable in relation
to the benefits received. In selecting brokers or dealers qualified to
execute a particular transaction, brokers or dealers may be selected who
also provide brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) to the Portfolio
and/or the other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Adviser determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Adviser and its affiliates have
with respect to accounts over which they exercise investment discretion.
The Trustees of the Fund shall periodically review the commissions paid by
the Portfolio to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits to the
Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, composed of a Group fee rate and an Individual Fund
fee rate.
(a) Group Fee Rate. The Group fee rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the charter of each investment company) determined
as of the close of business on each business day throughout the month. The
Group fee rate shall be determined on a cumulative basis pursuant to the
following schedule.
Average Net Assets Annualized Fee Rate
0 - $3 billion .370%
3 - 6 .340%
6 - 9 .310%
9 - 12 .280%
12 - 15 .250%
15 - 18 .220%
18 - 21 .200%
21 - 24 .190%
24 - 30 .180%
30 - 36 .175%
36 - 42 .170%
42 - 48 .165%
48 - 66 .160%
66 - 84 .155%
84 - 120 .150%
120 - 174 .145%
Over 174 .140%
(b) Individual Fund Fee Rate. The Individual Fund fee rate shall be .30%.
The sum of the Group fee rate, calculated as described above to the
nearest millionth, and the Individual Fund fee rate shall constitute the
annual management fee rate. One twelfth of the annual management fee shall
be applied to the average of the net assets of the Portfolio (computed in
the manner set forth in the Declaration of Trust of the Fund) determined as
of the close of business on each business day throughout the month.
In case of termination of this Contract during any month, the fee for that
month shall be reduced proportionately on the basis of the number of
business days during which it is in effect, and the fee computed upon the
average net assets for the business days it is so in effect for that month.
4. It is understood that the Portfolio will pay all its expenses other
than those expressly stated to be payable by the Adviser hereunder, which
expenses payable by the Portfolio shall, include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses relating to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices, and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until June 30, 1994
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract without payment of any
penalty, by action of its Trustees or Board of Directors, as the case may
be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust and
agrees that the obligations assumed by the Fund pursuant to this Contract
shall be limited in all cases to the Portfolio and its assets, and the
Adviser shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Portfolio or any other Portfolios of
the Fund. In addition, the Adviser shall not seek satisfaction of any such
obligation from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust are separate and distinct from those of any and all
other Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
FIDELITY FIXED-INCOME TRUST
on behalf of Fidelity Investment Grade Bond Fund

By /s/J. Gary Burkhead
J. Gary Burkhead
Senior Vice President

FIDELITY MANAGEMENT & RESEARCH COMPANY

By /s/J. Gary Burkhead
J. Gary Burkhead
President

Exhibit 11

CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the Prospectuses
and Statements of Additional Information in Post-Effective Amendment No. 71
to the Registration Statement on Form N-1A of Fidelity Fixed Income Trust:
Fidelity Investment Grade Bond Fund, Fidelity Short-Term Bond Portfolio,
Spartan Government Income Fund, and Spartan Short-Intermediate Government
Fund of our reports dated June 3, 1994 and Fidelity Fixed Income Trust:
Spartan High Income Fund of our report dated June 7, 1994 on the financial
statements and financial highlights included in the April 30, 1994 Annual
Reports to Shareholders of Fidelity Investment Grade Bond Fund, Fidelity
Short-Term Bond Portfolio, Spartan Government Income Fund, Spartan
Short-Intermediate Government Fund, and Spartan High Income Fund.
We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectuses and "Auditor" in the Statements
of Additional Information.
/s/COOPERS & LYBRAND
COOPERS & LYBRAND
Boston, Massachusetts
June 15, 1994