As filed with the Securities and Exchange Commission
on February 9, 1996
Registration No. 333-00569
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT
<TABLE>
<CAPTION>
<S> <C>
UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1 [x]
Post-Effective Amendment No. [ ]
</TABLE>
Fidelity Fixed-Income Trust
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, MA 02109
(Address Of Principal Executive Offices)
Registrant's Telephone Number (617) 563-7000
Arthur S. Loring, Secretary
82 Devonshire Street
Boston, MA 02109
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after
the Registration Statement becomes effective under the Securities Act of
1933.
The Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Section 24(f) under the Investment
Company Act of 1940; accordingly, no fee is payable herewith because of
reliance upon Rule 24f-2. A Rule 24f-2 Notice for the Registrant's most
recent fiscal year ended April 30, 1995 was filed with the Commission on
June 19, 1995. Pursuant to Rule 429, this Registration Statement relates to
shares previously registered on Form N-1A.
This registration statement shall hereafter become effective in accordance
with the provisions of section 8(a) of the Securities Act of 1933.
SPARTAN(registered trademark) GOVERNMENT INCOME FUND
CONTENTS OF PRE-EFFECTIVE AMENDMENT NO. 1 TO THE INITIAL REGISTRATION
STATEMENT ON FORM N-14
This Pre-Effective Amendment contains the following papers and documents:
Contents of Registration Statement
Facing Page
Part B- Statement of Additional Information
- - Annual Report of Spartan Government Income Fund for the fiscal year ended
April 30, 1995
- - Annual Report of Spartan Long-Term Government Bond Fund for the fiscal
year ended January 31, 1995
- - Semiannual Report for Spartan Government Income Fund for the fiscal
period ended October 31, 1995
- - Semiannual Report for Spartan Long-Term Government Bond Fund for the
fiscal period ended July 31, 1995
- - Pro Forma financial statements dated October 31, 1995
Part C - Other Information
Signature Pages
Exhibits
The following documents are incorporated herein by reference to the trust's
initial Registration Statement on Form N-14:
Cross Reference Sheet
Letter to Shareholders
Form of Proxy Card
Notice of Special Meeting
Part A - Prospectus/Proxy Statement
- - The Prospectus of Spartan Government Income Fund, dated June 24, 1995
Part B- Statement of Additional Information
- - The Statement of Additional Information of Spartan Government Income
Fund, dated June 24, 1995
- - The Prospectus and Statement of Additional Information of Spartan
Long-Term Government Bond Fund, dated March 22, 1995
Spartan(registered trademark) Long-Term Government Bond Fund
(A Fund of Fidelity Devonshire Trust)
Spartan(registered trademark) Government Income Fund
(A Fund of Fidelity Fixed-Income Trust)
FORM N-14
STATEMENT OF ADDITIONAL INFORMATION
March 11, 1996
This Statement of Additional Information, relates to the proposed
reorganization whereby Spartan Government Income Fund (Government Income),
a fund of Fidelity Fixed-Income Trust, would acquire all of the assets of
Spartan Long-Term Government Bond Fund (Long-Term Government), a fund of
Fidelity Devonshire Trust, and assume all of Long-Term Government's
liabilities in exchange solely for shares of beneficial interest in
Government Income.
This Statement of Additional Information consists of this cover page and
the following described documents, each of which is attached hereto and is
incorporated herein by reference:
1. The Statement of Additional Information of Government Income, dated June
24, 1995, is incorporated herein by reference to the trust's initial
Registration Statement on Form N-14.
2. The Prospectus and Statement of Additional Information of Long-Term
Government, dated March 22, 1995, are incorporated herein by reference to
the trust's initial Registration Statement on Form N-14.
3. The Annual Report of Government Income for the fiscal year ended April
30, 1995.
4. The Annual Report of Long-Term Government for the fiscal year ended
January 31, 1995.
5. The Semiannual Report of Government Income for the fiscal period ended
October 31, 1995.
6. The Semiannual Report of Long-Term Government for the fiscal period
ended July 31, 1995.
7. The Pro Forma Financial Statements for Government Income and Long-Term
Government for the period ended October 31, 1995.
This Statement of Additional Information is not a prospectus. A Proxy
Statement and Prospectus dated March 11, 1996, relating to the
above-referenced matter, may be obtained from Fidelity Distributors
Corporation, 82 Devonshire Street, Boston, Massachusetts, 02109. This
Statement of Additional Information relates to, and should be read in
conjunction with, such Proxy Statement and Prospectus.
The date of this Statement of Additional Information is March 11, 1996.
SPARTAN(registered trademark)
(registered trademark)
LONG-TERM GOVERNMENT BOND
FUND
ANNUAL REPORT
JANUARY 31, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 12 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 16 Notes to the financial statements.
REPORT OF INDEPENDENT 19 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 20
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL
RESERVE BOARD OR
ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF
PRINCIPAL. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A
BANK. FOR MORE
INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL
1-800-544-8888 FOR
A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although there have been a few positive market indications so far in 1995,
no one can predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term, as we witnessed last year. You also can help to manage some
of the risks of investing through diversification. A stock fund is already
diversified because it invests in many issues. You can diversify even
further by placing some of your money in several different types of stock
funds or in other investment categories, such as bonds.
If you have a short investment time horizon, you might want to consider
moving some of your investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
Finally, no matter what your investment horizon or portfolio diversity, it
makes good sense to follow a regular investment plan - investing a certain
amount of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. A fund's total
return includes changes in a fund's share price, plus reinvestment of any
dividends (or income) and capital gains (the profits the fund earns when it
sells bonds that have grown in value), and the effect of the $5 account
closeout fee. You can also look at the fund's income to measure
performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1995 PAST 1 LIFE OF
YEAR FUND
Spartan Long-Term Government Bond -12.45% 46.65%
Lehman Brothers Long-Term Government Bond Index -7.54% n/a
Average General U.S. Government Bond Fund -4.25% n/a
Consumer Price Index 2.80% 13.26%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, or since the fund started on
September 28, 1990. For example, if you invested $1,000 in a fund that had
a 5% return over the past year, you would end up with $1,050. You can
compare these figures to the Lehman Brothers Long-Term Government Bond
Index - a broad measure of the performance of long-term government bonds.
To measure how the fund's performance stacked up against its peers, you can
also look at the average general U.S. government bond fund, which currently
reflects the performance of 146 funds tracked by Lipper Analytical
Services. These benchmarks include reinvested dividends and capital gains,
if any. Comparing the fund's performance to the consumer price index (CPI)
helps show how your fund did compared to inflation. (The CPI returns begin
on the month end closest to the fund's start date.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1995 PAST 1 LIFE OF
YEAR FUND
Spartan Long-Term Government Bond -12.45% 9.21%
Lehman Brothers Long-Term Government Bond Index -7.54% n/a
Average General U.S. Government Bond Fund -4.25% n/a
Consumer Price Index 2.80% 2.91%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
Spartan Long-Term GoLB Long Term Gov't B
09/30/90 10000.00 10000.00
10/31/90 10380.00 10232.00
11/30/90 10820.00 10663.79
12/31/90 11019.82 10876.00
01/31/91 11140.92 11006.51
02/28/91 11161.10 11059.34
03/31/91 11182.92 11102.47
04/30/91 11367.25 11243.48
05/31/91 11377.50 11234.48
06/30/91 11297.11 11150.22
07/31/91 11484.52 11325.28
08/31/91 11901.01 11718.27
09/30/91 12162.30 12088.57
10/31/91 12151.72 12107.91
11/30/91 12299.78 12173.29
12/31/91 12934.77 12909.77
01/31/92 12587.53 12504.41
02/29/92 12674.34 12580.68
03/31/92 12576.86 12444.81
04/30/92 12631.97 12431.12
05/31/92 12940.60 12784.17
06/30/92 13117.72 12964.42
07/31/92 13543.77 13507.63
08/31/92 13577.41 13600.84
09/30/92 13745.02 13806.21
10/31/92 13505.68 13516.28
11/30/92 13653.85 13578.45
12/31/92 13976.82 13954.58
01/31/93 14343.39 14352.28
02/28/93 14780.90 14840.26
03/31/93 14944.93 14875.88
04/30/93 15017.01 14985.96
05/31/93 15065.07 15035.41
06/30/93 15588.43 15675.92
07/31/93 15893.61 15939.28
08/31/93 16394.10 16594.38
09/30/93 16563.72 16649.14
10/31/93 16737.16 16772.34
11/30/93 16192.06 16337.94
12/31/93 16304.31 16388.59
01/31/94 16751.37 16780.28
02/28/94 15725.77 16092.28
03/31/94 14897.33 15384.22
04/30/94 14586.69 15201.15
05/31/94 14262.54 15096.26
06/30/94 14166.33 14948.32
07/31/94 14616.27 15459.55
08/31/94 14493.56 15340.51
09/30/94 14029.85 14855.75
10/31/94 13974.77 14800.79
11/30/94 14057.38 14894.03
12/31/94 14305.53 15121.91
01/31/95 14667.70 15510.00
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan
Long-Term Government Bond Fund on September 30, 1990, shortly after the
fund started. As the chart shows, by January 31, 1995, the value of your
investment, with dividends reinvested would have grown to $14,668 - a
46.68% increase on your initial investment. This assumes you still owned
the fund on January 31, 1995 and therefore does not include the effect of
the $5 account closeout fee. For comparison, look at how the Lehman
Brothers Long-Term Government Bond Index did over the same period. With
dividends reinvested, the same $10,000 investment would have grown to
$15,510 - a 55.10% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, move in the
opposite direction of interest
rates. In turn, the share price,
return, and yield of a fund
that invests in bonds will vary.
That means if you sell your
shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
YEARS ENDED JANUARY 31, FROM
SEPTEMBER 28,
1990 TO
1995 1994 1993 1992 JANUARY 31, 1991
Dividend return 4.13% 7.14% 7.69% 7.15% 1.01%
Capital appreciation -16.58% 9.63% 6.24% 5.82% 10.38%
return
Total return -12.45% 16.77% 13.93% 12.97% 11.39%
DIVIDEND returns and capital appreciation returns are both part of a bond
fund's total return. A dividend return reflects the actual dividends paid
by the fund. A capital appreciation return reflects both the amount paid by
the fund to shareholders as capital gain distributions and changes in the
fund's share price. Both returns assume the dividends or gains are
reinvested. Capital appreciation and total returns include the effect of
the $5 account closeout fee on an average sized account.
DIVIDENDS AND YIELD
PERIODS ENDED JANUARY 31, 1995 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share - 22.00(cents) 52.00(cents)
Annualized dividend rate - 4.24% 4.88%
30-day annualized yield 7.16% - -
DIVIDENDS per share show the income paid by the fund for a set period and
do not reflect any tax reclassifications. If you annualize this number,
based on an average share price of $10.30 over the past six months and
$10.66 over the past year, you can compare the fund's income over these two
periods. The 30-day annualized YIELD is a standard formula for all funds
based on the yields of the bonds in the fund, averaged over the past 30
days. This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you compare funds from
different companies on an equal basis.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Although there was a small bond
market rally in January, sharply
rising interest rates caused a severe
downturn in U.S. bond markets
during the 12 months ended
January 31, 1995. Yields rose
sharply - and prices fell - on
virtually all types of fixed-income
investments. For the 12 months
ended January 31, 1995, the
Lehman Brothers Aggregate Bond
Index - a broad measure of
taxable bonds in the U.S. bond
market - had a total return of
- -2.31%. The Federal Reserve
Board raised the federal funds rate
- - the rate banks charge each other
for overnight loans - from 3.00% to
5.50% from February to
November, causing other interest
rates to rise. The Fed was hoping
to head off future inflation that might
be triggered by an improving U.S.
economy. The resulting higher
rates slowed refinancing activity in
mortgage-backed securities,
helping them to outperform
comparable Treasury bonds. The
Salomon Brothers Mortgage Index
returned -0.23% during the
period. Interest rate increases in
many foreign bond markets
followed the rate hikes in the U.S.
Weakness in the U.S. dollar,
however, helped the Salomon
Brothers World Government Bond
Index - which measures bond
market performance in the
developed world, including the
U.S. - to post a 3.66% return.
The JP Morgan Emerging Markets
Bond Index was down 21.71%, on
the heels of market corrections in
many emerging markets earlier in
the year and Mexico's devaluation
of the peso in December.
An interview with Curt Hollingsworth, Portfolio Manager of Fidelity Spartan
Long-Term Government Bond Fund
Q. CURT, HOW HAS THE FUND PERFORMED?
A. It has been a difficult year for the fund. For the 12 months ended
January 31, 1995, the fund had a total return of -12.45%. According to
Lipper Analytical Services, the average general U.S. government bond fund
had a total return of -4.25%.
Q. WHAT CAUSED THE FUND TO SHARPLY UNDERPERFORM THE AVERAGE FUND?
A. There were two reasons. First, the funds included in Lipper's average
U.S. government bond fund category had an average duration that was much
shorter than the duration of this fund. Duration is a measure of a fund's
sensitivity to changes in interest rates. The longer the duration, the more
sensitive a fund is to interest rate changes. Since many of the funds in
the Lipper category aren't focused on longer-term bonds, the average
duration of funds in this category was around five years. However, this
fund, with its long-term focus, had a duration closer to 10 years. That
means the fund was about twice as interest-rate sensitive as the funds it
was compared to. Second, the fund's performance was hurt by a strategy that
didn't work as I intended in a rising interest rate environment.
Q. WHAT STRATEGY WAS THAT?
A. In October 1993, the fund began using a strategy called duration
averaging. This strategy was designed to profit from the long-term cyclical
nature of interest rates. Using this strategy, I would lengthen the average
duration of the fund after a rise in interest rates, causing it to become
more aggressively positioned for a drop in interest rates. Conversely, I
would invest in bonds with shorter maturities if interest rates fell,
causing the fund to become more defensive by positioning it for rising
interest rates.
Q. INTEREST RATES HAVE CLIMBED STEADILY OVER THE YEAR. WHAT EFFECT DID THAT
HAVE?
A. The interest rate environment was especially difficult for a longer-term
bond fund, because its share price is extremely sensitive to changes in
interest rates. Using duration averaging, as rates started going up more
and more, the fund's duration got longer and longer, making it more
vulnerable to each rate increase.
Q. ARE YOU STILL USING DURATION AVERAGING?
A. No. I stopped using this strategy in the summer of 1994, because I
didn't believe it would lead to a return advantage in the foreseeable
future. Instead, I believe success in this environment will be achieved
through sector and security selection, while maintaining a duration neutral
approach. I'm seeking to match the fund's duration to that of a government
bond index. I believe it is equally likely that interest rates will go up
or down over the next year, so for me to invest based on what I think will
happen with interest rates would not be as constructive as focusing on
adding value by investing in cheap individual securities.
Q. WHAT CAN YOU TELL US ABOUT THE STRUCTURE OF THE FUND?
A. At the end of the period, the fund had a very simple portfolio
structure. More than 98% of the fund's investments was in U.S. Treasury
bonds, with very small percentages in U.S. government agency issues and
short-term cash investments. My feeling was that the Treasuries were more
attractive than other options. As far as choosing Treasuries is concerned,
I've underweighted the fund in what are known as "current" 30-year Treasury
bonds. These are bonds that have been on the market for no more than three
months, having been issued at one of the bond auctions that occurs
quarterly. These current bonds typically trade at lower yields - and higher
prices - than older 30-year bonds. That's because they're more easily
tradable, making bond traders - who earn money simply by buying and selling
securities - more willing to pay a premium for them. Of course, paying a
premium doesn't make sense for the fund, because its goal is to provide
income and to increase the value of the fund's shares, with a much longer
time frame than that of bond traders. Over the past several years, as
current long bonds have become older, the yields they offer have grown and
their prices have fallen. This change gradually evolves over a bond's first
year, and that's when they become more attractive for the fund to own.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. Real yields - Treasury yields adjusted for inflation - were fairly
attractive at the end of the period. Thirty-year bonds were yielding
roughly 7.8%, with inflation running at about 2.8% for the past 12 months.
That gives you a real yield of about 5%, which is very attractive by
historical standards. One of two things may occur to change the situation.
Inflation may accelerate to narrow the real yield. Or, long-term Treasury
yields may fall, having the same effect. Of course, it's also possible that
real yields could move even higher over the near term.
FUND FACTS
GOAL: to provide income and
increase the value of the
fund's shares by investing
mainly in long-term U.S.
government and government
agency securities.
START DATE: September 28,
1990
SIZE: as of January 31, 1995,
more than $77 million
MANAGER: Curt Hollingsworth,
since 1993; manager, Spartan
Short-Intermediate
Government Fund, since
1992; Fidelity
Short-Intermediate
Government Fund, since
1991; Spartan Limited Maturity
Government Fund, since
1988; joined Fidelity in 1983
(checkmark)
CURT HOLLINGSWORTH ON
LONG-TERM INVESTING:
"It's important to stress that -
being a fund that invests in
bonds with longer maturities
- - Spartan Long-Term
Government Bond Fund can
have more volatility than
other, shorter-term bond
funds. The fund has a
duration - a measure of
interest rate sensitivity - of
about 10 years. That means
- - other things being equal -
if rates rose 1%, the fund's
share price would probably
drop approximately 10%.
Looking at the past year, one
would say that interest rates
easily could rise or fall 1% in
the coming year.
"It's crucial for investors in this
fund to have a longer-term
investing horizon. If they do,
the fund should allow them to
secure today's higher yields for
a fair amount of time. Investors
with a long-term horizon
actually may be exposed to a
different type of risk in a
shorter-term fund -
reinvestment risk, which is the
risk that an investor might not
be able to reinvest short-term
returns at attractive rates.
"This is a long-term
government bond fund. As a
result, its share price is
especially sensitive to interest
rate changes. Investors in the
fund should be clear about
that, and should invest in the
fund for the long haul."
INVESTMENT CHANGES
TOP ISSUERS AS OF JANUARY 31, 1995
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS 6 MONTHS AGO
U.S. Treasury 98.1 80.8
Tennessee Valley Authority
(U.S. Government Agency) 0.9 1.2
EXCLUDING REPURCHASE AGREEMENTS.
AVERAGE YEARS TO MATURITY AS OF JANUARY 31, 1995
6 MONTHS AGO
Years 22.2 22.6
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL THE PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF JANUARY 31, 1995
6 MONTHS AGO
Years 9.7 10.2
DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
ASSET ALLOCATION
AS OF JANUARY 31, 1995 AS OF JULY 31, 1994
Row: 1, Col: 1, Value: 1.6
Row: 1, Col: 2, Value: 1.5
Row: 1, Col: 3, Value: 50.0
U.S. Treasury
obligations 80.8%
U.S. government
agency
obligations 19.2%
Short-term
investments 0.0%
U.S. Treasury
obligations 98.1%
U.S. government
agency
obligations 0.9%
Short-term
investments 1.0%
Row: 1, Col: 1, Value: 0.0
Row: 1, Col: 2, Value: 19.2
Row: 1, Col: 3, Value: 80.8
INVESTMENTS JANUARY 31, 1995
Showing Percentage of Total Value of Investment in Securities
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 99.0%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
U.S. TREASURY OBLIGATIONS - 98.1%
12 3/4%, 11/15/10$ 3,200,000 $4,350,496
8 7/8%, 8/15/17 60,175,000 66,897,751
9 1/8%, 5/15/18 1,600,000 1,825,500
TOTAL U.S. TREASURY OBLIGATIONS 73,073,747
U.S. GOVERNMENT AGENCY OBLIGATIONS - 0.9%
Tennessee Valley Authority:
8 1/4%, 4/15/42 (Callable 2012) 500,000 487,725
6 7/8%, 12/15/43 200,000 164,068
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 651,793
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS (Cost $74,107,067) 73,725,540
REPURCHASE AGREEMENTS - 1.0%
MATURITY
AMOUNT
Investments in repurchase
agreements $753,122 753,000
(U.S. Treasury obligations), in a
joint trading account at 5.81%
dated 1/31/95 due 2/1/95
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $74,860,067) $74,478,540
INCOME TAX INFORMATION
At January 31,1995, the aggregate cost of investment securities for income
tax purposes was $74,962,285. Net unrealized depreciation aggregated
$483,745, of which $489,166 related to appreciated investment securities
and $972,911 related to depreciated investment securities.
At January 31, 1995, the fund had a capital loss carryforward of
approximately $3,934,668 which will expire on January 31, 2003.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JANUARY 31, 1995
ASSETS
Investment in securities, at value (including repurchase $ 74,478,540
agreements of $753,000) (cost $74,860,067) -
See accompanying schedule
Cash 731
Receivable for fund shares sold 458,089
Interest receivable 2,583,082
TOTAL ASSETS 77,520,442
LIABILITIES
Dividends payable $ 278
Accrued management fee 38,964
TOTAL LIABILITIES 39,242
NET ASSETS $ 77,481,200
Net Assets consist of:
Paid in capital $ 81,478,947
Undistributed net investment income 567,963
Accumulated undistributed net realized gain (loss) on (4,186,986)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on (378,724)
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 7,358,093 shares outstanding $ 77,481,200
NET ASSET VALUE, offering price and redemption price per $10.53
share ($77,481,200 (divided by) 7,358,093 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JANUARY 31, 1995
INVESTMENT INCOME 4,160,118
Interest
EXPENSES
Management fee $ 409,492
Non-interested trustees' compensation 335
TOTAL EXPENSES 409,827
NET INVESTMENT INCOME 3,750,291
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (4,133,739)
Foreign currency transactions (696,101) (4,829,840)
Change in net unrealized appreciation (depreciation) on:
Investment securities (7,126,787)
Assets and liabilities in foreign currencies 169,728 (6,957,059)
NET GAIN (LOSS) (11,786,899)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (8,036,608)
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31,
1995 1994
INCREASE (DECREASE) IN NET ASSETS
Operations $ 3,750,291 $ 5,493,483
Net investment income
Net realized gain (loss) (4,829,840) 5,465,921
Change in net unrealized appreciation (depreciation) (6,957,059) 2,639,826
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (8,036,608) 13,599,230
FROM OPERATIONS
Distributions to shareholders: (3,025,880) (5,701,388)
From net investment income
From net realized gain (538,147) (2,855,797)
TOTAL DISTRIBUTIONS (3,564,027) (8,557,185)
Share transactions 165,444,920 131,601,595
Net proceeds from sales of shares
Reinvestment of distributions 3,354,463 8,169,134
Cost of shares redeemed (147,021,095) (160,517,979)
Net increase (decrease) in net assets resulting from 21,778,288 (20,747,250)
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 10,177,653 (15,705,205)
NET ASSETS
Beginning of period 67,303,547 83,008,752
End of period (including undistributed net investment $ 77,481,200 $ 67,303,547
income of $567,963 and $499,970, respectively)
OTHER INFORMATION
Shares
Sold 15,527,302 10,329,522
Issued in reinvestment of distributions 311,436 649,261
Redeemed (13,764,302) (12,536,136)
Net increase (decrease) 2,074,436 (1,557,353)
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED JANUARY 31, SEPTEMBER 28,
1990
(COMMENCEMENT
OF
OPERATIONS) TO
JANUARY 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991
SELECTED PER-SHARE DATA
Net asset value, $ 12.740 $ 12.130 $ 11.600 $ 11.040 $ 10.000
beginning of period
Income from Investment .513 .847 .847 .776 .144
Operations
Net investment income
Net realized and (2.093) 1.123 .703 .604 .996
unrealized gain
(loss)
Total from investment (1.580) 1.970 1.550 1.380 1.140
operations
Less Distributions (.530) C (.840) (.840) (.740) (.100)
From net investment
income
From net realized gain (.100) C (.520) (.180) (.080) -
on investments
Total distributions (.630) (1.360) (1.020) (.820) (.100)
Net asset value, end $ 10.530 $ 12.740 $ 12.130 $ 11.600 $ 11.040
of period
TOTAL RETURN B (12.44)% 16.79% 13.95% 12.98% 11.41%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 77,481 $ 67,304 $ 83,009 $ 62,992 $ 33,833
(000 omitted)
Ratio of expenses to .65% .65% .65% .65% .65% A
average net assets
Ratio of net investment 5.95% 6.41% 7.35% 7.30% 7.26% A
income to average
net assets
Portfolio turnover rate 422% 153% 135% 335% 256% 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 THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES. SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1995
1. SIGNIFICANT ACCOUNTING
POLICIES.
Spartan Long-Term Government Bond Fund (the fund) is a fund of Fidelity
Devonshire 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 of their purchase date are valued either at
amortized cost or original cost plus accrued interest, both of which
approximate current value. Securities for which quotations are not readily
available through the pricing service 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 prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Effective February 1, 1994, the fund adopted Statement of Position (SOP)
93-4: Foreign Currency Accounting and Financial Statement Presentation for
Investment Companies. In accordance with this SOP, reported net realized
gains and losses on foreign currency transactions represent net gains and
losses from sales and maturities of forward currency contracts, disposition
of foreign currencies, currency gains and losses realized between the trade
and settlement dates on securities transactions, and the difference between
the amount of net investment income accrued and the U.S. dollar amount
actually received. Further, as permitted under the SOP, the effects of
changes in foreign currency exchange rates on investments in securities are
not segregated in the Statement of Operations from the effects of changes
in market prices of those securities, but are included with the net
realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to 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.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for paydown
gains/losses on certain securities, market discount, foreign currency
transactions 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.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY
CONTRACTS. The fund may use foreign currency contracts to facilitate
transactions in foreign securities and to manage the fund's currency
exposure. Contracts to buy generally are used to acquire exposure to
foreign currencies, while contracts to sell are used to hedge the fund's
investments against currency fluctuations. Also, a contract to buy or sell
can offset a previous contract. Losses may arise from changes in the value
of the foreign currency or if the counterparties do not perform under the
contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) 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 affiliated
entities of FMR, may transfer uninvested cash balances into one or more
joint trading accounts. These balances are invested in one or more
repurchase agreements that mature in 60 days or less from the date of
purchase, and are collateralized by U.S. Treasury or Federal Agency
obligations.
3. PURCHASES AND SALES
OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $280,619,737 and $258,201, 513 respectively, of which U.S.
government and government agency obligations aggregated $280,349,321 and
$257,926,087, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the 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 the fund's average net assets.
FMR also bears the cost of providing shareholder services to the fund. To
offset the cost of providing these services, FMR or its affiliates collect
certain transaction fees from the fund's shareholders which amounted to
$9,226 for the period.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Devonshire Trust and the Shareholders of
Spartan Long-Term Government Bond Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Devonshire Trust: Spartan Long-Term Government Bond Fund,
including the schedule of portfolio investments, as of January 31, 1995,
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 four years in the
period then ended and for the period September 28, 1990 (commencement of
operations) to January 31, 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 January 31, 1995 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 Devonshire Trust: Spartan Long-Term Government Bond Fund as of
January 31, 1995, 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 four years in the
period then ended and for the period September 28, 1990 (commencement of
operations) to January 31, 1991, in conformity with generally accepted
accounting principles.
/s/COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
March 7, 1995
DISTRIBUTIONS
A total of 95.93% of the dividends distributed during the fiscal year was
derived from interest on U.S. Government securities which is generally
exempt from state income tax.
The fund will notify shareholders in January 1996 of the applicable
percentage for use in preparing 1995 income tax returns.
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios.(registered trademark)
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
1907 West State Road 434
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
1 West Pennsylvania Ave.
Towson, MD
7401 Wisconsin Avenue
Bethesda, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
101 Cambridge Street
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
38 South Sixth Street
Minneapolis, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
2200 West Main Street
Durham, NC
4611 Sharon Road
Charlotte, NC
OHIO
600 Vine Street
Cincinnati, OH
1903 East Ninth Street
Cleveland, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
1010 Lamar Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
215 South State Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Curtis Hollingsworth, Vice President
Arthur S. Loring, Secretary
Stephen P. Jonas, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
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
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(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)
(registered trademark)
SPARTAN(REGISTERED TRADEMARK)
(REGISTERED TRADEMARK)
LONG-TERM GOVERNMENT BOND
FUND
SEMIANNUAL REPORT
JULY 31, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 12 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 16 Notes to the financial statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although there have been positive market indications so far in 1995, no one
can predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving for a college education, enables you to weather these ups and
downs in a long-term fund, which has higher potential returns. An
intermediate-length fund could be appropriate if your investment horizon is
two to four years, and a short-term bond fund could be the right choice if
you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. A fund's total
return includes changes in a fund's share price, plus reinvestment of any
dividends (or income) and capital gains (the profits the fund earns when it
sells bonds that have grown in value), and the effect of the $5 account
closeout fee. You can also look at the fund's income to measure
performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JULY 31, 1995 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Spartan Long-Term Government Bond 12.98% 13.38% 65.72%
Lehman Brothers Long-Term Government Bond 13.19% 13.59% n/a
Index
Salomon Brothers Treasury/Agency 10+ Year Index 13.15% 13.87% n/a
Average General U.S. Government Bond Fund 8.04% 8.48% n/a
Consumer Price Index 1.46% 2.76% 14.92%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, or since the fund
started on September 28, 1990. For example, if you invested $1,000 in a
fund that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare the fund's returns to the Lehman Brothers
Long-Term Government Bond Index or the Salomon Brothers Treasury/Agency
Year 10+ Year Index - both broad measures of the performance of long-term
government bonds. To measure how the fund's performance stacked up against
its peers, you can compare it to the average general U.S. government bond
fund, which reflects the performance of 185 funds with similar objectives
tracked by Lipper Analytical Services over the past six months. These
benchmarks include reinvested dividends and capital gains, if any.
Comparing the fund's performance to the consumer price index (CPI) helps
show how your fund did compared to inflation. (The CPI returns begin on the
month end closest to the fund's start date.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1995 PAST 1 LIFE OF
YEAR FUND
Spartan Long-Term Government Bond 13.38% 10.99%
Lehman Brothers Long-Term Government Bond Index 13.59% n/a
Salomon Brothers Treasury/Agency 10+ Year Index 13.87% n/a
Average General U.S. Government Bond Fund 8.48% n/a
Consumer Price Index 2.76% 2.92%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
Spartan Long-Term Gsb029
09/30/90 10000.00 10000.00
10/31/90 10380.00 10239.00
11/30/90 10820.00 10653.68
12/31/90 11019.82 10871.01
01/31/91 11140.91 11001.47
02/28/91 11161.10 11030.07
03/31/91 11182.92 11071.98
04/30/91 11367.26 11233.64
05/31/91 11377.50 11220.16
06/30/91 11297.11 11152.83
07/31/91 11484.53 11330.16
08/31/91 11901.01 11708.59
09/30/91 12162.30 12089.12
10/31/91 12151.72 12091.54
11/30/91 12299.79 12162.88
12/31/91 12934.78 12899.95
01/31/92 12587.54 12502.63
02/29/92 12674.35 12577.65
03/31/92 12576.86 12439.29
04/30/92 12631.97 12445.51
05/31/92 12940.61 12774.07
06/30/92 13117.73 12959.30
07/31/92 13543.77 13489.33
08/31/92 13577.41 13598.60
09/30/92 13745.03 13791.70
10/31/92 13505.68 13508.97
11/30/92 13653.85 13572.46
12/31/92 13976.82 13937.56
01/31/93 14343.38 14365.44
02/28/93 14780.90 14850.99
03/31/93 14944.93 14856.93
04/30/93 15017.02 14989.16
05/31/93 15065.07 15031.13
06/30/93 15588.43 15672.96
07/31/93 15893.60 15933.13
08/31/93 16394.09 16576.83
09/30/93 16563.72 16648.11
10/31/93 16737.16 16736.34
11/30/93 16192.06 16301.20
12/31/93 16304.32 16376.19
01/31/94 16751.37 16764.30
02/28/94 15725.78 16095.41
03/31/94 14897.33 15371.11
04/30/94 14586.69 15192.81
05/31/94 14262.54 15097.09
06/30/94 14166.33 14961.22
07/31/94 14616.27 15435.49
08/31/94 14493.56 15322.81
09/30/94 14029.85 14847.80
10/31/94 13974.78 14778.02
11/30/94 14057.38 14862.25
12/31/94 14305.54 15113.43
01/31/95 14667.70 15532.07
02/28/95 15057.73 15963.86
03/31/95 15159.52 16081.99
04/30/95 15428.71 16363.43
05/31/95 16632.97 17661.05
06/30/95 16846.58 17855.32
07/31/95 16573.24 17574.99
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan
Long-Term Government Bond Fund on September 30, 1990, shortly after the
fund started. As the chart shows, by July 31, 1995, the value of your
investment, with dividends reinvested would have grown to $16,573 - a
65.73% increase on your initial investment. This assumes you still owned
the fund on July 31, 1995 and therefore does not include the effect of the
$5 account closeout fee. For comparison, look at how the Salomon Brothers
Treasury/Agency 10+ Year Index did over the same period. With dividends
reinvested, the same $10,000 investment would have grown to $17,575 - a
75.75% increase. Beginning with this report the fund will compare its
performance to the Salomon Brothers Treasury/Agency 10+ Year Index rather
than the Lehman Brothers Long-Term Government Bond Index. Although the
difference in performance between the two indices is small, the Salomon
Brothers Index includes fewer securities and is more straightforward to
monitor on a daily basis. For comparison purposes, both indices are shown
on page 4.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED JANUARY 31, FROM SEPTEMBER
ENDED 28, 1990 TO
JULY 31,
1995 1995 1994 1993 1992 JANUARY 31, 1991
</TABLE>
Dividend return 3.59% 4.13% 7.14% 7.69% 7.15% 1.01%
Capital appreciation 9.39% -16.58% 9.63% 6.24% 5.82% 10.38%
return
Total return 12.98% -12.45% 16.77% 13.93% 12.97% 11.39%
DIVIDEND returns and capital appreciation returns are both part of a bond
fund's total return. A dividend return reflects the actual dividends paid
by the fund. A capital appreciation return reflects both the amount paid by
the fund to shareholders as capital gain distributions and changes in the
fund's share price. Both returns assume the dividends or gains are
reinvested. Capital appreciation and total returns include the effect of
the $5 account closeout fee on an average sized account.
DIVIDENDS AND YIELD
PERIODS ENDED JULY 31, 1995 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share - 36.00(cents) 58.00(cents)
Annualized dividend rate - 6.52% 5.41%
30-day annualized yield 6.30% - -
DIVIDENDS per share show the income paid by the fund for a set period and
do not reflect any tax reclassifications. If you annualize this number,
based on an average share price of $11.17 over the past six months and
$10.73 over the past year, you can compare the fund's income over these two
periods. The 30-day annualized YIELD is a standard formula for all funds
based on the yields of the bonds in the fund, averaged over the past 30
days. This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you compare funds from
different companies on an equal basis.
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Curt Hollingsworth, Portfolio Manager of Spartan
Long-Term Government Bond Fund
Q. CURT, HOW HAS THE FUND PERFORMED?
A. For the six months ended July 31, 1995, the fund had a total return of
12.98%, compared to 8.04% for the average general U.S. government bond fund
tracked by Lipper Analytical Services, and 13.15% for the Salomon Brothers
Treasury/Agency 10+ Year Index. For the 12 months ended July 31, 1995, the
fund returned 13.38%, compared to 8.48% for the average general U.S.
government bond fund, and 13.87% for the Salomon Brothers index.
Q. WHAT IS MEANT BY TOTAL RETURN?
A. Risk and return are two of the most important aspects of an investment's
performance. When it comes to measuring return, in my opinion total return
is the best figure to look at. Instead of merely watching a fund's share
price - and assuming, for example, that they've lost 5% of their money if
the share price is down 5% over a year - investors are beginning to realize
that they need to take into account the monthly dividends they receive that
offset much of the price decline. Interest income is the main source of
return for a bond fund over the long term. Fortunately, total return is
easy to explain by using a "dollars in, dollars out" example. If someone
invested $100 in this bond fund a year ago and reinvested all dividends and
capital gains, then the investment would be worth $113.38 today. That is
what is meant by a cumulative total return of 13.38%.
Q. WHAT HELPED THE FUND PERFORM
BETTER THAN THE AVERAGE FUND?
A. The funds included in Lipper's U.S. government bond fund category have
an average duration that is much shorter than the duration of this fund.
Duration is a measure of a fund's sensitivity to changes in interest rates.
The longer the duration, the more sensitive a fund is to interest rate
changes. Since many of the funds in the Lipper category aren't focused on
longer-term bonds, their average duration is around five years. However,
this fund, with its long-term focus, has a duration closer to 10 years.
That means the fund is about twice as interest rate-sensitive as many of
the funds it is compared to.
Q. AND INTEREST RATES FELL OVER THE PERIOD?
A. Right. The bond market rallied during the past six months - with yields
falling and prices rising - as it became apparent that the economy was
slowing. Bond investors often perceive a slower economy to be a positive
backdrop, because it usually is an environment in which inflation does not
threaten to erode the value of a bond's fixed-income payments. Looking at
the long end of the yield curve - where you find bonds with 10- to 30-year
maturities - rates dropped as well, but not as much as they did in the one-
to 10-year range. As a result, at the end of July, the yield spread between
10-year and 30-year Treasuries had widened to 0.42% from 0.12% on January
31, 1995. That suggests there was good value in longer-term securities at
the end of the period. An investor was being paid more for assuming the
greater price volatility of longer-term bonds.
Q. HOW ARE YOU POSITIONING THE FUND?
A. The fund continues to be invested in Treasury securities. Most of the
fund's investments are bulleted, or focused, on the highest yielding part
of the yield curve, currently in the 20- to 25-year range. These
investments have benefited the fund in two ways. First, it's intuitively
appealing to own the highest yielding available Treasury issues. Second, if
the yield curve changes shape, it most likely will reshape in such a way
that other issues will increase in yield - and drop in price - to come
closer to these issues. If that happens, the fund should benefit. This part
of the curve will shift at some point, and in a few months perhaps bonds
with maturities a few months shorter or longer will become the highest
yielding issues. When that happens, I'll most likely swap the fund's
investments into those new high-yielding issues.
Q. WHAT ABOUT INVESTMENTS WITH MATURITIES LONGER THAN 25 YEARS?
A. I've underweighted this area, because it typically trades rich, or high
in price in terms of historical levels. In particular, I've not invested in
what are known as "current" 30-year Treasury bonds. These are bonds that
have been on the market for no more than three months. These current bonds
typically trade at lower yields - and higher prices - than 30-year bonds
that have been on the market longer. That's because they're more easily
tradable, making bond traders - who earn money simply by buying and selling
securities - more willing to pay a premium for them. Over the past several
years, as current long bonds have become older, the yields they offer have
grown and their prices have fallen.
Q. WHAT DO YOU SEE LOOKING OUT OVER THE NEXT SIX MONTHS?
A. It's very difficult to predict the direction of interest rates. As a
result, I don't intend to actively manage the fund's duration in
anticipation of interest rate changes. Instead, I will try to manage the
fund so that it will have approximately the same duration as the Salomon
Brothers Treasury/Agency 10+ Year Index. Duration is an estimate of how
sensitive the fund's share price is to a change in comparable interest
rates. Over the next six months, I may add some more bonds to the fund, in
particular long-term federal agency issues. By doing so, I hope to add a
little extra yield to the fund.
NOTE TO SHAREHOLDERS:
On October 1, 1995, Robert Ives will become portfolio manager of Spartan
Long-Term Government Bond Fund. He also manages the Fidelity Advisor
Government Investment, Fidelity Government Securities and Fidelity Advisor
Annuity Government Investment funds - which he has managed since February
1995 - and Spartan Government Income Fund, which he has managed since 1993.
Mr. Ives previously managed Fidelity Mortgage Securities Portfolio,
Fidelity Ginnie Mae Portfolio and Spartan Ginnie Mae Fund. He joined
Fidelity in 1991.
FUND FACTS
GOAL: to provide income
and growth of capital by
investing mainly in securities
issued and guaranteed by
the U.S. government or its
agencies while maintaining
an average maturity of at
least 10 years
START DATE: September
28,1990
SIZE: as of July 31, 1995,
more than $73 million
MANAGER: Curt
Hollingsworth, since 1993;
manager Spartan Limited
Maturity Government Bond
Fund, since 1988; Spartan
Short-Intermediate Government
Fund, since 1992; Fidelity
Short-Intermediate Government
Fund, since 1991;
Fidelity Institutional
Short-Intermediate
Government Portfolio, since
1987; joined Fidelity in 1983
(checkmark)
CURT HOLLINGSWORTH ON
INVESTING IN A LONG-TERM BOND
FUND:
"At the end of July,
shareholders were being
rewarded more for investing
further out on the yield curve
than they were six months ago.
On July 31, 1995, someone
investing in a 30-year Treasury
bond received a 0.42% yield
advantage over someone
investing in a 10-year Treasury
bond. On January 31, 1995,
that yield advantage was only
0.12%.
"At the same time, it's
important to stress that this
fund can have more volatility
than shorter-term bond funds.
The fund has a duration of
about 10 years. That means
- - other things being equal -
if rates rose 1%, the fund's
share price would probably
drop approximately 10%.
"It's crucial for investors in this
fund to have a longer-term
investing horizon. Investors
with a long-term horizon
actually may be exposed to a
different type of risk in a
shorter-term fund -
reinvestment risk, which is the
risk that an investor may not
be able to reinvest short-term
returns at attractive rates.
"This is a long-term
government bond fund. As a
result, its share price is
especially sensitive to interest
rate changes. Investors in the
fund should be clear about
that, and should invest in the
fund for the long haul."
INVESTMENT CHANGES
TOP ISSUERS AS OF JULY 31, 1995
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS 6 MONTHS AGO
U.S. Treasury 99.5 98.1
Tennessee Valley Authority 0.0 0.9
(U.S. Government Agency)
EXCLUDING REPURCHASE AGREEMENTS.
AVERAGE YEARS TO MATURITY AS OF JULY 31, 1995
6 MONTHS AGO
Years 23.5 22.2
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF JULY 31, 1995
6 MONTHS AGO
Years 10.3 9.7
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
ASSET ALLOCATION
AS OF JULY 31, 1995 AS OF JANUARY 31, 1995
Row: 1, Col: 1, Value: 3.0
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 47.0
Row: 1, Col: 4, Value: 40.0
Row: 1, Col: 1, Value: 3.0
Row: 1, Col: 2, Value: 2.0
Row: 1, Col: 3, Value: 45.0
Row: 1, Col: 4, Value: 40.0
U.S. Treasury
obligations 99.5%
U.S. government
agency obligations 0.0%
Short-term
investments 0.5%
U.S. Treasury
obligations 98.1%
U.S. government
agency obligations 0.9%
Short-term
investments 1.0%
INVESTMENTS JULY 31, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
U.S. TREASURY OBLIGATIONS - 99.5%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
12 3/4%, 11/15/10 $3,400,000 $4,936,358
9%, 11/15/18 3,000,000 3,709,680
8 3/4%, 8/15/20 46,025,000 55,783,681
12%, 8/15/23 4,700,000 6,810,582
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $67,248,126) 71,240,301
REPURCHASE AGREEMENTS - 0.5%
MATURITY
AMOUNT
Investments in repurchase agreements $364,059 364,000
(U.S. Treasury obligations), in a
joint trading account at 5.82%
dated 7/31/95 due 8/1/95
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $67,612,126) $ 71,604,301
INCOME TAX INFORMATION
At July 31, 1995, the aggregate cost of investment securities for income
tax purposes was $67,612,126. Net unrealized appreciation aggregated
$3,992,175, of which $4,100,633 related to appreciated investment
securities and $108,458 related to depreciated investment securities.
At January 31, 1995, the fund had a capital loss carryforward of
approximately $3,935,000 which will expire on January 31, 2003.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 71,604,301
agreements of $364,000) (cost $67,612,126) - See
accompanying schedule
Cash 578
Interest receivable 2,252,551
TOTAL ASSETS 73,857,430
LIABILITIES
Payable for fund shares redeemed $ 472,733
Distributions payable 278
Accrued management fee 41,506
TOTAL LIABILITIES 514,517
NET ASSETS $ 73,342,913
Net Assets consist of:
Paid in capital $ 71,018,225
Undistributed net investment income 625,968
Accumulated undistributed net realized gain (loss) (2,296,258)
on investments
Net unrealized appreciation (depreciation) on 3,994,978
investments
NET ASSETS, for 6,367,020 shares outstanding $ 73,342,913
NET ASSET VALUE, offering price and redemption price per $11.52
share ($73,342,913 (divided by) 6,367,020 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JULY 31, 1995 (UNAUDITED)
INVESTMENT INCOME $ 2,843,337
Interest
EXPENSES
Management fee $ 244,657
Non-interested trustees' compensation 188
Interest 3,595
TOTAL EXPENSES 248,440
NET INVESTMENT INCOME 2,594,897
REALIZED AND UNREALIZED GAIN (LOSS) 1,890,728
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on 4,373,702
investment securities
NET GAIN (LOSS) 6,264,430
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 8,859,327
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED JANUARY 31,
JULY 31,1995 1995
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 2,594,897 $ 3,750,291
Net investment income
Net realized gain (loss) 1,890,728 (4,829,840)
Change in net unrealized appreciation (depreciation) 4,373,702 (6,957,059)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 8,859,327 (8,036,608)
FROM OPERATIONS
Distributions to shareholders (2,536,892) (3,025,880)
From net investment income
From net realized gain - (538,147)
TOTAL DISTRIBUTIONS (2,536,892) (3,564,027)
Share transactions 80,964,620 165,444,920
Net proceeds from sales of shares
Reinvestment of distributions 2,400,228 3,354,463
Cost of shares redeemed (93,825,570) (147,021,095)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (10,460,722) 21,778,288
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS (4,138,287) 10,177,653
NET ASSETS
Beginning of period 77,481,200 67,303,547
End of period (including undistributed net investment $ 73,342,913 $ 77,481,200
income of $625,968 and $567,963, respectively)
OTHER INFORMATION
Shares
Sold 7,132,808 15,527,302
Issued in reinvestment of distributions 217,349 311,436
Redeemed (8,341,230) (13,764,302)
Net increase (decrease) (991,073) 2,074,436
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED JANUARY 31, SEPTEMBER 28,
ENDED 1990
JULY 31, 1995 (COMMENCEMENT
OF
OPERATIONS) TO
JANUARY 31,
(UNAUDITED) 1995 1994 C 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 10.530 $ 12.740 $ 12.130 $ 11.600 $ 11.040 $ 10.000
beginning of
period
Income from .381 D .513 .847 .847 .776 .144
Investment
Operations
Net investment
income
Net realized and .969 (2.093) 1.123 .703 .604 .996
unrealized
gain (loss)
Total from 1.350 (1.580) 1.970 1.550 1.380 1.140
investment
operations
Less Distributions (.360) (.530) (.840) (.840) (.740) (.100)
From net invest-
ment income
From net real- - (.100) (.520) (.180) (.080) -
ized gain on
investments
Total distributions (.360) (.630) (1.360) (1.020) (.820) (.100)
Net asset value, $ 11.520 $ 10.530 $ 12.740 $ 12.130 $ 11.600 $ 11.040
end of period
TOTAL RETURN B 12.99% (12.44) 16.79% 13.95% 12.98 11.41%
% %
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 73,343 $ 77,481 $ 67,304 $ 83,009 $ 62,992 $ 33,833
period (000
omitted)
Ratio of expenses .66% .65% .65% .65% .65 .65%
to average net A, E % A
assets
Ratio of net invest- 6.91% A 5.95% 6.41% 7.35% 7.30 7.26%
ment income to % A
average net
assets
Portfolio turnover 364% A 422% 153% 135% 335 256%
rate % 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 EFFECTIVE FEBRUARY 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, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
D INCLUDES INTEREST EXPENSE OF $.001 PER SHARE.
E INCLUDES INTEREST EXPENSE OF .01% OF AVERAGE NET ASSETS.
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1995 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Long-Term Government Bond Fund (the fund) is a fund of Fidelity
Devonshire 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 of their purchase date 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 substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
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 recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for paydown
gains/losses on certain securities, market discount, foreign currency
transactions 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 and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments 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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other affiliated
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint trading accounts. These
balances are invested in one or more repurchase agreements that mature in
60 days or less from the date of purchase, and are collateralized by U.S.
Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying U.S. Treasury or Federal Agency Securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and maintained at a value at least equal to the
repurchase price. The fund's investment adviser, FMR, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of long-term U.S. government and government agency
obligations aggregated $132,710,438 and $141,460,107, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the 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 the fund's average net assets.
FMR also bears the cost of providing shareholder services to the fund. To
offset the cost of providing these services, FMR or its affiliates collect
certain transaction fees from the fund's shareholders which amounted to
$3,377 for the period.
5. 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 $2,218,000 and $1,434,286,
respectively. The weighted average interest rate was 6.45%.
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call -
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios(registered trademark).
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and send
you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Curtis Hollingsworth, Vice President
Fred L. Henning, Jr., Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
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
Bank of New York
New York, NY
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)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)SPARTAN(registered trademark)
GOVERNMENT INCOME
FUND
ANNUAL REPORT
APRIL 30, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 15 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 19 Notes to the financial statements.
REPORT OF INDEPENDENT 21 The auditors' 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. 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. NEITHER THE FUND NOR FIDELITY
DISTRIBUTORS
CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING
CHARGES
AND EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU
INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although there have been some positive market indications so far in 1995,
no one can predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving for a college education, enables you to weather these ups and
downs in a long-term fund, which has higher potential returns. An
intermediate-length fund could be appropriate if your investment horizon is
two to four years, and a short-term bond fund could be the right choice if
you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells bonds
that have grown in value), and the effect of the $5 account closeout fee.
You can also look at the fund's income to measure performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan Government Income 7.31% 50.91% 71.52%
Lehman Brothers Government Bond Index 6.51% 55.76% n/a
Salomon Brothers Treasury/Agency Index 6.50% 55.80% n/a
Average General U.S. Government Bond Fund 5.32% 48.78% n/a
Consumer Price Index 3.05% 17.84% 26.06%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years or since the fund
started on December 20, 1988. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the
Lehman Brothers Government Bond Index and the Salomon Brothers
Treasury/Agency Index - both broad measures of the performance of U.S.
government bonds. To measure how the fund's performance stacked up against
its peers, you can compare it to the average general U.S. government bond
fund, which reflects the performance of 153 funds with similar objectives
tracked by Lipper Analytical Services over the past 12 months. This
benchmark includes reinvested dividends and capital gains, if any.
Comparing the fund's performance to the consumer price index (CPI) helps
show how your fund did compared to inflation. (The CPI returns begin on the
month end closest to the fund's start date.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan Government Income 7.31% 8.58% 8.85%
Lehman Brothers Government Bond Index 6.51% 9.27% n/a
Salomon Brothers Treasury/Agency Index 6.50% 9.27% n/a
Average General U.S. Government Bond Fund 5.32% 8.25% n/a
Consumer Price Index 3.05% 3.34% 3.72%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
Spartan GovernmeGovernment Bond
12/31/88 10000.00 10000.00
01/31/89 10175.40 10127.14
02/28/89 10097.77 10044.69
03/31/89 10104.09 10106.16
04/30/89 10313.81 10322.92
05/31/89 10606.34 10566.35
06/30/89 10945.27 10918.90
07/31/89 11196.69 11149.49
08/31/89 10999.20 10961.86
09/30/89 11064.30 11009.01
10/31/89 11349.29 11293.91
11/30/89 11477.31 11403.28
12/31/89 11522.54 11422.54
01/31/90 11374.73 11260.83
02/28/90 11423.41 11283.30
03/31/90 11432.64 11280.83
04/30/90 11290.09 11181.34
05/31/90 11644.07 11493.15
06/30/90 11829.42 11675.10
07/31/90 12017.07 11824.47
08/31/90 11838.33 11659.80
09/30/90 11934.42 11771.63
10/31/90 12100.99 11963.96
11/30/90 12373.82 12229.11
12/31/90 12578.79 12418.22
01/31/91 12724.51 12551.54
02/28/91 12819.09 12623.38
03/31/91 12879.74 12687.57
04/30/91 13014.50 12826.81
05/31/91 13078.93 12876.68
06/30/91 13080.97 12858.41
07/31/91 13251.78 13010.99
08/31/91 13535.40 13312.68
09/30/91 13808.89 13591.90
10/31/91 13957.31 13710.90
11/30/91 14056.63 13848.41
12/31/91 14478.80 14320.21
01/31/92 14300.44 14097.27
02/29/92 14396.78 14152.33
03/31/92 14350.80 14069.62
04/30/92 14452.94 14158.25
05/31/92 14693.76 14419.45
06/30/92 14881.81 14626.10
07/31/92 15120.92 14994.69
08/31/92 15198.56 15134.43
09/30/92 15326.05 15348.48
10/31/92 15148.12 15127.02
11/30/92 15271.77 15100.85
12/31/92 15509.68 15355.14
01/31/93 15678.93 15681.27
02/28/93 15894.54 15995.31
03/31/93 15936.86 16048.88
04/30/93 16060.21 16172.32
05/31/93 16126.32 16154.55
06/30/93 16393.84 16513.02
07/31/93 16488.93 16613.75
08/31/93 16709.99 16984.57
09/30/93 16688.52 17049.50
10/31/93 16720.05 17113.94
11/30/93 16522.77 16926.31
12/31/93 16648.04 16991.73
01/31/94 16896.90 17224.29
02/28/94 16548.51 16859.65
03/31/94 16104.32 16480.43
04/30/94 15876.72 16350.82
05/31/94 15892.04 16329.84
06/30/94 15850.88 16292.31
07/31/94 16166.61 16591.78
08/31/94 16192.41 16594.99
09/30/94 15955.73 16361.19
10/31/94 15947.78 16348.85
11/30/94 15923.80 16318.97
12/31/94 16050.98 16418.22
01/31/95 16365.69 16723.86
02/28/95 16727.36 17083.82
03/31/95 16810.08 17190.96
04/28/95 17039.29 17415.63
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan
Government Income Fund on December 31, 1988, shortly after the fund
started. As the chart shows, by April 30, 1995, the value of your
investment would have grown to $17,039 - a 70.39% increase on your initial
investment. This assumes you still owned the fund on April 30, 1995, and
therefore does not include the effect of the $5 account closeout fee. For
comparison, look at how the Salomon Brothers Treasury/Agency Index did over
the same period. With dividends reinvested, the same $10,000 investment
would have grown to $17,433 - a 74.33% increase. Beginning with this report
the fund will compare its performance to the Salomon Brothers
Treasury/Agency Index rather than the Lehman Brothers Government Bond
Index. Although the difference in performance between the indexes is small,
the Salomon Brothers Treasury/Agency Index includes fewer securities and is
more straightforward to monitor on a daily basis. For comparison purposes,
both indexes are shown on Performance: The Bottom Line, Page 4.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield of
a fund that invests in bonds
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
YEARS ENDED APRIL 30,
1995 1994 1993 1992 1991
Dividend return 7.82% 5.09% 6.81% 8.22% 9.19%
Capital appreciation return -0.51 -6.24% 4.30% 2.82% 6.07%
%
Total return 7.31% -1.15% 11.11% 11.04% 15.26%
DIVIDEND returns and capital appreciation returns are both part of a bond
fund's total return. A dividend return reflects the actual dividends paid
by the fund. A capital appreciation return reflects both the amount paid by
the fund to shareholders as capital gain distributions and changes in the
fund's share price. Both returns assume the dividends or gains are
reinvested. Capital appreciation and total returns include the effect of
the $5 account closeout fee on an average sized account.
DIVIDENDS AND YIELD
PERIODS ENDED APRIL 30, 1995 PAST PAST 6 PAST
MONTH MONTHS YEAR
Dividends per share 5.46(cents) 41.87(cents) 74.46(cents)
Annualized dividend rate 6.68% 8.66% 7.58%
30-day annualized yield 6.51% - -
DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $9.94 over
the past month, $9.75 over the past six months and $9.82 over the past
year, you can compare the fund's income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
A rally starting in mid-November
1994 helped resuscitate the U.S.
bond market, which had been
reeling from several months of
sharply rising interest rates. For
the 12 months ended April 30,
1995, the Lehman Brothers
Aggregate Bond Index - a broad
measure of U.S. taxable bonds -
had a total return of 6.51%. During
the period, the Federal Reserve
Board raised the federal funds
rate - the rate banks charge
each other for overnight loans -
to 6.00%. From March 1994
through October 1994, these
actions, combined with a
strengthening economy,
sparked inflation fears, leading to
a sharp sell-off in the bond
markets. However, from
November 1994 through April
1995 prices in the taxable bond
market rebounded. Investors
gained confidence that the
economy was beginning to slow -
reducing the risk of inflation -
and that the Fed may have been
nearing the end of its interest-rate
increases. Outside of the U.S.,
interest rates in many foreign
markets moved higher - and
prices lower - through 1994,
before rebounding with the U.S.
market during the first four
months of 1995.
An interview with Robert Ives,
Portfolio Manager of Spartan
Government Income Fund
Q. BOB, HOW DID THE FUND PERFORM?
A. Despite a volatile interest rate environment, the fund came through the
past 12 months in relatively good shape. For the year ended April 30, 1995,
the fund had a total return of 7.31%. That topped the average U.S.
government bond fund, which returned 5.32% for the same period, as tracked
by Lipper Analytical Services, and the Salomon Brothers Treasury/Agency
Index, which returned 6.50% for the period.
Q. WHY DID THE FUND DO BETTER THAN THE AVERAGE?
A. I kept the fund's duration - which is a measure of how sensitive its
share price is to changes in interest rates - in line with the bond market
as a whole throughout the year. Essentially what it boils down to is that I
don't make bets on the direction of interest rates. Many other funds of
this type do, and may have been caught by surprise when interest rates
started rising in early 1994 and again when bond yields peaked later in the
year. In my view, it's very difficult to predict where interest rates are
headed. Going forward I'll be measuring the fund's performance more closely
against the Salomon Brothers Treasury/Agency Index, and as a result, will
tend to match the fund's duration with that of the Index. So I'll try to
add value by picking the most attractive sectors and individual issues
within those sectors.
Q. CAN YOU GIVE US AN EXAMPLE?
A. Sure. In general, agency issues have been attractive relative to U.S.
Treasury securities over the past several months. That's because agency
issues offered higher yields than U.S. Treasury securities with similar
maturities. This yield advantage is known as a yield spread. Recently, the
yield spread diminished somewhat. So agency issues added capital
appreciation as well as additional yield to the fund's total return. Within
the agency sector, I focused on AID Israel bonds, issued by the Agency for
International Development, and Guaranteed Export Trust bonds, which are
used to help U.S. exporters. Both types are backed by the full faith and
credit of the United States and as such, carry the same credit rating as
U.S. Treasuries.
Q. THE FUND'S STAKE IN U.S. TREASURY SECURITIES HAS BEEN STEADILY RISING
OVER THE PAST SIX MONTHS. WHAT'S THE REASONING BEHIND THAT MOVE?
A. In the beginning of 1995, the bond market rallied and the yield spread
between U.S. Treasuries and mortgage-backed securities narrowed. As that
occurred, the prices of many mortgage securities rose. I sold many of the
fund's mortgage securities at a profit, and put the proceeds in Treasuries.
Q. WHAT TYPES OF MORTGAGE SECURITIES DO YOU STILL FAVOR?
A. Of the roughly 19% of the fund invested in mortgage-backed securities
at the end of the period, about half were in seasoned mortgages, which
contain mortgage securities that have been outstanding for 10 years or
more. Homeowners who hold these mortgages have had several opportunities to
refinance, but so far haven't done so. For that reason, fewer of the loans
underlying these bonds are likely to be "prepaid," or have their principal
returned to investors before the bonds' maturity dates. Mortgage securities
containing loans that are less likely to prepay early can earn a higher
total return. Seasoned mortgage securities are attractive because they also
offer a yield advantage over U.S. Treasury securities. PAC bonds - planned
amortization class bonds - were another type of mortgage security I favored
during various times during the period. PACs can be difficult to understand
and in 1994 the market overestimated what impact slowing prepayments would
have on them. I bought these bonds at a time when I thought they were
priced inexpensively relative to their value, and they added not only
additional yield to the fund, but capital appreciation as well.
Q. IN HINDSIGHT, DO YOU HAVE ANY REGRETS?
A. Determining when a particular sector is at its exact peak or bottom is
difficult - if not impossible. That said, my timing moving in and out of
sectors didn't always work out exactly as I had anticipated.
Q. CAN THE BOND MARKET CONTINUE ITS RECENT STRONG PERFORMANCE?
A. In my view, it's unclear where the economy goes from here - into a
recession or back to growing at a moderate pace. Consumers drive about
two-thirds of the economy. Their spending has slowed, and what consumers do
going forward will have very important implications for the economy. I'll
be watching economic data over the coming months, trying to see if the
economy is moving one way or the other. That said, it may be difficult for
the bond market going forward to match the returns we've seen so far this
year.
FUND FACTS
GOAL: high current income
by investing mainly in
securities of any maturity
issued or guaranteed by the
U.S. government and its
agencies
START DATE: December 20,
1988
SIZE: as of April 30, 1995,
more than $239 million
MANAGER: Robert Ives, since
1993; manager, Fidelity
Advisor Government
Investment and Fidelity
Advisor Annuity Government
Investment, and Fidelity
Government Securities funds
since February 1995; Fidelity
Mortgage Securities
Portfolio, January 1993 -
August 1993; Fidelity Ginnie
Mae Portfolio, 1993 -
February 1995; Spartan
Ginnie Mae Fund, 1993 -
February 1995; joined Fidelity
in 1991
(checkmark)
ROBERT IVES ON HIS INVESTMENT
PHILOSOPHY:
"I generally don't position the
fund to take advantage of
rising or falling interest rates.
Instead, I keep the fund's
duration - a measure of how
sensitive the fund's share
price is to changes in interest
rates - in line with the bond
market in general. In my view,
finding sectors - and
individual issues within those
sectors - that offer the best
value is the most prudent way
to achieve total return. With
this strategy I try to buy
securities when they are
inexpensive - based on what
I believe to be their actual
value - before the market
comes to the same
conclusion. I look for
opportunities with good
risk/reward trade-offs -
those situations where I feel
there is a combination of low
risk and higher potential for
gain. I also seek to diversify
my investments, so that the
fund's performance is not
overly dependent on the
performance of a particular
type or class of security."
DISTRIBUTIONS
A total of 39.02% of the
dividends distributed during
the fiscal year was derived
from interest on U.S.
government securities that is
generally exempt from state
income tax.
The fund will notify
shareholders in January 1996
of the applicable percentage
for use in preparing 1995
income tax returns.
INVESTMENT CHANGES
COUPON DISTRIBUTION AS OF APRIL 30, 1995
APRIL 30, 1995
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
6 MONTHS AGO
Under 6 % 19.5 0.4
6 - 6.99% 8.8 15.8
7 - 7.99% 8.3 19.6
8 - 8.99% 29.8 19.6
9 - 9.99% 22.1 16.3
10 - 10.99% 2.0 6.9
11 - 11.99% 1.5 1.3
12 - 12.99% 5.4 13.5
13% and over 0.5 0.5
Zero Coupon Bonds 0.2 3.5
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, 1995
APRIL 30, 1995
6 MONTHS AGO
Years 9.3 10.3
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF APRIL 30, 1995
APRIL 30, 1995
6 MONTHS AGO
Years 4.7 5.3
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
ASSET ALLOCATION
APRIL 30, 1995
AS OF APRIL 30, 1995 AS OF OCTOBER 31, 1994
Row: 1, Col: 1, Value: 1.9
Row: 1, Col: 2, Value: 14.9
Row: 1, Col: 3, Value: 64.3
Row: 1, Col: 4, Value: 18.9
Mortgage-backed
securities 35.9%**
U.S. government
and government
agency
obligations 48.2%
CMO's and other
mortgage related
securities 13.3%
Other 2.6%
GNMA SECURITIES 12.4%
Mortgage-backed
securities 18.9%*
U.S. government
and government
agency
obligations 64.3%
CMO's and other
mortgage related
securities 14.9%
Other 1.9%
GNMA SECURITIES 1.1%
Row: 1, Col: 1, Value: 2.6
Row: 1, Col: 2, Value: 13.3
Row: 1, Col: 3, Value: 48.2
Row: 1, Col: 4, Value: 35.9
*
**
INVESTMENTS APRIL 30, 1995
Showing Percentage of Total Value of Investment in Securities
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 64.3%
APRIL 30, 1995
U.S. TREASURY OBLIGATIONS - 46.8%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
8%, 10/15/96 $16,607,000 $16,952,093
4 3/8%, 11/15/96 18,240,000 17,672,918
7 1/4%, 11/30/96 6,285,000 6,350,804
5 3/8%, 5/31/98 7,100,000 6,827,076
6 1/4%, 2/15/03 830,000 790,318
9%, 11/15/18 23,470,000 27,390,194
8 7/8%, 2/15/19 15,000,000 17,310,900
8 1/8%, 8/15/19 6,505,000 6,965,424
12%, 8/15/23 7,200,000 10,013,616
110,273,343
U.S. GOVERNMENT AGENCY OBLIGATIONS - 17.5%
<TABLE>
<CAPTION>
<S> <C> <C>
Federal Home Loan Bank:
7.59%, 12/23/96 270,000 273,670
4.55%, 8/3/98 (callable) 2,500,000 2,364,000
5.92%, 3/18/99 450,000 433,476
Federal Home Loan Mortgage
Corp. 6.47%, 7/7/97 430,000 426,842
Federal National Mortgage Association:
5.24%, 7/15/98 4,870,000 4,617,369
4.70%, 9/10/98 590,000 548,654
4.94%, 10/30/98 600,000 560,625
0%, 11/30/99 606,000 438,435
Government Trust Certificates (assets of Trust guaranteed by
U.S. government through Defense Security Assistance
Agency):
Class 1-C, 9 1/4%, 11/15/01 2,825,000 3,032,553
Class T-2, 9 5/8%, 5/15/02 2,330,000 2,517,868
Government Trust Certificates, (assets of Trust guaranteed by
U.S. Government through Export-Import Bank):
Series 1992-A, 7.02%, 9/1/04 845,500 838,292
Series 1994-F, 8.178%,
12/15/04 13,810,673 14,254,189
Private Export Funding
Corp. 5.65%, 3/15/03 280,000 264,765
State of Israel (guaranteed by U.S. Government through
Agency for International Development)
4 7/8%, 9/15/98 1,060,000 993,088
8%, 11/15/01 6,000,000 6,220,440
</TABLE>
6 1/8%, 3/15/03 1,200,000 1,116,750
8 1/2%, 4/1/06 780,000 828,750
Student Loan Marketing
Association 8.14%, 10/15/03 650,000 678,361
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
APRIL 30, 1995
PRINCIPAL VALUE
AMOUNT (NOTE 1)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
Tennessee Valley Authority
8 1/4%, 11/15/96 $570,000 $582,648
Twelve Federal Land Banks
7.95%, 10/21/96 290,000 295,075
41,285,850
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $149,953,369) 151,559,193
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 18.9%
APRIL 30, 1995
FEDERAL HOME LOAN MORTGAGE CORPORATION - 13.5%
6 1/2%, 5/1/08 1,157,296 1,109,188
7 1/2%, 6/1/07 892,776 881,385
8%, 2/1/17 to 3/1/17 1,536,674 1,528,944
8 1/2%, 7/1/08 to 11/1/19 2,481,446 2,523,972
9%, 8/1/08 to 4/1/20 2,484,929 2,564,169
9 1/2%, 6/1/09 to 8/1/24 14,719,735 15,294,224
10%, 3/1/10 to 8/1/21 4,338,165 4,649,154
10 1/2%, 10/1/15 to 1/1/16 146,169 156,687
12%, 9/1/03 to 12/1/15 243,275 264,393
12 1/4%, 3/1/11 to 11/1/15 679,274 736,835
12 1/2%, 2/1/14 to 6/1/19 1,330,808 1,471,196
13%, 12/1/97 to 6/1/16 532,983 591,356
13 1/2%, 10/1/11 1,175 1,323
31,772,826
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 4.3%
6 1/2%, 1/1/24 960 887
7%, 11/1/06 568,431 554,954
7.778%, 7/1/01 5,000,000 5,075,000
8 1/4%, 12/1/01 1,994,737 2,062,059
11%, 8/1/10 1,096,596 1,189,104
11 1/4%, 5/1/14 489,152 529,566
12 1/2%, 3/1/16 156,323 173,518
13%, 9/1/13 100,873 112,978
13 1/2%, 5/1/11 to 11/1/14 317,216 356,868
10,054,934
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 1.1%
7 1/2%, 3/15/17 to 6/15/23 941,864 930,617
8 1/2%, 1/15/06 to 7/15/08 261,824 272,539
9 1/2%, 6/15/09 to 11/15/09 1,167,550 1,239,031
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - CONTINUED
APRIL 30, 1995
PRINCIPAL VALUE
AMOUNT (NOTE 1)
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - CONTINUED
10%, 1/15/16 $5,851 $6,320
11%, 4/15/13 to 6/15/13 73,919 81,495
11 1/2%, 4/15/10 to 4/15/13 97,597 108,576
13 1/2%, 7/15/11 96,286 109,044
2,747,622
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $44,606,556) 44,575,382
COLLATERALIZED MORTGAGE OBLIGATIONS - 13.1%
APRIL 30, 1995
PRIVATE SPONSOR - 0.2%
DLJ Acceptance Trust planned
amortization class, 416,415 448,426
Series 1989, Class 1-F, 11%, 8/1/19
U.S. GOVERNMENT AGENCY - 12.9%
<TABLE>
<CAPTION>
<S> <C> <C>
Federal Home Loan Mortgage Corporation:
planned amortization class:
Series 1417-C, 5 3/8%, 6/15/01 1,250,000 1,227,539
Series 1485-C, 5%, 9/15/01 1,800,000 1,737,844
Series 1475-D, 5.85%, 10/15/02 2,000,000 1,931,875
Series 1515-D, 6%, 9/15/05 4,000,000 3,795,625
Series 1380-K, 6 3/4%, 10/15/07 2,500,000 2,378,125
sequential pay Series 1353
Class A, 5 1/2%, 11/15/04 202,095 193,000
Federal National Mortgage Association:
planned amortization class:
Series 1992, Class 155-D,
6.20%, 11/25/01 500,000 486,328
Series 1992, Class 193-D,
5 3/4%, 12/25/01 3,900,000 3,753,750
Series 1992, Class 151-E,
6%, 5/25/04 6,155,000 5,919,379
Series 1993, Class 18-PC,
5 1/2%, 3/25/01 2,065,000 2,023,377
Series 1993-28, Class PD,
5 1/4%, 10/25/01 1,000,000 970,000
Z Bond Series 1987-2,
11%, 11/25/17 1,126,336 1,223,834
U.S. Department of Veteran's Affairs Vendee Mortgage Trust
sequential pay Series 1993-3,
Class 2-E, 6%, 11/15/16 5,500,000 4,713,672
30,354,348
</TABLE>
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $30,827,564) 30,802,774
COMMERCIAL MORTGAGE SECURITIES - 1.8%
APRIL 30, 1995
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<TABLE>
<CAPTION>
<S> <C> <C>
Federal National Mortgage Association commercial
Series 1994-M3, Class A,
7.71%, 4/1/06
(Cost $4,201,485) $4,272,244 $4,310,293
</TABLE>
REPURCHASE AGREEMENTS - 1.9%
APRIL 30, 1995
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.93%, dated
4/28/95 due 5/1/95 $4,459,203 4,457,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $234,045,974) $235,704,642
INCOME TAX INFORMATION
At April 30, 1995, the aggregate cost of investment securities for income
tax purposes was $234,326,783. Net unrealized appreciation aggregated
$1,377,859, of which $2,820,397 related to appreciated investment
securities and $1,442,538 related to depreciated investment securities.
At April 30, 1995, the fund had a capital loss carryforward of
approximately $13,235,000 all of which will expire on April 30, 2003.
The fund has elected to defer to its fiscal year ending April 30, 1996
$5,411,453 of losses recognized during the period November 1, 1994 to April
30, 1995.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1995
ASSETS
Investment in securities, at value (including repurchase $ 235,704,642
agreements of $4,457,000) (cost $234,045,974) -
See accompanying schedule
Cash 851
Receivable for investments sold 474,069
Interest receivable 4,113,181
TOTAL ASSETS 240,292,743
LIABILITIES
Payable for fund shares redeemed $ 55,927
Distributions payable 207,990
Accrued management fee 129,730
TOTAL LIABILITIES 393,647
NET ASSETS $ 239,899,096
Net Assets consist of:
Paid in capital $ 258,371,102
Distributions in excess of net investment income (1,315,256)
Accumulated undistributed net realized gain (loss) on (18,815,418)
investments
Net unrealized appreciation (depreciation) on 1,658,668
investments
NET ASSETS, for 24,120,697 shares outstanding $ 239,899,096
NET ASSET VALUE, offering price and redemption price per $9.95
share ($239,899,096 (divided by) 24,120,697 shares)
</TABLE>
STATEMENT OF OPERATIONS
APRIL 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED APRIL 30, 1995
INVESTMENT INCOME $ 20,153,570
Interest
EXPENSES
Management fee $ 1,638,449
Non-interested trustees' compensation 1,265
TOTAL EXPENSES 1,639,714
NET INVESTMENT INCOME 18,513,856
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (12,943,294)
Futures contracts (79,969) (13,023,263)
Change in net unrealized appreciation (depreciation) on:
Investment securities 11,319,515
Delayed delivery commitments (175,910) 11,143,605
NET GAIN (LOSS) (1,879,658)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 16,634,198
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
APRIL 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1995 1994
INCREASE (DECREASE) IN NET ASSETS
Operations $ 18,513,856 $ 26,977,562
Net investment income
Net realized gain (loss) (13,023,263) (6,693,220)
Change in net unrealized appreciation (depreciation) 11,143,605 (18,819,747)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 16,634,198 1,464,595
FROM OPERATIONS
Distributions to shareholders (17,802,636) (21,081,236)
From net investment income
In excess of net investment income (1,156,874) -
From net realized gain - (3,856,086)
In excess of net realized gain - (6,127,536)
TOTAL DISTRIBUTIONS (18,959,510) (31,064,858)
Share transactions 36,150,573 76,411,385
Net proceeds from sales of shares
Reinvestment of distributions 15,816,845 26,884,876
Cost of shares redeemed (96,396,776) (244,767,610)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (44,429,358) (141,471,349)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS (46,754,670) (171,071,612)
NET ASSETS
Beginning of period 286,653,766 457,725,378
End of period (including under (over) distribution of net $ 239,899,096 $ 286,653,766
investment income of $(1,315,256) and $1,429,535,
respectively)
OTHER INFORMATION
Shares
Sold 3,685,770 7,048,083
Issued in reinvestment of distributions 1,612,595 2,500,119
Redeemed (9,835,808) (22,782,018)
Net increase (decrease) (4,537,443) (13,233,816)
</TABLE>
FINANCIAL HIGHLIGHTS
APRIL 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED APRIL 30,
1995 1994 1993 1992 1991
SELECTED PER-SHARE DATA
Net asset value, beginning $ 10.000 $ 10.930 $ 10.900 $ 10.640 $ 10.030
of period
Income from Investment .640 .624 .784 .846 .870
Operations
Net investment income
Net realized and unrealized .055 C (.720) .370 .294 .610
gain (loss)
Total from investment .695 (.096) 1.154 1.140 1.480
operations
Less Distributions (.700) (.574) (.704) (.840) (.870)
From net investment income
In excess of net investment (.045) - - - -
income
From net realized gain - (.100) (.420) (.040) -
on investments
In excess of net realized gain - (.160) - - -
on investments
Total distributions (.745) (.834) (1.124) (.880) (.870)
Net asset value, end of period $ 9.950 $ 10.000 $ 10.930 $ 10.900 $ 10.640
TOTAL RETURN A, B 7.32 (1.14) 11.12 11.05 15.27
% % % % %
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 240 $ 287 $ 458 $ 483 $ 430
(in millions)
Ratio of expenses to average .65 .65 .65 .65 .53
net assets % % % % %
Ratio of expenses to average net .65 .65 .65 .65 .65
assets before expense % % % % %
reductions
Ratio of net investment income 7.34 6.79 7.11 7.77 8.35
to average net assets % % % % %
Portfolio turnover rate 303 354 170 59 96
% % % % %
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE.
C 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, 1995
1. 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 of their purchase date 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, which may result in distribution
reclassifications, are primarily due to differing treatments for paydown
gains/losses on certain securities, futures and options transactions,
market discount, and losses deferred due to wash sales, and excise tax
regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Distributions in excess of net investment
income and accumulated undistributed net realized gain (loss) on
investments may include temporary book and tax basis differences that will
reverse in a subsequent period. Any taxable income or gain remaining at
fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with other
affiliated entities of Fidelity Management & Research Company (FMR), may
transfer uninvested cash balances into one or more joint trading accounts.
These balances are invested in one or more repurchase agreements that
mature in 60 days or less from the date of purchase, and are collateralized
by U.S. Treasury or Federal Agency obligations.
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. FMR, the fund's
investment adviser, is responsible for determining that the value of these
underlying securities remains at least equal to the resale price.
FUTURES CONTRACTS AND OPTIONS.
The fund may use futures and options contracts to manage its exposure to
the bond market and to fluctuations in interest rates. Buying futures,
writing puts, and buying calls tend to increase the fund's exposure to the
underlying instrument. Selling futures, buying puts, and writing calls tend
to decrease the fund's exposure to the underlying instrument, or hedge
other fund investments. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparties do not perform under the contracts'
terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options are valued using the last sale price or, in the absence of a sale,
the last offering price. Options traded over-the-counter are valued using
dealer-supplied valuations.
3. PURCHASES AND SALES
OF INVESTMENTS.
Purchases and sales of long-term U.S. government and government agency
obligations aggregated $734,429,175 and $774,722,763, respectively.
The market value of futures contracts opened and closed during the period
amounted to $7,426,109 and $7,346,141, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the 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 the fund's average net assets.
FMR also bears the cost of providing shareholder services to the fund. To
offset the cost of providing these services, FMR or its affiliates collect
certain transaction fees from the fund's shareholders which amounted to
$9,480 for the period.
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, 1995, 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, 1995 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, 1995, 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 L.L.P.
Boston, Massachusetts
June 8, 1995
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call -
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios(registered trademark).
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and send
you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Arthur S. Loring, Secretary
Stephen P. Jonas, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
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
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)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)SPARTAN(registered trademark)
GOVERNMENT INCOME
FUND
SEMIANNUAL REPORT
OCTOBER 31, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 16 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 20 Notes to the financial statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although the markets have been fairly positive this year, no one can
predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving for a college education, enables you to weather these ups and
downs in a long-term fund, which has higher potential returns. An
intermediate-length fund could be appropriate if your investment horizon is
two to four years, and a short-term bond fund could be the right choice if
you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. A fund's total
return includes changes in a fund's share price, reinvestment of any
dividends (or income) and capital gains (the profits the fund earns when it
sells bonds that have grown in value), and the effect of the $5 account
closeout fee on an average sized account. You can also look at the fund's
income to measure performance. If Fidelity had not reimbursed certain fund
expenses, the past five years and life of fund total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1995 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Spartan Government Income 8.22% 15.63% 52.39% 85.64%
Salomon Brothers Treasury/Agency Index 8.34% 15.45% 57.76% n/a
Average General U.S. Government Bond 7.78% 14.70% 51.19% n/a
Fund
Consumer Price Index 1.18% 2.81% 15.13% 27.55%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years or since
the fund started on December 20, 1988. For example, if you invested $1,000
in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the Salomon Brothers Treasury/Agency Index - a broad measure
of the performance of U.S. government bonds. To measure how the fund's
performance stacked up against its peers, you can compare it to the average
general U.S. government bond fund, which reflects the performance of 185
funds with similar objectives tracked by Lipper Analytical Services over
the past six months. This benchmark includes reinvested dividends and
capital gains, if any. Comparing the fund's performance to the consumer
price index (CPI) helps show how your fund did compared to inflation. (The
CPI returns begin on the month end closest to the fund's start date.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan Government Income 15.63% 8.79% 9.43%
Salomon Brothers Treasury/Agency Index 15.45% 9.55% n/a
Average General U.S. Government Bond Fund 14.70% 8.59% n/a
Consumer Price Index 2.81% 2.86% 3.62%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
Spartan GovernmenSalomon Brothers T
12/31/88 10000.00 10000.00
01/31/89 10175.40 10134.27
02/28/89 10097.78 10056.19
03/31/89 10104.09 10115.66
04/30/89 10313.82 10305.03
05/31/89 10606.35 10567.01
06/30/89 10945.29 10924.95
07/31/89 11196.70 11152.26
08/31/89 10999.20 10963.62
09/30/89 11064.30 11013.97
10/31/89 11349.30 11300.03
11/30/89 11477.32 11406.57
12/31/89 11522.54 11423.72
01/31/90 11374.73 11266.46
02/28/90 11423.41 11275.95
03/31/90 11432.64 11287.26
04/30/90 11290.09 11192.03
05/31/90 11644.08 11492.68
06/30/90 11829.42 11675.85
07/31/90 12017.08 11830.92
08/31/90 11838.33 11659.79
09/30/90 11934.42 11782.76
10/31/90 12100.99 11976.14
11/30/90 12373.83 12233.01
12/31/90 12578.78 12426.75
01/31/91 12724.51 12558.47
02/28/91 12819.09 12611.74
03/31/91 12879.73 12680.70
04/30/91 13014.49 12831.76
05/31/91 13078.93 12876.64
06/30/91 13080.97 12868.25
07/31/91 13251.79 13030.61
08/31/91 13535.40 13320.68
09/30/91 13808.89 13608.93
10/31/91 13957.32 13714.01
11/30/91 14056.63 13856.68
12/31/91 14478.81 14332.10
01/31/92 14300.45 14110.26
02/29/92 14396.79 14166.82
03/31/92 14350.80 14081.44
04/30/92 14452.94 14182.14
05/31/92 14693.76 14428.80
06/30/92 14881.82 14638.60
07/31/92 15120.94 15001.64
08/31/92 15198.57 15155.62
09/30/92 15326.07 15365.05
10/31/92 15148.13 15142.12
11/30/92 15271.79 15114.39
12/31/92 15509.70 15369.80
01/31/93 15678.96 15714.60
02/28/93 15894.57 16021.09
03/31/93 15936.89 16064.14
04/30/93 16060.25 16202.07
05/31/93 16126.36 16177.62
06/30/93 16393.88 16540.66
07/31/93 16488.97 16642.46
08/31/93 16710.04 17012.44
09/30/93 16688.57 17087.61
10/31/93 16720.09 17132.85
11/30/93 16522.81 16944.58
12/31/93 16648.09 17020.10
01/31/94 16896.96 17253.99
02/28/94 16548.56 16894.95
03/31/94 16104.37 16501.62
04/30/94 15876.77 16374.65
05/31/94 15892.09 16358.96
06/30/94 15850.93 16325.39
07/31/94 16166.65 16610.36
08/31/94 16192.46 16614.73
09/30/94 15955.78 16381.95
10/31/94 15947.83 16365.53
11/30/94 15923.85 16329.40
12/31/94 16051.03 16441.78
01/31/95 16365.74 16763.97
02/28/95 16727.41 17115.34
03/31/95 16810.12 17217.13
04/30/95 17039.33 17438.98
05/31/95 17682.39 18154.12
06/30/95 17826.75 18291.68
07/31/95 17766.76 18228.19
08/31/95 17969.09 18436.53
09/30/95 18151.91 18602.91
10/31/95 18436.89 18892.98
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan
Government Income Fund on December 31, 1988, shortly after the fund
started. As the chart shows, by October 31, 1995, the value of your
investment would have grown to $18,442 - an 84.42% increase on your initial
investment. This assumes you still owned the fund on October 31, 1995, and
therefore does not include the effect of the $5 account closeout fee on an
average sized account. For comparison, look at how the Salomon Brothers
Treasury/Agency Index did over the same period. With dividends reinvested,
the same $10,000 investment would have grown to $18,893 - an 88.93%
increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield of
a fund that invests in bonds
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
SIX MONTHS YEARS ENDED APRIL 30,
ENDED
OCTOBER 31,
1995 1995 1994 1993 1992 1991
Dividend return 3.41% 7.82% 5.09% 6.81% 8.22% 9.19%
Capital appreciation 4.81% -0.51% -6.24% 4.30% 2.82% 6.07%
return
Total return 8.22% 7.31% -1.15% 11.11% 11.04% 15.26%
DIVIDEND returns and capital appreciation returns are both part of a bond
fund's total return. A dividend return reflects the actual dividends paid
by the fund. A capital appreciation return reflects both the amount paid by
the fund to shareholders as capital gain distributions and changes in the
fund's share price. Both returns assume the dividends or gains are
reinvested. Capital appreciation and total returns include the effect of
the $5 account closeout fee on an average sized account.
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1995 PAST PAST 6 PAST
MONTH MONTHS YEAR
Dividends per share 5.49(cents) 33.03(cents) 74.90(cents)
Annualized dividend rate 6.22% 6.38% 7.48%
30-day annualized yield 5.84% - -
DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $10.39 over
the past month, $10.27 over the past six months and $10.01 over the past
year, you can compare the fund's income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis.
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Robert Ives, Portfolio Manager of Spartan Government
Income Fund
Q. SO, BOB, HOW DID THE FUND DO DURING THE SEMIANNUAL PERIOD?
A. Pretty well. For the six-month period ended October 31, 1995, the fund
had a total return of 8.22%. That topped the average U.S. government bond
fund, which returned 7.78% for the same period, as tracked by Lipper
Analytical Services. The fund's benchmark, the Salomon Brothers
Treasury/Agency Index, returned 8.34% for the period.
Q. IT APPEARS THE BOND MARKET CONTINUED TO PERFORM WELL . . .
A. Yes, it certainly did. Economic growth has slowed noticeably as 1995 has
progressed. This slowing of growth caused the bond market to rally as
inflation fears, which are sparked by signs of growth, waned. That caused a
general drop in interest rates, particularly in the longer maturity bonds
of the yield curve. In fact, the yield curve has flattened dramatically.
Q. WHAT AREAS OF THE BOND MARKET HELPED THE FUND THE MOST?
A. The chief reason for the very strong performance of the fund was its
position in U.S. Treasury bonds. In a bond rally, the greatest price
appreciation usually comes from the bonds with the longer maturities.
Therefore, the fund's Treasury holdings with maturities of 10 years or more
tended to help the most. The fund's holdings in
U.S. government agencies - such as Fannie Mae - performed well in the
period, as did most collateralized mortgage obligations or CMOs held by the
fund.
Q. WHAT INVESTMENTS DOES THE FUND HOLD IN THE CMO MARKET?
A. Planned amortization class bonds, or PACs, which are a class of CMOs.
PACs are known for the greater predictability of their cash flow relative
to the more common mortgage pass-through security. In the mortgage-backed
securities market, investors fear prepayment risk, or the possibility that
these securities' underlying pool of mortgages will be paid off early and
force bond holders to invest at less attractive rates. Because of certain
financial characteristics, PACs tend to lessen these risks. Earlier this
year, I bought these securities because their yields were much greater than
Treasury note yields. Today, I'm reducing the fund's position in PACs
because they have performed well relative to Treasuries and are not likely
to continue to do so.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Sure. While some PAC bonds performed well during the period, most
mortgage pass-through securities did not perform as well as Treasury
securities.
Q. WHAT ARE PASS-THROUGH SECURITIES, AND WHY DID THEY UNDERPERFORM
TREASURIES?
A. Mortgage pass-through securities - such as Ginnie Maes - represent
pooled mortgages whose principal and interest payments are "passed-through"
by Ginnie Mae to investors. As discussed before, when interest rates fall,
investors in mortgage-related securities fear increases in the prepayment
rates of the securities' underlying mortgages. Over the fund's reporting
period, increasing prepayment fears caused the prices of mortgage
pass-throughs to lag Treasury bonds.
Q. EARLIER, YOU DISCUSSED PREPAYMENT RISK. DO YOU ANTICIPATE LOWERING THE
FUND'S EXPOSURE TO MORTGAGE-BACKED SECURITIES BECAUSE OF PREPAYMENT RISKS?
A. If anything, I would consider adding to the fund's mortgage position. In
the past few months, mortgage securities have become even more attractive
as prepayment fears have been priced into the market and made mortgages
cheap relative to Treasuries. Should fears escalate, it could signal a
buying opportunity. That said, there are ways that I've attempted to limit
prepayment risk while still owning mortgage securities.
Q. SPECIFICALLY, HOW HAVE YOU DONE THAT?
A. I've done this by owning shorter duration CMOs and higher-coupon
seasoned mortgages - or those containing mortgage securities that have been
outstanding for 10 years or more. Fewer of these securities are likely to
have their mortgages paid off early.
Q. HOW IS THE FUND CURRENTLY STRUCTURED?
A. The fund currently has large positions in mortgage-backed securities,
U.S. government agencies and CMOs. In general, over the past few months
mortgage securities have come to offer a significant yield advantage over
Treasuries. During that time, rising prepayment fears have been priced in
the mortgage-related markets - thus making them cheap relative to
Treasuries. Additionally, the fund's duration - or its price sensitivity to
a given change in interest rates - is approximately that of the overall
market.
Q. WHAT'S YOUR MARKET OUTLOOK, BOB?
A. I think the most important thing in the next few months is the budget
situation in Washington. If the White House and Congress can make some
headway, I think it will be very positive for the bond market and it might
lead the Federal Reserve to ease short-term interest rates. That said,
however, it is unlikely investors will see the same stellar performance in
the bond market next year as we have seen in 1995.
FUND FACTS
GOAL: high current income
by investing mainly in
securities of any maturity
issued or guaranteed by the
U.S. government and its
agencies
START DATE: December 20,
1988
SIZE: as of October 31, 1995,
more than $245 million
MANAGER: Robert Ives, since
1993; manager, Fidelity
Advisor Government
Investment and Fidelity
Advisor Annuity Government
Investment, and Fidelity
Government Securities funds
since February 1995; Fidelity
Mortgage Securities Portfolio,
January 1993-August 1993;
Fidelity Ginnie Mae Portfolio,
1993-February 1995; Spartan
Ginnie Mae Fund,
1993-February 1995; joined
Fidelity in 1991
(checkmark)
ROBERT IVES ON MANAGING RISK
IN THE MORTGAGE-BACKED
SECURITIES MARKET:
"Managing mortgage-backed
securities presents a variety of
challenges. Like other
fixed-income securities, they
are affected by inflation fears
and tend to perform poorly in
rising interest rate
environments. An additional
feature of mortgage securities
is that, because they represent
a pool of home mortgages,
their value is greatly influenced
by the payment patterns of the
people holding the underlying
mortgages. If interest rates fall
far enough, mortgage owners
will be encouraged to refinance
their debt. If the underlying
mortgages of a
mortgage-backed security are
paid off early, investors are
forced to reinvest their money
at lower rates.
"I manage prepayment risk by
trying to identify mortgage
securities that have relatively
low prepayment risk. These
can include generic
pass-throughs - or pooled
mortgages whose income is
passed through an
intermediary to investors -
CMOs, PACs and seasoned
mortgages. These securities
offer a limited amount of
prepayment protection while
still capturing much of the
additional yield that the
mortgage market offers."
INVESTMENT CHANGES
COUPON DISTRIBUTION AS OF OCTOBER 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Under 5% 2.5 9.4
5 - 5.99% 7.7 10.1
6 - 6.99% 10.6 8.8
7 - 7.99% 6.1 8.3
8 - 8.99% 30.4 29.8
9 - 9.99% 24.3 22.1
10 - 10.99% 1.8 2.0
11 - 11.99% 5.3 1.5
12 - 12.99% 9.9 5.4
13% and over 0.4 0.5
Zero Coupon Bonds 0.2 0.2
COUPON DISTRIBUTION SHOWS THE RANGE OF STATED INTEREST RATES ON THE FUND'S
INVESTMENTS, EXCLUDING REPURCHASE AGREEMENTS.
AVERAGE YEARS TO MATURITY AS OF OCTOBER 31, 1995
6 MONTHS AGO
Years 9.6 9.3
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF OCTOBER 31, 1995
6 MONTHS AGO
Years 5.0 4.7
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
ASSET ALLOCATION
AS OF OCTOBER 31, 1995 AS OF APRIL 30, 1995
Mortgage-backed
securities 14.6%*
U.S. government and
government agency
obligations 76.3%
CMOs and other
mortgage related
securities 8.3%
Short-term
investments 0.8%
Mortgage-backed
securities 18.9%**
U.S. government and
government agency
obligations 64.3%
CMOs and other
mortgage related
securities 14.9%
Short-term
investments 1.9%
Row: 1, Col: 1, Value: 2.8
Row: 1, Col: 2, Value: 8.300000000000001
Row: 1, Col: 3, Value: 74.3
Row: 1, Col: 4, Value: 14.6
Row: 1, Col: 1, Value: 2.9
Row: 1, Col: 2, Value: 14.9
Row: 1, Col: 3, Value: 64.3
Row: 1, Col: 4, Value: 17.9
* GNMA SECURITIES 0.7%
** GNMA SECURITIES 1.1%
INVESTMENTS OCTOBER 31, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 76.3%
<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL VALUE (NOTE 1)
AMOUNT
U.S. TREASURY OBLIGATIONS - 52.1%
8%, 10/15/96 $11,907,000 $12,165,620
4 3/8%, 11/15/96 4,340,000 4,287,095
7 1/4%, 11/15/96 860,000 873,975
8 1/2%, 5/15/97 11,949,000 12,449,305
9 1/4%, 8/15/98 3,580,000 3,902,200
5 1/8%, 12/31/98 1,965,000 1,931,226
7 3/4%, 12/31/99 5,600,000 5,996,368
11 7/8%, 11/15/03 3,595,000 4,922,885
11 3/4%, 2/15/10 4,080,000 5,694,782
12 3/4%, 11/15/10 7,290,000 10,857,507
9%, 11/15/18 23,470,000 30,653,932
8 7/8%, 2/15/19 15,000,000 19,382,850
8 1/8%, 8/15/19 2,205,000 2,654,269
12%, 8/15/23 7,200,000 10,801,152
126,573,166
U.S. GOVERNMENT AGENCY OBLIGATIONS - 24.2%
Federal Agricultural Mortgage Corp. 700,000 737,429
7.01%, 2/10/05
Federal Farm Credit Bank: 6.56%, 8/5/02 455,000 464,555
6.20%, 9/23/02 650,000 650,910
6.40%, 10/3/02 200,000 202,400
Federal Home Loan Bank:
4.78%, 2/10/97 (callable) 310,000 305,713
5.40%, 8/3/98 (callable) (a) 2,500,000 2,461,750
5.92%, 3/18/99 450,000 449,861
6.37%, 6/30/03 310,000 312,870
Federal National Mortgage Association: 6.52%, 9/15/97 11,000,000 11,143,946
3%, 7/13/98 (a) 450,000 456,258
0%, 11/30/99 606,000 474,195
7.40%, 7/1/04 230,000 245,939
Government Trust Certificates (assets of the Trust 532,184 541,801
guaranteed by U.S. Government through Defense
Security Assistance Agency): Class 3-B, 8.55%, 11/15/97
Class 1-C, 9 1/4%, 11/15/01 2,983,000 3,281,837
Class 2-E, 9.40%, 5/15/02 190,000 209,897
Class T-2, 9 5/8%, 5/15/02 2,621,000 2,894,580
</TABLE>
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL VALUE (NOTE 1)
AMOUNT
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
Government Trust Certificates (assets of Trust
guaranteed by U.S. Government through Export-Import
Bank):
Series 1994-C, 6.610%, 9/15/99 $147,496 $149,253
Series 1995-A, 6.28%, 6/15/04 870,000 871,044
Series 1992-A, 7.02%, 9/1/04 801,000 825,629
Series 1994-F, 8.178%, 12/15/04 13,051,907 13,943,666
Private Export Funding Corp.:
secured notes, Series CC, 9 1/2%, 3/31/99 260,000 287,539
5 3/4%, 4/30/98 515,000 513,209
6.90%, 1/31/03 90,000 93,366
5.65%, 3/15/03 667,500 658,489
8 3/4%, 6/30/03 880,000 1,011,484
5.80%, 2/1/04 120,000 117,540
6.86%, 4/30/04 294,300 300,489
State of Israel (guaranteed by U.S. Government through
Agency for International Development):
5 1/4%, 3/15/98 410,000 405,002
4 7/8%, 9/15/98 1,060,000 1,033,500
5 3/4%, 3/15/00 690,000 682,672
8%, 11/15/01 6,190,000 6,753,909
6 1/4%, 8/15/02 2,170,000 2,185,722
6 1/8%, 3/15/03 1,200,000 1,193,256
8 1/2%, 4/1/06 1,590,000 1,784,282
Student Loan Marketing Association:
7.56%, 12/9/96 200,000 203,719
8.14%, 10/15/03 650,000 717,641
Twelve Federal Land Banks 7.95%, 10/21/96 290,000 295,800
58,861,152
TOTAL U.S. GOVERNMENT AND 185,434,318
GOVERNMENT AGENCY OBLIGATIONS
(Cost $176,665,028)
</TABLE>
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 14.6%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 10.6%
<TABLE>
<CAPTION>
<S> <C> <C>
6 1/2%, 5/1/08 1,087,111 1,078,957
7 1/2%, 6/1/07 815,564 836,760
9%, 8/1/08 to 4/1/20 2,337,822 2,468,277
9 1/2%, 6/1/09 to 8/1/24 13,425,017 14,227,808
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
FEDERAL HOME LOAN MORTGAGE CORPORATION -
CONTINUED
10%, 7/1/09 to 2/1/21 $3,782,815 $4,123,334
10 1/2%, 10/1/15 to 1/1/16 142,211 155,538
12%, 9/1/03 to 12/1/15 213,327 240,130
12 1/4%, 3/1/11 to 7/1/14 625,924 704,703
12 1/2%, 2/1/14 to 6/1/19 1,176,156 1,352,342
13%, 8/1/10 to 6/1/15 454,831 528,171
13 1/2%, 10/1/11 1,165 1,376
25,717,396
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 3.3%
6.345%, 3/1/99 1,797,815 1,807,366
6 1/2%, 2/1/10 to 1/1/24 1,290,757 1,289,118
7%, 11/1/06 518,544 525,820
8 1/4%, 12/1/01 1,986,523 2,125,580
11%, 8/1/10 993,517 1,105,496
11 1/4%, 5/1/14 416,369 463,922
12 1/2%, 3/1/16 139,607 161,813
13%, 9/1/13 92,793 108,654
13 1/2%, 5/1/11 to 1/1/15 266,591 314,756
7,902,525
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 0.7%
8 1/2%, 1/15/06 to 7/15/08 243,139 255,813
9 1/2%, 6/15/09 to 11/15/09 1,094,879 1,183,277
10%, 1/15/16 4,729 5,185
11%, 4/15/13 to 6/15/13 67,169 75,280
11 1/2%, 4/15/10 to 4/15/13 96,507 109,278
13 1/2%, 7/15/11 86,559 103,357
1,732,190
TOTAL U.S. GOVERNMENT AGENCY - 35,352,111
MORTGAGE-BACKED SECURITIES
(Cost $34,626,303)
COLLATERALIZED MORTGAGE OBLIGATIONS - 8.3%
PRIVATE SPONSOR - 0.2%
DLJ Acceptance Trust planned amortization class, Series 369,666 405,709
1989, Class 1-F, 11%, 8/1/19
COLLATERALIZED MORTGAGE OBLIGATIONS - CONTINUED
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL VALUE (NOTE 1)
AMOUNT
U.S. GOVERNMENT AGENCY - 8.1%
Federal Home Loan Mortgage Corporation: planned
amortization class:
Series 1417-C, 5 3/8%, 6/15/01 $1,242,300 $1,233,371
Series 1485-C, 5%, 9/15/01 1,800,000 1,772,719
Series 1515-D, 6%, 9/15/05 4,000,000 3,940,000
sequential pay Series 1353, Class A, 5 1/2%, 11/15/04 177,959 174,789
Series 1993: Class 72-B, 5%, 1/25/02 1,372,308 1,354,715
Class 135-PC, 5 1/2%, 7/25/02 1,970,000 1,940,450
Federal National Mortgage Association: planned
amortization class:
Series 1992, Class 193-D, 5 3/4%, 12/25/01 3,900,000 3,875,625
Series 1993-28, Class PD, 5 1/4%, 10/25/01 1,000,000 988,438
Series 1994-M3, Class A, 7.71%, 4/1/06 4,237,581 4,383,248
19,663,355
TOTAL COLLATERALIZED MORTGAGE 20,069,064
OBLIGATIONS
(Cost $19,243,185)
</TABLE>
REPURCHASE AGREEMENTS - 0.8%
<TABLE>
<CAPTION>
<S> <C> <C>
MATURITY
AMOUNT
Investments in repurchase agreement, (U.S. Treasury $2,056,336 $2,056,000
obligations) in a joint trading account at 5.88%, dated
10/31/95 due 11/1/95
TOTAL INVESTMENT IN SECURITIES - 100% $242,911,493
(Cost $232,590,516)
</TABLE>
LEGEND
1. Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
INCOME TAX INFORMATION
At October 31, 1995, the aggregate cost of investment securities for income
tax purposes was $232,702,524. Net unrealized appreciation aggregated
$10,208,969, of which $10,484,325 related to appreciated investment
securities and $275,356 related to depreciated investment securities.
At April 30, 1995, the fund had a capital loss carryforward of
approximately $13,235,000 all of which will expire on April 30, 2003.
The fund has elected to defer to its fiscal year ending April 30, 1996
approximately $5,412,000 of losses recognized during the period November 1,
1994 to April 30, 1995.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 242,911,493
agreements of $2,056,000) (cost $232,590,516) -
See accompanying schedule
Cash 182,834
Receivable for investments sold 9,850,967
Interest receivable 4,906,998
TOTAL ASSETS 257,852,292
LIABILITIES
Payable for investments purchased $ 11,850,779
Distributions payable 208,262
Accrued management fee 132,272
TOTAL LIABILITIES 12,191,313
NET ASSETS $ 245,660,979
Net Assets consist of:
Paid in capital $ 252,691,679
Distributions in excess of net investment income (1,191,845)
Accumulated undistributed net realized gain (loss) (16,159,832)
on investments
Net unrealized appreciation (depreciation) on 10,320,977
investments
NET ASSETS, for 23,561,908 shares outstanding $ 245,660,979
NET ASSET VALUE, offering price and redemption price per $10.43
share ($245,660,979 (divided by) 23,561,908 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED OCTOBER 31, 1995 (UNAUDITED)
INVESTMENT INCOME $ 8,749,186
Interest
EXPENSES
Management fee $ 790,276
Non-interested trustees' compensation 545
TOTAL EXPENSES 790,821
NET INVESTMENT INCOME 7,958,365
REALIZED AND UNREALIZED GAIN (LOSS) 2,655,586
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on 8,662,309
investment securities
NET GAIN (LOSS) 11,317,895
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 19,276,260
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED APRIL 30,
OCTOBER 31,1995 1995
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 7,958,365 $ 18,513,856
Net investment income
Net realized gain (loss) 2,655,586 (13,023,263)
Change in net unrealized appreciation (depreciation) 8,662,309 11,143,605
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 19,276,260 16,634,198
FROM OPERATIONS
Distributions to shareholders (7,834,954) (17,802,636)
From net investment income
In excess of net investment income - (1,156,874)
TOTAL DISTRIBUTIONS (7,834,954) (18,959,510)
Share transactions 19,280,881 36,150,573
Net proceeds from sales of shares
Reinvestment of distributions 6,550,945 15,816,845
Cost of shares redeemed (31,511,249) (96,396,776)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (5,679,423) (44,429,358)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 5,761,883 (46,754,670)
NET ASSETS
Beginning of period 239,899,096 286,653,766
End of period (including distributions in excess $ 245,660,979 $ 239,899,096
of net investment income of $(1,191,845) and
$(1,315,256), respectively)
OTHER INFORMATION
Shares
Sold 1,873,447 3,685,770
Issued in reinvestment of distributions 636,074 1,612,595
Redeemed (3,068,310) (9,835,808)
Net increase (decrease) (558,789) (4,537,443)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED APRIL 30,
ENDED
OCTOBER 31, 1995
(UNAUDITED) 1995 1994 E 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE
DATA
Net asset value, $ 9.950 $ 10.000 $ 10.930 $ 10.900 $ 10.640 $ 10.030
beginning of period
Income from .334 .640 .624 .784 .846 .870
Investment
Operations
Net investment
income
Net realized and .476 .055 D (.720) .370 .294 .610
unrealized gain
(loss)
Total from investment .810 .695 (.096) 1.154 1.140 1.480
operations
Less Distributions (.330) (.700) (.574) (.704) (.840) (.870)
From net investment
income
In excess of net - (.045) - - - -
investment income
From net realized gain - - (.100) (.420) (.040) -
In excess of net - - (.160) - - -
realized gain
Total distributions (.330) (.745) (.834) (1.124) (.880) (.870)
Net asset value, end $ 10.430 $ 9.950 $ 10.000 $ 10.930 $ 10.900 $ 10.640
of period
TOTAL RETURN B, C 8.23% 7.32% (1.14) 11.12% 11.05% 15.27%
%
RATIOS AND
SUPPLEMENTAL DATA
Net assets, end of $ 245,661 $ 239,899 $ 286,654 $ 457,725 $ 482,837 $ 430,443
period (000 omitted)
Ratio of expenses to .65% .65% .65% .65% .65% .53%
average net assets A F
Ratio of net investment 6.51% 7.34% 6.79% 7.11% 7.77% 8.35%
income to average A
net assets
Portfolio turnover rate 138% 303% 354% 170% 59% 96%
A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D 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.
E 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, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
F FMR VOLUNTARILY AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1995 (Unaudited)
1. 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 of their purchase date 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 substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
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 generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for paydown
gains/losses on certain securities, futures and options transactions,
market discount and losses deferred due to wash sales and excise tax
regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Distributions in excess of net investment
income and accumulated undistributed net realized gain (loss) on
investments may include temporary book and tax basis differences that will
reverse in a subsequent period. Any taxable income or gain remaining at
fiscal year end is distributed in the following year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other affiliated
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint trading accounts. These
balances are invested in one or more repurchase agreements that mature in
60 days or less from the date of purchase, and are collateralized by U.S.
Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying U.S. Treasury or Federal Agency Securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and maintained at a value at least equal to the
repurchase price. FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of long-term U.S. government and government agency
obligations aggregated $165,316,313 and $167,039,628, respectively.
4. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the 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 the fund's average net assets.
FMR also bears the cost of providing shareholder services to the fund. To
offset the cost of providing these services, FMR or its affiliates collect
certain transaction fees from the fund's shareholders which amounted to
$2,517 for the period.
5. PROPOSED REORGANIZATION.
The Board of Trustees of the Fidelity Fixed-Income Trust has approved an
Agreement and Plan of Reorganization and Liquidation ("Agreement") between
the fund and Spartan Long-Term Government Bond Fund ("Reorganization"). The
Agreement provides for the transfer of substantially all of the assets and
the assumption of substantially all of the liabilities of Spartan Long-Term
Government Bond Fund in exchange solely for
5. PROPOSED REORGANIZATION - CONTINUED
the number of shares of the fund having the same aggregate net asset value
as the outstanding shares of Spartan Long-Term Government Bond Fund at the
close of business on the day the Reorganization is effective. The
Reorganization can be consummated only if, among other things, it is
approved by the vote of a majority (as defined by the Investment Company
Act of 1940) of outstanding voting securities of Spartan Long-Term
Government Bond Fund. A Special Meeting of Shareholders (Meeting) of
Spartan Long-Term Government Bond Fund will be held on May 7, 1996 to
approve the Agreement. If the Agreement is approved at the Meeting, the
Reorganization is expected to become effective on or about May 31, 1996.
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call -
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios(registered trademark).
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr., Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
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
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)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
Spartan Government Income Fund
Spartan Long-Term Government Bond Fund
Pro Forma Combining Statement of Operations
Year Ended October 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Government Long-Term Pro Forma Pro Forma
Income Government Combined Adjustments Combined
Interest Income $18,180,782 $5,696,930 $23,877,712 $ $23,877,712
Expenses
Management fee 1,563,795 488,940 2,052,735 (153,910)B 1,898,825
Non-interested trustees' compensation 1,027 323 1,350 1,350
Interest expense 0 3,595 3,595 3,595
Total expenses before reductions 1,564,822 492,858 2,057,680 (153,910) 1,903,770
Net investment income 16,615,960 5,204,072 21,820,032 153,910 21,973,942
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investment securities (1,380,363) 2,258,676 878,313 878,313
Foreign currency transactions 0 (59,415) (59,415) (59,415)
Futures contracts (79,969) 0 (79,969) (79,969)
Change in net unrealized apprecation
(depreciation) on:
Investment securities 19,747,641 10,595,963 30,343,604 30,343,604
Futures contracts 30,734 0 30,734 30,734
Delayed delivery commitments (18,725) 0 (18,725) (18,725)
Net Gain (Loss) 18,299,318 12,795,224 31,094,542 0 31,094,542
Net increase in net assets resulting
from operations $34,915,278 $17,999,296 $52,914,574 $153,910 $53,068,484
</TABLE>
See accompanying notes to Pro Forma Combining Financial Statements
Spartan Government Income Fund and
Spartan Long-Term Government Bond Fund
Pro Forma Combining Schedule of Investments October 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Principal Value
Amount
Government Long-Term Government Long-Term
Income Government Combined Income Government Combined
U.S. Government &
Government Agency
Obligations
U.S. Treasury Obligations
8%, 10/15/96 $11,907,000 $ 0 $11,907,000 $12,165,620 $ 0 $12,165,620
4 3/8%, 11/15/96 4,340,000 0 4,340,000 4,287,095 0 4,287,095
7 1/4%, 11/15/96 860,000 0 860,000 873,975 0 873,975
8 1/2%, 5/15/97 11,949,000 0 11,949,000 12,449,305 0 12,449,305
9 1/4%, 8/15/98 3,580,000 0 3,580,000 3,902,200 0 3,902,200
5 1/8%, 12/31/98 1,965,000 0 1,965,000 1,931,226 0 1,931,226
7 3/4%, 12/31/99 5,600,000 0 5,600,000 5,996,368 0 5,996,368
11 7/8%, 11/15/03 3,595,000 0 3,595,000 4,922,885 0 4,922,885
11 3/4%, 2/15/10 4,080,000 3,560,000 7,640,000 5,694,782 4,968,977 10,663,759
12 3/4%, 11/15/10 7,290,000 110,000 7,400,000 10,857,507 163,831 11,021,338
9%, 11/15/18 23,470,000 1,495,000 24,965,000 30,653,932 1,952,605 32,606,537
8 7/8%, 2/15/19 15,000,000 0 15,000,000 19,382,850 0 19,382,850
8 1/8%, 8/15/19 2,205,000 0 2,205,000 2,654,269 0 2,654,269
8 3/4%, 8/15/20 0 58,290,000 58,290,000 0 74,802,391 74,802,391
12%, 8/15/23 7,200,000 4,700,000 11,900,000 10,801,152 7,050,752 17,851,904
126,573,166 88,938,556 215,511,722
U.S. Government Agency
Obligations
Federal Agricultural
Mortgage Corp. 7.01%, 700,000 0 700,000 737,429 0 737,429
2/10/05
Federal Farm Credit Bank:
6.56%, 8/5/02 455,000 0 455,000 464,555 0 464,555
6.20%, 9/23/02 650,000 0 650,000 650,910 0 650,910
6.40%, 10/3/02 200,000 0 200,000 202,400 0 202,400
Federal Home Loan Bank:
4.78%, 2/10/97 (callable) 310,000 0 310,000 305,713 0 305,713
5.40%, 8/3/98 (callable) 2,500,000 0 2,500,000 2,461,750 0 2,461,750
5.92%, 3/18/99 450,000 0 450,000 449,861 0 449,861
6.37%, 6/30/03 310,000 0 310,000 312,870 0 312,870
Federal National Mortgage
Association:
6.52%, 9/15/97 11,000,000 0 11,000,000 11,143,946 0 11,143,946
3%, 7/13/98 450,000 0 450,000 456,258 0 456,258
0%, 11/30/99 606,000 0 606,000 474,195 0 474,195
7.40%, 7/1/04 230,000 0 230,000 245,939 0 245,939
8.28%, 1/10/25 0 1,000,000 1,000,000 0 1,191,780 1,191,780
Financing Corp. 10.70%, 0 430,000 430,000 0 624,308 624,308
10/6/17
Government Trust
Certificates
(assets of the Trust
guaranteed by U.S.
government through
Defense Security
Assistance Agency):
Class 3-B, 8.55%, 11/15/97 532,184 0 532,184 541,801 0 541,801
Class 1-C, 9 1/4%, 11/15/01 2,983,000 0 2,983,000 3,281,837 0 3,281,837
Class 2-E, 9.40%, 5/15/02 190,000 0 190,000 209,897 0 209,897
Class T-2, 9 5/8%, 5/15/02 2,621,000 0 2,621,000 2,894,580 0 2,894,580
Government Trust
Certificates Series
1995-A (assets of Trust
guaranteed by
U.S. Government through
Export-
Import Bank)
Series:
1994-C, 6.61%, 9/15/99 147,496 0 147,496 149,253 0 149,253
1995-A, 6.28%, 6/15/04 870,000 0 870,000 871,044 0 871,044
1992-A, 7.02%, 9/1/04 801,000 0 801,000 825,629 0 825,629
1994-F, 8.178%, 12/15/04 13,051,907 0 13,051,907 13,943,666 0 13,943,666
Private Export Funding
Corp.:
secured notes, Series CC,
9 1/2%, 3/31/99 260,000 0 260,000 287,539 0 287,539
5 3/4%, 4/30/98 515,000 0 515,000 513,209 0 513,209
6.90%, 1/31/03 90,000 0 90,000 93,366 0 93,366
5.65%, 3/15/03 667,500 0 667,500 658,489 0 658,489
8 3/4%, 6/30/03 880,000 0 880,000 1,011,484 0 1,011,484
5.80%, 2/1/04 120,000 0 120,000 117,540 0 117,540
6.86%, 4/30/04 294,300 0 294,300 300,489 0 300,489
State of Israel (guaranteed
by U.S.
Government through
Agency for
International Development):
5 1/4%, 3/15/98 410,000 0 410,000 405,002 0 405,002
4 7/8%, 9/15/98 1,060,000 0 1,060,000 1,033,500 0 1,033,500
5 3/4%, 3/15/00 690,000 0 690,000 682,672 0 682,672
8%, 11/15/01 6,190,000 0 6,190,000 6,753,909 0 6,753,909
6 1/4%, 8/15/02 2,170,000 0 2,170,000 2,185,722 0 2,185,722
6 1/8%, 3/15/03 1,200,000 0 1,200,000 1,193,256 0 1,193,256
8 1/2%, 4/1/06 1,590,000 0 1,590,000 1,784,282 0 1,784,282
Student Loan Marketing
Association:
7.56%, 12/9/96 200,000 0 200,000 203,719 0 203,719
8.14%, 10/15/03 650,000 0 650,000 717,641 0 717,641
Twelve Federal Land
Banks 7.95%, 10/21/96 290,000 0 290,000 295,800 0 295,800
58,861,152 1,816,088 60,677,240
TOTAL U.S.
GOVERNMENT
& GOVERNMENT
AGENCY OBLIGATIONS 185,434,318 90,754,644 276,188,962
U.S. GOVERNMENT
AGENCY -
MORTGAGE-BACKED
SECURITIES
Federal Home Loan
Mortgage Corporation
6 1/2%, 5/1/08 1,087,111 0 1,087,111 1,078,957 0 1,078,957
7 1/2%, 6/1/07 815,564 0 815,564 836,760 0 836,760
9%, 8/1/08 to 4/1/20 2,337,822 0 2,337,822 2,468,277 0 2,468,277
9 1/2%, 6/1/09 to 8/1/24 13,425,017 0 13,425,017 14,227,808 0 14,227,808
10%, 7/1/09 to 2/1/21 3,782,815 0 3,782,815 4,123,334 0 4,123,334
10 1/2%, 10/1/15 to 1/1/16 142,211 0 142,211 155,538 0 155,538
12%, 9/1/03 to 12/1/15 213,327 0 213,327 240,130 0 240,130
12 1/4%, 3/1/11 to 7/1/14 625,924 0 625,924 704,703 0 704,703
12 1/2%, 2/1/14 to 6/1/19 1,176,156 0 1,176,156 1,352,342 0 1,352,342
13%, 8/1/10 to 6/1/15 454,831 0 454,831 528,171 0 528,171
13 1/2%, 10/1/11 1,165 0 1,165 1,376 0 1,376
25,717,396 0 25,717,396
Federal National Mortgage
Association
6.345%, 3/1/99 1,797,815 0 1,797,815 1,807,366 0 1,807,366
6 1/2%, 2/1/10 to 1/1/24 1,290,757 0 1,290,757 1,289,118 0 1,289,118
7%, 11/1/06 518,544 0 518,544 525,820 0 525,820
8 1/4%, 12/1/01 1,986,523 0 1,986,523 2,125,580 0 2,125,580
11%, 8/1/10 993,517 0 993,517 1,105,496 0 1,105,496
11 1/4%, 5/1/14 416,369 0 416,369 463,922 0 463,922
12 1/2%, 3/1/16 139,607 0 139,607 161,813 0 161,813
13%, 9/1/13 92,793 0 92,793 108,654 0 108,654
13 1/2%, 10/1/11 266,591 0 266,591 314,756 0 314,756
7,902,525 0 7,902,525
Government National
Mortgage
Association
8 1/2%, 1/15/06 to 7/15/08 243,139 0 243,139 255,813 0 255,813
9 1/2%, 6/15/09 to 11/1509 1,094,879 0 1,094,879 1,183,277 0 1,183,277
10%, 1/15/16 4,729 0 4,729 5,185 0 5,185
11%, 4/15/13 to 6/15/13 67,169 0 67,169 75,280 0 75,280
11 1/2%, 4/15/10 to 4/15/13 96,507 0 96,507 109,278 0 109,278
13 1/2%, 7/15/11 86,559 0 86,559 103,357 0 103,357
1,732,190 0 1,732,190
TOTAL U.S.
GOVERNMENT AGENCY
- -
MORTGAGE-BACKED 35,352,111 0 35,352,111
SECURITIES
COLLATERALIZED
MORTGAGE
OBLIGATIONS
Private Sponsor
DLJ Acceptance Trust
planned
amortization class, Series
1989,
Class1-F, 11%, 8/1/19 369,666 0 369,666 405,709 0 405,709
U.S. Government Agency
Federal Home Loan
Mortgage Corporation:
planned amortization class:
Series 1417-C, 5 3/8%, 1,242,300 0 1,242,300 1,233,371 0 1,233,371
6/15/01
Series 1485-C, 5%, 9/15/01 1,800,000 0 1,800,000 1,772,719 0 1,772,719
Series 1515-D, 6%, 9/15/05 4,000,000 0 4,000,000 3,940,000 0 3,940,000
sequential pay Series 1353,
Class A, 5 1/2%, 11/15/04 1,177,959 0 177,959 174,789 0 174,789
Series 1993:
Class 72-B, 5%, 1/25/02 1,372,308 0 1,372,308 1,354,715 0 1,354,715
Class 135-PC, 5 1/2%, 1,970,000 0 1,970,000 1,940,450 0 1,940,450
7/25/02
Federal National Mortgage
Association,
planned amortization class:
Series 1992, Class 193-D,
5 3/4%, 12/25/01 3,900,000 0 3,900,000 3,875,625 0 3,875,625
Series 1993-28, Class PD,
5 1/4%, 10/25/01 1,000,000 0 1,000,000 988,438 0 988,438
Series 1994-M3, Class A,
7.71%, 4/1/06 4,237,581 0 4,237,581 4,383,248 0 4,383,248
19,663,355 0 19,663,355
TOTAL
COLLATERALIZED
MORTGAGE 20,069,064 0 20,069,064
OBLIGATIONS
REPURCHASE
AGREEMENTS
Maturity
Amount
Investments in repurchase
agreement, (U.S. Treasury
obligations)
in a joint trading account at
5.88%,
dated 10/31/95 due 11/1/95 2,056,336 0 2,056,336 2,056,000 0 2,056,000
TOTAL INVESTMENT
IN SECURITIES $242,911,493 $90,754,644 $333,666,137
</TABLE>
Spartan Government Income Fund
Spartan Long-Term Government Bond Fund
Pro Forma Combining Statement of Assets and Liabilities
as of October 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Government Long-Term Pro Forma Pro Forma
Income Government Combined Adjustments Combined
Assets
Investment in securities,
at value
- - See accompanying $242,911,493 $90,754,644 $333,666,137 $333,666,137
schedule
Cash 182,834 663,630 846,464 846,464
Receivable for 9,850,967 0 9,850,967 9,850,967
investments sold
Interest receivable 4,906,998 1,369,513 6,276,511 6,276,511
Total assets 257,852,292 92,787,787 350,640,079 350,640,079
Liabilities
Payable for investments 11,850,779 0 11,850,779 11,850,779
purchased
Dividends payable 208,262 0 208,262 208,262
Accrued management 132,272 48,521 180,793 180,793
fee
Total liabilities 12,191,313 48,521 12,239,834 12,239,834
Net Assets $245,660,979 $92,739,266 $338,400,245 $338,400,245
Net Assets consist of:
Paid in capital $252,691,679 $85,954,017 $338,645,696 $338,645,696
Undistributed net (1,191,845) 729,866 (461,979) (461,979)
investment income
Accumulated net
realized gain (loss) on
investments (16,159,832) (1,837,624) (17,997,456) (17,997,456)
Net unrealized
appreciation
(depreciation) on
investments 10,320,977 7,893,007 18,213,984 18,213,984
Net Assets $245,660,979 $92,739,266 $338,400,245 $338,400,245
Net Asset Value
Net Assets $245,660,979 $92,739,266 $338,400,245 $338,400,245
Offering price and
redemption price
per share $10.43 $12.14 $10.85 $10.43
Shares outstanding 23,561,908 7,637,201 31,199,109 1,254,387A 32,453,496
</TABLE>
See accompanying notes to Pro Forma Combining Financial Statements
Spartan Government Income Fund
Spartan Long-Term Government Bond Fund
Notes to Pro Forma Combining Financial Statements
(Unaudited)
The accompanying unaudited Pro Forma Combining Schedule of Investments and
Statement of Assets and Liabilities as of October 31, 1995 and the
unaudited Pro Forma Combining Statement of Operations for the year ended
October 31, 1995 are intended to present the financial condition and
related results of operations of Spartan Government Income Fund (Government
Income) as if the reorganization with Spartan Long-Term Government Bond
Fund (Long-Term Government) had been consummated at October 31, 1995.
The pro forma adjustments to these pro forma financial statements are
comprised of:
(A) Increase in shares outstanding of Government Income to reflect the
conversion of the Long-Term Government shares as of October 31, 1995.
(B) Decrease in management fee to reflect a voluntary reduction by FMR of
its fee from 0.65% to 0.60% applied to the combined fund's average net
assets.
The unaudited pro forma combining statements should be read in conjunction
with the separate semiannual unaudited financial statements as of October
31, 1995 and the separate annual audited financial statements as of April
30, 1995 for Government Income and the separate semiannual unaudited
financial statements as of July 31, 1995 and the separate annual audited
financial statements as of January 31, 1995 for Long-Term Government which
are incorporated by reference in the Statement of Additional Information to
this Proxy and Prospectus.
PART C. OTHER INFORMATION
Item 15. 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.
Pursuant to Section 11 of the Distribution Agreement, the Registrant
agrees to indemnify and hold harmless the Distributor and each of its
directors and officers and each person, if any, who controls the
Distributor within the meaning of Section 15 of the 1933 Act against any
loss, liability, claim, damages or expense arising by reason of any person
acquiring any shares, based upon the ground that the registration
statement, Prospectus, Statement of Additional Information, shareholder
reports or other information filed or made public by the Registrant
included a materially misleading statement or omission. However, the
Registrant does not agree to indemnify the Distributor or hold it harmless
to the extent that the statement or omission was made in reliance upon, and
in conformity with, information furnished to the Registrant by or on behalf
of the Distributor. The Registrant does not agree to indemnify the parties
against any liability to which they would be subject by reason of willful
misfeasance, bad faith, gross negligence, and reckless disregard of the
obligations and duties under the Distribution Agreement.
Pursuant to the agreement by which Fidelity Service Company ("Service") is
appointed sub-transfer agent, the Transfer Agent agrees to indemnify
Service for its losses, claims, damages, liabilities and expenses to the
extent the Transfer Agent is entitled to and receives indemnification from
the Registrant for the same events. Under the Transfer Agency Agreement,
the Registrant agrees to indemnify and hold the Transfer Agent harmless
against any losses, claims, damages, liabilities, or expenses resulting
from:
(1) any claim, demand, action or suit brought by any person other than the
Registrant, which names the Transfer Agent and/or the Registrant as a party
and is not based on and does not result from the Transfer Agent's willful
misfeasance, bad faith, negligence or reckless disregard of its duties, and
arises out of or in connection with the Transfer Agent's performance under
the Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent contributed to
by the Transfer Agent's willful misfeasance, bad faith, negligence or
reckless disregard of its duties) which results from the negligence of the
Registrant, or from the Transfer Agent's acting upon any instruction(s)
reasonably believed by it to have been executed or communicated by any
person duly authorized by the Registrant, or as a result of the Transfer
Agent's acting in reliance upon advice reasonably believed by the Transfer
Agent to have been given by counsel for the Registrant, or as a result of
the Transfer Agent's acting in reliance upon any instrument or stock
certificate reasonably believed by it to have been genuine and signed,
countersigned or executed by the proper person.
Item 16. Exhibits
(1) An Amended and Restated Declaration of Trust, dated March 17, 1994, is
incorporated herein by reference to Exhibit 1 to Post-Effective Amendment
No. 83.
(2) By-laws of the Trust, as amended, are incorporated herein by reference
to Exhibit 2(a) to Fidelity Union Street Trust's (File No. 2-50318)
Post-Effective Amendment No. 87.
(3) Not applicable.
(4) Agreement and Plan of Reorganization among Fidelity Devonshire Street
Trust, Spartan Long-Term Government Bond Fund, Fidelity Fixed Income Trust,
Spartan Government Income Fund, and Fidelity Management & Research Company
is incorporated herein by reference to Exhibit 1 to the Proxy Statement and
Prospectus to the trust's initial Registration Statement on Form N-14.
(5) Not applicable.
(6)(a) Management Contract, dated November 1, 1993, between Fidelity
Short-Term Bond Portfolio and Fidelity Management & Research Company is
incorporated herein by reference to Exhibit 5(a) to Post-Effective
Amendment No. 71.
(b) Management Contract, dated November 1, 1993, between Fidelity
Investment Grade Bond Fund and Fidelity Management & Research Company is
incorporated herein by reference to Exhibit 5(b) to Post-Effective
Amendment No. 71.
(c) Management Contract, dated November 1, 1989, between Spartan
Government Fund (currently known as Spartan Government Income Fund) and
Fidelity Management & Research Company is incorporated herein by reference
to Exhibit 5(c) to Post-Effective Amendment No. 74.
(d) 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. 74.
(e) Management Contract, dated November 19, 1992, 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. 74.
(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(f) to Post-Effective Amendment No. 74.
(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(g) to Post-Effective Amendment No. 74.
(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(h) to Post-Effective Amendment No. 74.
(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(i) to Post-Effective Amendment No. 74.
(j) 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. 74.
(k) 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. 74.
(7)(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. 74.
(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. 74.
(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. 74.
(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. 74.
(e) General Distribution Agreement, dated November 7, 1988, between
Spartan Government Fund (currently known as Spartan Government Income Fund)
and Fidelity Distributors Corporation is incorporated herein by reference
to Exhibit 6(e) to Post-Effective Amendment No. 74.
(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. 74.
(g) Amendment, dated May 10, 1994, to General Distribution Agreement
between Spartan High Income Fund and Fidelity Distributors Corporation is
incorporated herein by reference to Exhibit 6(g) to Post-Effective
Amendment No. 74.
(h) 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.
(8) Retirement Plan for Non-Interested Person Trustees, Directors, or
General Partners is incorporated herein by reference to Exhibit 7 to
Fidelity Union Street Trust's Post Effective Amendment No. 87 (File No.
2-50318).
(9)(a) Custodian Agreement, Appendix A, and Appendix C, dated December 1,
1994, between the Bank of New York and Fidelity Fixed-Income Trust on
behalf of Fidelity Investment Grade Bond Fund, Spartan Government Income
Fund, Fidelity Short-Term Bond Portfolio, Spartan High Income Fund, and
Spartan Short-Intermediate Government Fund, is incorporated herein by
reference to Exhibit 8(a) to Fidelity Hereford Street Trust's
Post-Effective Amendment No. 4 (File No. 33-52577).
(b) Appendix B, dated April 20, 1995, to the Custodian Agreement, dated
December 1, 1994, between The Bank of New York and Fidelity Fixed-Income
Trust on behalf of Fidelity Investment Grade Bond Fund, Spartan Government
Income Fund, Fidelity Short-Term Bond Portfolio, Spartan High Income Fund,
and Spartan Short-Intermediate Government Fund, is incorporated herein by
reference to Exhibit 8(b) to Fidelity Hereford Street Trust's
Post-Effective Amendment No. 5 (File No. 33-52577).
(10)(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. 74.
(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. 74.
(c) Distribution and Service Plan pursuant to Rule 12b-1 for Spartan
High Income Fund is incorporated herein by reference to Exhibit 15(c) to
Post-Effective Amendment No. 74.
(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. 74.
(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. 74.
(11) Opinion and Consent of Kirkpatrick & Lockhart LLP as to the legality
of shares being registered is incorporated herein by reference to Exhibit
11 to the trust's initial Registration Statement on Form N-14.
(12) Opinion and Consent of Kirkpatrick & Lockhart LLP as to tax matters in
connection with the reorganization of Spartan Long-Term Government Fund is
incorporated herein by reference to Exhibit 12 to the trust's initial
Registration Statement on Form N-14.
(13) Not applicable.
(14) Consent of Coopers & Lybrand, L.L.P. is filed herein as Exhibit 14.
(15) Not applicable.
(16) Not applicable.
(17) Rule 24f-2 Notice for Registrant's most recent fiscal year ended April
30, 1995 is incorporated herein by reference to Exhibit 17 to the trust's
initial Registration Statement on Form N-14.
Item 17. Undertakings
(1) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through the use of the prospectus which is a
part of this Registration Statement by any person or party who is deemed to
be an underwriter within the meaning of Rule 145(c) of the Securities Act
of 1933, the reoffering prospectus will contain the information called for
by the applicable registration form for reoffering by persons who may be
deemed underwriters, in addition to the information called for by the other
items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as part of an amendment to the
Registration Statement and will not be used until the amendment is
effective, and that, in determining any liability under the Securities Act
of 1933, each Post-Effective Amendment shall be deemed to be a new
Registration Statement for the securities offered therein, and the offering
of securities at that time shall be deemed to be the initial bona fide
offering of them.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston, and the Commonwealth of
Massachusetts, on the 9th day of February 1996.
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 February 9, 1996
Edward C. Johnson 3d (Principal Executive Officer)
</TABLE>
/s/Kenneth A. Rathgeber Treasurer February 9, 1996
Kenneth A. Rathgeber
/s/J. Gary Burkhead Trustee February 9, 1996
J. Gary Burkhead
/s/Ralph F. Cox * Trustee February 9, 1996
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee February 9, 1996
Phyllis Burke Davis
/s/Richard J. Flynn * Trustee February 9, 1996
Richard J. Flynn
/s/E. Bradley Jones * Trustee February 9, 1996
E. Bradley Jones
/s/Donald J. Kirk * Trustee February 9, 1996
Donald J. Kirk
/s/Peter S. Lynch * Trustee February 9, 1996
Peter S. Lynch
/s/Edward H. Malone * Trustee February 9, 1996
Edward H. Malone
/s/Marvin L. Mann_____* Trustee February 9, 1996
Marvin L. Mann
/s/Gerald C. McDonough* Trustee February 9, 1996
Gerald C. McDonough
/s/Thomas R. Williams * Trustee February 9, 1996
Thomas R. Williams
(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated December 15, 1994 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated December 15, 1994 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 Annuity Fund Fidelity Income Fund
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 Mt. Vernon Street Trust
Fidelity Advisor Series VI Fidelity Municipal Trust
Fidelity Advisor Series VII Fidelity New York Municipal Trust
Fidelity Advisor Series VIII Fidelity Puritan Trust
Fidelity California Municipal Trust Fidelity School Street Trust
Fidelity Capital Trust Fidelity Securities Fund
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 Corporate Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Court Street Trust 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
</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.
Djinis, 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 fifteenth day of December, 1994.
/s/Edward C. Johnson 3d /s/Donald J. Kirk
Edward C. Johnson 3d Donald J. Kirk
/s/J. Gary Burkhead /s/Peter S. Lynch
J. Gary Burkhead Peter S. Lynch
/s/Ralph F. Cox /s/Marvin L. Mann
Ralph F. Cox Marvin L. Mann
/s/Phyllis Burke Davis /s/Edward H. Malone
Phyllis Burke Davis 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
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee or General Partner, as
the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Annuity Fund Fidelity Institutional Trust
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series II Fidelity Magellan Fund
Fidelity Advisor Series III Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series IV Fidelity Money Market Trust
Fidelity Advisor Series V Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VI Fidelity Municipal Trust
Fidelity Advisor Series VII Fidelity New York Municipal Trust
Fidelity Advisor Series VIII Fidelity Puritan Trust
Fidelity California Municipal Trust Fidelity School Street Trust
Fidelity Capital Trust Fidelity Securities Fund
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 Corporate Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Court Street Trust Fidelity U.S. Investments-Government Securities
Fidelity Destiny Portfolios Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity Yen Performance Portfolio, L.P.
Fidelity Devonshire Trust Spartan U.S. Treasury Money Market
Fidelity Exchange Fund Fund
Fidelity Financial Trust Variable Insurance Products Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund II
Fidelity Government Securities Fund
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 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 December 15, 1994
Edward C. Johnson 3d
Exhibit 14
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the Proxy
Statement and Prospectus (the Proxy/Prospectus) constituting part of this
Registration Statement on Form N-14 (the Registration Statement) of
Fidelity Fixed Income Trust: Spartan Government Income Fund, of our report
dated June 8, 1995 on the financial statements and financial highlights
included in the April 30, 1995 Annual Report to Shareholders of Spartan
Government Income Fund.
We also consent to the incorporation by reference in the Registration
Statement, of our report dated March 7, 1995 on the financial statements
and financial highlights included in the Annual Report to Shareholders of
Fidelity Devonshire Trust: Spartan Long Term Government Bond Fund.
We further consent to the references to our Firm under the headings
"Experts" and "Financial Highlights" in the Proxy/Prospectus and to the
references to our Firm under the headings "Financial Highlights" in the
Prospectuses and "Auditor" in the Statements of Additional Information for
Spartan Government Income Fund and Spartan Long Term Government Bond Fund,
which are also incorporated by reference into the Proxy/Prospectus.
/s/COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 7, 1996
