FIDELITY FIXED INCOME TRUST, N14EL24, 1996-07-03

FIDELITY FIXED INCOME TRUST
N14EL24, 1996-07-03

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As filed with the Securities and Exchange Commission
on July 3, 1996
Registration No. 33-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT

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UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No. [ ]

Post-Effective Amendment No. [ ]

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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 in reliance
upon Rule 24f-2. A Rule 24f-2 Notice for the Registrant's most recent
fiscal year ended April 30, 1996 was filed with the Commission on June 27,
1996. Pursuant to Rule 429, this Registration Statement relates to shares
previously registered on Form N-1A.
It is proposed that this filing will become effective on August 1, 1996,
pursuant to Rule 488.

FIDELITY SHORT-TERM BOND FUND
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following papers and documents:

Facing Page
Contents of Registration Statement
Cross Reference Sheet
Letter to Shareholders
Form of Proxy Card
Notice of Special Meeting
Part A - Prospectus/Proxy Statement
Part B- Statement of Additional Information
Part C - Other Information
Signature Pages
Exhibits
FIDELITY FIXED-INCOME TRUST:
FIDELITY SHORT-TERM BOND FUND
FORM N-14 CROSS REFERENCE SHEET
PART A

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Form N-14 Item Number and Caption Prospectus/Proxy Statement Caption

1. Beginning of Registration Statement and Out- Cover Page
side Front Cover Page of Prospectus

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2. Beginning and Outside Back Cover Page of Pro- Table of Contents
spectus

3. Fee Table, Synopsis Information and Risk Synopsis; Comparative Fee Tables; Comparison of
Factors Principal Risk Factors; The Proposed Transaction

4. Information About the Transaction Synopsis; The Proposed Transaction; Exhibit I

5. Information About the Registrant Synopsis; Comparison of Principal Risk Factors;
Miscellaneous; Additional Information About
Fidelity Short-Term Bond Fund; Prospectus of
Fidelity Short-Term Bond Fund

6. Information About the Company Being Acquired Cover Page; Synopsis; Comparison of Principal Risk
Factors; Miscellaneous; Prospectus of Fidelity
Short-Term World Bond Fund

7. Voting Information Voting Information

8. Interest of Certain Persons and Experts Not Applicable

9. Additional Information Required for Reoffering Not Applicable
by Persons Deemed to be
Underwriters

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PART B
Item Number and Caption Statement of Additional Information Caption

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10. Cover Page Cover Page

11. Table of Contents Table of Contents

12. Additional Information About the Registrant Prospectus and Statement of Additional
Information of Fidelity Short-Term Bond
Fund

13. Additional Information About the Company Be- Not applicable
ing Acquired

14. Financial Statements Annual Report of Fidelity Short-Term World
Bond Fund for the Fiscal Year Ended
December 31, 1995. Annual Report of
Fidelity Short-Term Bond Fund for the Fiscal
Year Ended April 30, 1996.

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PART C Information required to be included in Part C is set forth under the
appropriate item so numbered, in Part C of this Registration Statement
FIDELITY SHORT-TERM WORLD BOND FUND
Dear Shareholder:
I am writing to let you know about an important proposal to merge Fidelity
Short-Term World Bond Fund with another Fidelity bond fund, and to ask you
to send in your vote. A Special Meeting of shareholders will be held in
October, and the votes submitted in time to be counted at the meeting will
decide whether the merger takes place. This package contains information
about the proposal and includes all the materials you will need to vote by
mail.
Please take the time to read the enclosed materials and cast your vote on
the yellow proxy card. PLEASE VOTE PROMPTLY. YOUR VOTE IS EXTREMELY
IMPORTANT, NO MATTER HOW MANY SHARES YOU OWN.
HERE IS A BRIEF SUMMARY OF THE PROPOSAL.
The Trustees of Fidelity Short-Term World Bond Fund are recommending that
the fund merge with Fidelity Short-Term Bond Fund, a larger bond fund also
managed by Fidelity Management & Research Company. The merger would be a
tax-free reorganization, with no gain or loss to you as a shareholder. If
shareholders vote to approve the merger, Fidelity Short-Term World Bond
Fund will cease to exist and you will become a shareholder of Fidelity
Short-Term Bond Fund instead.
Short-Term World and Short-Term Bond have similar investment objectives and
offer identical shareholder services. Short-Term Bond, however, is a much
larger fund than Short-Term World, and has lower management fees and other
operating expenses. Short-Term Bond has also performed better than
Short-Term World over Short-Term World's lifetime, with a lower level of
volatility. The enclosed materials include a detailed description of the
Funds.
The Trustees, most of whom are not affiliated with Fidelity, are
responsible for protecting your interests as a shareholder. The Trustees
believe that the merger is in shareholders' best interests, and recommend
that you vote for the proposal. But the final decision is up to you.
VOTING BY MAIL IS QUICK AND EASY. EVERYTHING YOU NEED IS ENCLOSED.
We encourage you to exercise your right as a shareholder and to vote
promptly. To cast your vote, simply complete the yellow proxy card
enclosed in this package. Be sure to sign the card before mailing it in
the postage-paid envelope provided.
If you have any questions before you vote, please call us at
1-800-544-8888. We'll be glad to help you get your vote in quickly. Thank
you for your participation in this important initiative for your fund.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
President
SWI-PXL-896
Vote this proxy card TODAY! Your prompt response will
save your Fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848

PLEASE DETACH AT PERFORATION BEFORE MAILING.
- --------------------------------------------------------------------------
FIDELITY INVESTMENT TRUST: FIDELITY SHORT-TERM WORLD BOND FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C.
Johnson 3d, Arthur S. Loring, and Richard J. Flynn, or any one or more of
them, attorneys, with full power of substitution, to vote all shares of
Fidelity Investment Trust: Fidelity Short-Term World Bond Fund, which the
undersigned is entitled to vote at the Special Meeting of Shareholders of
the Fund to be held at the office of the trust at 82 Devonshire St.,
Boston, MA 02109, on Friday, October 11, 1996 at 9:00 a.m. Eastern time and
at any adjournments thereof. All powers may be exercised by a majority of
said proxy holders or substitutes voting or acting or, if only one votes
and acts, then by that one. This Proxy shall be voted on the proposals
described in the Proxy Statement as specified on the reverse side. Receipt
of the Notice of the Meeting and the accompanying Proxy Statement is hereby
acknowledged.

NOTE: Please sign exactly as your name
appears on this Proxy. When signing in
a fiduciary capacity, such as executor,
administrator, trustee, attorney,
guardian, etc., please so indicate.
Corporate and partnership proxies
should be signed by an authorized
person indicating the person's title.
Date_____________, 1996
_____________________________________
_____________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 315910703/fund# 465

Please refer to the Proxy Statement discussion of this matter.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSAL.
As to any other matter, said attorneys shall vote in accordance with their
best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING:
- ---------------------------------------------------------------------------
___________________________________________________________________________

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1. To approve an Agreement and Plan of Reorganization FOR [ ] AGAINST [ ] ABSTAIN [ ] 1.
between Fidelity Short-Term World Bond Fund and
Fidelity Short-Term Bond Fund.

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SWI-PXC-896 cusip # 315910703/fund# 465

FIDELITY SHORT-TERM WORLD BOND FUND
A FUND OF
FIDELITY INVESTMENT TRUST

82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-544-8888
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To the Shareholders of Fidelity Short-Term World Bond Fund:

NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
Meeting) of Fidelity Short-Term World Bond Fund (the Fund), will be held at
the office of the Fidelity Investment Trust, 82 Devonshire Street, Boston,
Massachusetts 02109 on Friday, October 11, 1996, at 9:00 a.m. Eastern time.
The purpose of the Meeting is to consider and act upon the following
proposal, and to transact such other business as may properly come before
the Meeting or any adjournments thereof.

(1) To approve an Agreement and Plan of Reorganization (the Agreement)
between the Fund and Fidelity Short-Term Bond Fund. The Agreement provides
for the transfer of all of the assets of the Fund to Fidelity Short-Term
Bond Fund in exchange solely for shares of beneficial interest of Fidelity
Short-Term Bond Fund and the assumption by Fidelity Short-Term Bond Fund of
the Fund's liabilities, followed by the distribution of Fidelity Short-Term
Bond Fund shares.

The Board of Trustees has fixed the close of business on August 14, 1996
as the record date for the determination of shareholders of the Fund
entitled to notice of, and to vote at, such Meeting and any adjournments
thereof.
By order of the Board of Trustees,
ARTHUR S. LORING, Secretary
AUGUST 14, 1996

YOUR VOTE IS IMPORTANT -
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY SHAREHOLDER
WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO INDICATE VOTING
INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND SIGN IT, AND RETURN IT IN
THE ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED
STATES. IN ORDER TO AVOID UNNECESSARY EXPENSE, WE ASK YOUR COOPERATION IN
MAILING YOUR PROXY CARD PROMPTLY, NO MATTER HOW LARGE OR SMALL YOUR
HOLDINGS MAY BE.

INSTRUCTIONS FOR EXECUTING PROXY CARD

The following general rules for executing proxy cards may be of assistance
to you and help you avoid the time involved in validating your vote if you
fail to execute your proxy card properly.

1. INDIVIDUAL ACCOUNTS: Your name should be signed exactly as it appears
in the registration on the proxy card.

2. JOINT ACCOUNTS: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.

3. ALL OTHER ACCOUNTS should show the capacity of the individual signing.
This can be shown either in the form of the account registration itself or
by the individual executing the proxy card. For example:
REGISTRATION VALID
SIGNATURE

A. 1) ABC Corp. John Smith,
Treasurer

2) ABC Corp. John Smith,
Treasurer

c/o John Smith, Treasurer

B. 1) ABC Corp. Profit Sharing Plan Ann B. Collins,
Trustee

2) ABC Trust Ann B. Collins,
Trustee

3) Ann B. Collins, Trustee Ann B. Collins,
Trustee

u/t/d 12/28/78

C. 1) Anthony B. Craft, Cust. Anthony B. Craft

f/b/o Anthony B. Craft, Jr.

UGMA

FIDELITY SHORT-TERM WORLD BOND FUND
A FUND OF FIDELITY INVESTMENT TRUST

82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-544-8888
PROXY STATEMENT AND PROSPECTUS
AUGUST 14, 1996
This Proxy Statement and Prospectus (Proxy Statement) is being furnished
to shareholders of Fidelity Short-Term World Bond Fund (Short-Term World or
the Fund), a fund of Fidelity Investment Trust (the trust), in connection
with the solicitation of proxies by the trust's Board of Trustees for use
at the Special Meeting of Shareholders of the Fund and at any adjournments
thereof (the Meeting). The Meeting will be held on Friday, October 11,
1996, at 9:00 a.m. Eastern time at 82 Devonshire Street, Boston,
Massachusetts 02109, the principal executive office of the trust.
As more fully described in the Proxy Statement, the purpose of the Meeting
is to vote on a proposed reorganization (the Reorganization). Pursuant to
an Agreement and Plan of Reorganization (the Agreement), Short-Term World
would transfer all of its assets to Fidelity Short-Term Bond Fund
(Short-Term Bond), a fund of Fidelity Fixed-Income Trust, in exchange
solely for shares of beneficial interest of Short-Term Bond and the
assumption by Short-Term Bond of Short-Term World's liabilities. The number
of shares to be issued in the proposed Reorganization will be based upon
the relative net asset values of the funds at the time of the exchange. As
provided in the Agreement, Short-Term World will distribute shares of
Short-Term Bond to its shareholders on the closing date (defined below) so
that each shareholder receives the number of full and fractional shares of
Short-Term Bond equal in value to the aggregate net asset value of the
shares of Short-Term World held by such shareholder on October 31, 1996, or
such other date as the parties may agree (the Closing Date). Following the
distribution, Short-Term World will have neither assets, liabilities, nor
shareholders, and it is expected that the trust's Board of Trustees will
liquidate Short-Term World as soon as practicable thereafter.
Short-Term Bond, a taxable bond fund, is a diversified fund of Fidelity
Fixed-Income Trust, an open-end management investment company organized as
a Massachusetts business trust on September 5, 1984. Short-Term Bond's
investment objective is to seek as high a level of current income as
consistent with preservation of capital. Short-Term Bond seeks to achieve
its investment objective by investing principally in investment-grade debt
securities while normally maintaining an average maturity of three years or
less.
This Proxy Statement is accompanied by the Prospectus of Short-Term Bond
(dated June 24, 1996), which is incorporated herein by reference and should
be retained for future reference. These documents set forth concisely the
information about the Reorganization, Short-Term World, and Short-Term Bond
that a shareholder should know before voting on the proposed
Reorganization. A Prospectus and Statement of Additional Information for
Short-Term World, both dated February 26, 1996, a supplement to Short-Term
World's Prospectus dated June 24, 1996, and a Statement of Additional
Information dated June 24, 1996 for Short-Term Bond have been filed with
the Securities and Exchange Commission and are incorporated herein by
reference. Copies of these documents may be obtained without charge by
contacting Fidelity Distributors Corporation at 82 Devonshire Street,
Boston, Massachusetts 02109 or by calling 1-800-544-8888.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT AND
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

TABLE OF CONTENTS
VOTING INFORMATION
SYNOPSIS
COMPARISON OF PRINCIPAL RISK FACTORS
THE PROPOSED TRANSACTION
ADDITIONAL INFORMATION ABOUT FIDELITY SHORT-TERM BOND FUND
MISCELLANEOUS
EXHIBIT 1. AGREEMENT AND PLAN OF REORGANIZATION

FIDELITY SHORT-TERM WORLD BOND FUND
(A FUND OF FIDELITY INVESTMENT TRUST)

82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109

PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
FIDELITY INVESTMENT TRUST: FIDELITY SHORT-TERM WORLD BOND FUND

TO BE HELD ON
OCTOBER 11, 1996
_________________________________
VOTING INFORMATION
This Proxy Statement and Prospectus (Proxy Statement) is furnished in
connection with a solicitation of proxies made by, and on behalf of, the
Board of Trustees of Fidelity Investment Trust (the trust) to be used at
the Special Meeting of Shareholders of Fidelity Short-Term World Bond Fund
(Short-Term World or the Fund) and at any adjournments thereof (the
Meeting), to be held on Friday, October 11, 1996 at 9:00 a.m. Eastern time
at 82 Devonshire Street, Boston, Massachusetts 02109, the principal
executive office of the trust and Fidelity Management & Research Company
(FMR), Short-Term World's investment adviser.
The purpose of the Meeting is set forth in the accompanying Notice of
Special Meeting of Shareholders. The solicitation is made primarily by the
mailing of this Proxy Statement and the accompanying proxy card on or about
August 14, 1996. Supplementary solicitations may be made by mail,
telephone, telegraph, or by personal interview by representatives of the
trust. In addition, D.F. King may be paid on a per-call basis to solicit
shareholders on behalf of Short-Term World at an anticipated cost of
approximately $1,950. The expenses in connection with preparing this Proxy
Statement and its enclosures and of all solicitations will be borne by the
Fund. The Fund will reimburse brokerage firms and others for their
reasonable expenses in forwarding solicitation material to the beneficial
owners of shares.
If a quorum is not present at the Meeting, or if a quorum is present but
sufficient votes to approve the proposal are not received, or if other
matters arise requiring shareholder attention, the persons named as proxies
may propose one or more adjournments of the Meeting to permit further
solicitation of proxies. Any such adjournment will require the affirmative
vote of a majority of those shares present at the Meeting or represented by
proxy. When voting on a proposed adjournment, the persons named as proxies
will vote FOR the proposed adjournment all shares that they are entitled to
vote, unless directed to vote AGAINST the item, in which case such shares
will be voted against the proposed adjournment with respect to that item. A
shareholder vote may be taken on items in this Proxy Statement or on any
other business properly presented at the Meeting prior to such adjournment
if sufficient votes have been received and it is otherwise appropriate.
If the enclosed proxy card is executed and returned, it nevertheless may
be revoked at any time prior to its use by written notification received by
the trust, by the execution of a later-dated proxy card, or by attending
the Meeting and voting in person. All proxy cards solicited by the Board of
Trustees that are properly executed and received by the Secretary prior to
the Meeting, and which are not revoked, will be voted at the Meeting.
Shares represented by such proxies will be voted in accordance with the
instructions thereon. If no specification is made on a proxy card, it will
be voted FOR the matters specified on the proxy card. Only proxies voted
will be counted towards establishing a quorum. Broker non-votes are not
considered voted for this purpose. Shareholders should note that while
votes to ABSTAIN will count toward establishing a quorum, passage of any
proposal being considered at the Meeting will occur only if a sufficient
number of votes are cast FOR the proposal. Accordingly, votes to ABSTAIN
and votes AGAINST will have the same effect in determining whether the
proposal is approved.
Short-Term World may also choose to have votes recorded by telephone. D.F.
King may be paid on a per-call basis for vote-by-phone solicitations on
behalf of Short-Term World at an anticipated cost of approximately $360. If
the Fund records votes by telephone, it will use procedures designed to
authenticate shareholders' identities, to allow shareholders to authorize
the voting of their shares in accordance with their instructions, and to
confirm that their instructions have been properly recorded. Proxies given
by telephone may be revoked at any time before they are voted in the same
manner that proxies voted by mail may be revoked.
On May 31, 1996 there were 119,338,655 shares of Fidelity Short-Term Bond
Fund (Short-Term Bond) issued and outstanding.
On May 31, 1996 there were 11,296,997 shares of Short-Term World issued
and outstanding. Shareholders of record of Short-Term World at the close of
business on August 14, 1996 will be entitled to vote at the Meeting. Each
such shareholder will be entitled to one vote for each share held on that
date.
As of May 31, 1996, approximately 5.1% of Short-Term Bond's total
outstanding shares was held by FMR affiliates. FMR Corp. is the ultimate
parent company of these FMR affiliates. Mr. Edward C. Johnson 3d, President
and Trustee of the Fund, is a member of a family group which, by virtue of
owning approximately 49% of the voting securities of FMR Corp., may be
deemed under the Investment Company Act of 1940 (the 1940 Act) to form a
controlling group with respect to FMR Corp. Based on his membership in this
family group, Mr. Edward C. Johnson 3d may be deemed to be a beneficial
owner of these shares. As of the above date, with the exception of Mr.
Johnson 3d's ownership of Short-Term Bond's shares, the Trustees and
officers of the Funds owned, in the aggregate, less than 1% of each Fund's
total outstanding shares.
VOTE REQUIRED: Approval of the Agreement and Plan of Reorganization (the
Agreement) requires the affirmative vote of a "majority of the outstanding
voting securities" of Short-Term World. Under the 1940 Act, a "majority
vote of the outstanding voting securities" means the affirmative vote of
the lesser of (a) 67% or more of the voting securities present at the
Meeting or represented by proxy if the holders of more than 50% of the
outstanding voting securities are present or represented by proxy, or (b)
more than 50% of the outstanding voting securities. Broker non-votes are
not considered "present" for this purpose.
SYNOPSIS
The following is a summary of certain information contained elsewhere in
this Proxy Statement, in the Agreement, and in the Prospectuses of
Short-Term World and Short-Term Bond, which are incorporated herein by this
reference. Shareholders should read the entire Proxy Statement and the
Prospectus of Short-Term Bond carefully for more complete information.
The proposed Reorganization would merge Short-Term World into Short-Term
Bond, a larger bond fund also managed by FMR. If the Reorganization is
approved, Short-Term World will cease to exist and current shareholders
will become shareholders of Short-Term Bond instead.
Short-Term World and Short-Term Bond have similar investment objectives
and offer identical shareholder services. Short-Term Bond, however, is a
much larger fund than Short-Term World, and has lower management fees and
other operating expenses. Short-Term Bond has also performed better than
Short-Term World over Short-Term World's lifetime, with a lower level of
volatility. As discussed more fully below, the Board of Trustees of the
trust believes that the Reorganization will be in the best interests of
Short-Term World shareholders.
The primary focus of both Short-Term World and Short-Term Bond is to seek
as high a level of current income as is consistent with preservation of
capital by investing in short-term debt securities. Short-Term Bond,
however, invests mainly in domestic debt securities while Short-Term World
focuses on debt securities issued anywhere in the world. Short-Term World's
current strategy involves hedging substantially all of its foreign currency
exposure into U.S. dollars, which reduces the currency risk involved in
foreign investing. Since early 1995, when Short-Term World began to
implement its current hedging strategy, the Fund's performance and
volatility have closely resembled that of Short Term Bond.
Short-Term World's assets have declined significantly in recent years,
from a peak of approximately $800 million in 1992 to $105.4 million at
April 30, 1996. Short-Term Bond, on the other hand, has over $1 billion in
assets. Short-Term Bond enjoys lower operating expenses than Short-Term
World, with a management fee 0.15% lower (0.50% vs. 0.65%) and total
expenses 0.34% lower (0.69% vs. 1.03%) than Short-Term World's for the 12
months ended April 30, 1996. The higher expense ratio of Short-Term World,
in part, reflects the higher costs of operating a smaller fund and the
higher costs of investing to a greater extent in foreign securities. It is
not anticipated that the merger will result in a material increase in
expenses for Short-Term Bond.
The Funds share identical service features, including purchase and
exchange provisions, redemption procedures, automatic reinvestment
policies, and dividend policies (each declares dividends daily and pays
them monthly). In addition, the same portfolio manager manages both
Short-Term Bond and the U.S. investments held by Short-Term World.
In sum, the merger would give shareholders of Short-Term World the
opportunity to participate in a larger fund with an investment objective
and performance level similar to Short-Term World's. At the same time, as
shareholders of Short-Term Bond, current Short-Term World shareholders can
expect to experience significantly lower expenses.
THE PROPOSED REORGANIZATION
Shareholders of Short-Term World will be asked at the Meeting to vote upon
and approve the Reorganization and the Agreement, which provides for the
acquisition by Short-Term Bond of all of the assets of Short-Term World in
exchange solely for shares of Short-Term Bond and the assumption by
Short-Term Bond of the liabilities of Short-Term World. Short-Term World
will then distribute the shares of Short-Term Bond to its shareholders, so
that each shareholder will receive the number of full and fractional shares
of Short-Term Bond equal in value to the aggregate net asset value of the
shareholder's shares of Short-Term World on the Closing Date (defined
below). The exchange of Short-Term World's assets for Short-Term Bond's
shares will occur at 4:00 p.m. Eastern time on October 31, 1996, or such
other time and date as the parties may agree (the Closing Date). Short-Term
World will then be liquidated as soon as practicable thereafter.
The rights and privileges of the former shareholders of Short-Term World
will be effectively unchanged by the Reorganization, except with respect to
the manner in which shares are voted (described below).
COMPARATIVE FEE TABLES
Each Fund pays a management fee to FMR for managing its investments and
business affairs which is calculated and paid to FMR every month. The fee
is calculated by adding a group fee rate to an individual fund fee rate,
and multiplying the result by the Fund's average net assets. The group fee
rate, which is the same for both Funds, is based on the average net assets
of all mutual funds advised by FMR. This rate cannot exceed 0.37% and
decreases as total assets under management increase. As of April 30, 1996,
the group fee rate for both Short-Term World and Short-Term Bond was
0.1458%. The individual fund fee rate is 0.45% for Short-Term World and
0.30% for Short-Term Bond.
In addition to the management fee payable to FMR, each Fund also incurs
other expenses for services such as maintaining shareholder records and
furnishing shareholder statements and financial reports. For the year ended
April 30, 1996, the total operating expenses for Short-Term World were
1.03%, while Short-Term Bond's total operating expenses were 0.69%. The
estimated expenses of the merged Fund are 0.34% lower than Short-Term
World's expenses, and the management fee is 0.15% lower. If the proposed
Reorganization is not approved, each Fund's total operating expenses are
expected to remain at their comparative levels.
With respect to both Funds, Fidelity reserves the right to deduct an
annual maintenance fee of $12.00 from accounts with a value of less than
$2,500, subject to an annual maximum charge of $60.00 per shareholder. For
more information about the Funds' fees, refer to their Prospectuses.
The following table shows the current fees and expenses of Short-Term Bond
and Short-Term World for the year ended April 30, 1996 and pro forma fees
for the combined fund based on the same period after giving effect to the
Reorganization.
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Annual fund operating expenses are paid out of each Fund's assets. Expenses
are factored into the Fund's share price or dividends and are not charged
directly to shareholder accounts. The following expenses are based on
historical expenses and are calculated as a percentage of average net
assets.

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PRO FORMA EXPENSES
SHORT-TERM WORLD SHORT-TERM BOND COMBINED FUND

Management Fees 0.60% 0.45% 0.45%

Other Expenses 0.43% 0.24% 0.24%

Total Fund Operating Expenses 1.03% 0.69% 0.69%

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EXAMPLES OF EFFECT OF FUND EXPENSES
The following table illustrates the expenses on a hypothetical $1,000
investment in each Fund under the current and pro forma (combined fund)
expenses calculated at the rates stated above, assuming a 5% annual return.

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AFTER 1 YEAR AFTER 3 YEARS AFTER 5 YEARS AFTER 10 YEARS

Short-Term World $11 $33 $57 $126

Short-Term Bond $7 $22 $38 $86

Combined Fund $7 $22 $38 $86

</TABLE>

This example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Annual Fund
Operating Expenses remain the same in the years shown. These examples
illustrate the effect of expenses, but are not meant to suggest actual or
expected costs, which may vary. The assumed return of 5% is not a
prediction of, and does not represent, actual or expected performance of
any fund.
FORMS OF ORGANIZATION
Short-Term World is a non-diversified fund of Fidelity Investment Trust,
an open-end management investment company organized as a Massachusetts
business trust on April 20, 1984. Short-Term Bond is a diversified fund of
Fidelity Fixed-Income Trust, an open-end management investment company
organized as a Massachusetts business trust on September 5, 1984. Both
trusts are authorized to issue an unlimited number of shares of beneficial
interest. Because Short-Term World and Short-Term Bond are series of
Massachusetts business trusts, organized under generally similar
Declarations of Trust, the rights of Short-Term World shareholders under
state law and the governing documents are expected to remain unchanged
after the Reorganization, except with regard to shareholder voting rights
as described below. Shareholder voting rights for Short-Term World are
based on the number of shares owned (share-based voting) while shareholder
voting rights for Short-Term Bond are based on the total dollar interest in
the Fund (dollar-based voting). While the differences between the two
Funds' voting rights would have no bearing on matters affecting only one
Fund, on matters requiring trust-wide votes where all funds in a trust are
required to vote, dollar-based voting provides shareholders voting power
that is proportionate to their economic interest whereas share-based voting
may provide shareholders who own shares with a lower net asset value than
other funds in the trust with a disproportionate ability to affect the vote
relative to shareholders of the other funds in the trust. After the
Reorganization, the voting rights of Short-Term World shareholders will
change to reflect those of Short Term Bond shareholders. For more
information regarding shareholder rights, refer to the section of each
Fund's Statement of Additional Information called "Description of the
Trust."
INVESTMENT OBJECTIVE AND POLICIES
The investment objectives and policies of the Funds are set forth below.
There can be no assurance that either Fund will achieve its objective.
As a general matter, the Funds have similar investment objectives and
policies in that both seek as high a level of current income as consistent
with preservation of capital. Although both Funds can invest in domestic
and foreign securities, a higher percentage of Short-Term World's assets
are normally invested in foreign securities (see Comparison of Other
Policies of the Funds). As of April 30, 1996, 1.0% of Short-Term Bond's
investment portfolio was invested in securities of foreign issuers, 100% of
which was U.S. dollar-denominated. As of the same date, 38.3% of Short-Term
World's portfolio was invested in securities of foreign issuers, none of
which was U.S. dollar-denominated. However, as described below, Short-Term
World has followed a strategy to hedge its foreign currency exposure.
The investment objective of each Fund is a fundamental policy and may not
be changed without the approval of a vote of at least a majority of the
outstanding voting securities of the Fund. With the exception of
fundamental policies, investment policies of the Funds can be changed
without shareholder approval. Thus, the differences between the Funds
discussed below, except as noted, could be changed by the Boards of
Trustees without a vote of shareholders.

COMPARISON OF OTHER POLICIES OF THE FUNDS

DEBT SECURITIES. Both Funds seek to achieve their investment objective by
investing in foreign and domestic short-term debt securities. Historically,
Short-Term Bond invested in both domestic and foreign securities, but since
early 1995 it has focused mainly on domestic securities. Short-Term World
has focused on both foreign and domestic securities since its inception.
Short-Term World's foreign exposure may offer opportunities for higher
returns than comparable domestic investments, due to the different risk
factors associated with investments in foreign securities (see Comparison
of Principal Risk Factors). In past years, however, foreign exposure has
also caused the Fund to experience significant share-price volatility. To
reduce volatility while retaining foreign market exposure, Short-Term
World's current investment strategy is to hedge all non-U.S.
dollar-denominated debt directly to U.S. dollars. This strategy reduces
foreign currency risk, but also offers less potential for outperformance of
a similarly situated domestic fund such as Short-Term Bond. In general, a
fully-hedged short-term foreign portfolio can be expected to perform
similarly to a domestic portfolio of similar average maturity and credit
quality. Since early 1995, when Short-Term World implemented its current
hedging strategy, the volatility and performance of the Funds have closely
resembled each other.
The following table compares the Funds' average annual total returns for
the periods indicated, as well as each Fund's cumulative total return for
the period from October 4, 1991 (commencement of operations of Short-Term
World) to April 30, 1996. Please note that total returns are based on past
results and are not an indication of future performance.

Average Annual Total Return Cumulative
(periods ended April 30) Total Return

October 4,
1992 1 1993 1994 1995 1996 1991 to
April 30,
1996

Short-Term World 4.42% 5.43% 3.17% -0.01% 7.83% 22.47%

Short-Term Bond 6.60% 8.85% 1.99% 2.17% 6.52% 28.79%

1 From the inception date of Short-Term World (October 4, 1991).
The following graph shows the value of a hypothetical $10,000 investment
in each Fund made on October 4, 1991, assuming all distributions are
reinvested. The graph compares the cumulative returns of the Funds on a
monthly basis over the same periods, and illustrates the short-term
volatility of their performance.
Performance Reporting & Analysis Fri Jun 21 11:48:14 EDT 1996
Fidelity Short-Term Bond Fund (450)
Hypothetical illustrating the growth of a no-load $10,000 investment made
at the market opening on Oct 4 1991.
All distributions have been reinvested.
Cumulative no-load total return is for the period Oct 4 1991 (market
opening) - Apr 30 1996 (market closing).
Period Total Value Cum Return
Ending

4-Oct-91 10,000.00

Oct-91 10,042.96

Nov-91 10,146.88

Dec-91 10,329.64

Jan-92 10,372.04

Feb-92 10,462.02

Mar-92 10,533.78

Apr-92 10,591.07

May-92 10,693.05

Jun-92 10,792.82

Jul-92 10,920.68

Aug-92 11,016.25

Sep-92 11,107.28

Oct-92 11,028.69

Nov-92 11,018.25

Dec-92 11,092.74

Jan-93 11,275.61

Feb-93 11,401.46

Mar-93 11,472.06

Apr-93 11,528.41

May-93 11,548.20

Jun-93 11,673.86

Jul-93 11,741.42

Aug-93 11,870.48

Sep-93 11,914.42

Oct-93 11,990.52

Nov-93 12,014.65

Dec-93 12,105.50

Jan-94 12,184.37

Feb-94 12,078.39

Mar-94 11,848.30

Apr-94 11,757.39

May-94 11,822.41

Jun-94 11,713.51

Jul-94 11,801.66

Aug-94 11,850.09

Sep-94 11,869.33

Oct-94 11,863.38

Nov-94 11,881.66

Dec-94 11,610.01

Jan-95 11,698.64

Feb-95 11,822.00

Mar-95 11,897.22

Apr-95 12,012.11

May-95 12,226.18

Jun-95 12,299.65

Jul-95 12,334.08

Aug-95 12,412.25

Sep-95 12,476.19

Oct-95 12,558.14

Nov-95 12,666.65

Dec-95 12,750.11

Jan-96 12,847.89

Feb-96 12,811.93

Mar-96 12,782.87

Apr-96 12,795.38 27.95

Fidelity Short-Term World Bond Fund (00465)
Hypothetical illustrating the growth of a no-load $10,000 investment made
at the market opening on Oct 4 1991.
All distributions have been reinvested.
Cumulative no-load total return is for the period Oct 4 1991 (market
opening) - Apr 30 1996 (market closing).
Period

Ending Total Value Cum Return

4-Oct-91 10,000.00

Oct-91 10,097.69

Nov-91 10,050.79

Dec-91 10,111.72

Jan-92 10,172.35

Feb-92 10,267.10

Mar-92 10,303.32

Apr-92 10,441.54

May-92 10,494.83

Jun-92 10,552.64

Jul-92 10,666.97

Aug-92 10,697.54

Sep-92 10,449.21

Oct-92 10,613.13

Nov-92 10,544.47

Dec-92 10,600.26

Jan-93 10,698.97

Feb-93 10,823.46

Mar-93 10,931.59

Apr-93 11,008.45

May-93 11,127.40

Jun-93 11,312.79

Jul-93 11,459.35

Aug-93 11,599.30

Sep-93 11,583.81

Oct-93 11,746.91

Nov-93 11,790.67

Dec-93 11,934.60

Jan-94 12,006.95

Feb-94 11,815.07

Mar-94 11,481.02

Apr-94 11,357.86

May-94 11,528.86

Jun-94 11,266.58

Jul-94 11,348.88

Aug-94 11,431.41

Sep-94 11,491.78

Oct-94 11,533.58

Nov-94 11,574.65

Dec-94 11,242.97

Jan-95 11,172.42

Feb-95 11,191.68

Mar-95 11,219.56

Apr-95 11,356.83

May-95 11,548.69

Jun-95 11,608.50

Jul-95 11,682.41

Aug-95 11,754.45

Sep-95 11,839.03

Oct-95 11,914.01

Nov-95 12,028.36

Dec-95 12,118.45

Jan-96 12,208.73

Feb-96 12,175.37

Mar-96 12,197.76

Apr-96 12,246.55 22.47

As illustrated by the graph, Short-Term Bond's cumulative total return has
been superior to Short-Term World's over the period since Short-Term
World's inception. At the same time, Short-Term World has experienced
greater volatility of returns from month to month, particularly in the
period from 1992 through 1994.
QUALITY OF PORTFOLIO SECURITIES. Short-Term World's policies limit its
investments to securities of Ba-quality or above and limit investments in
securities below Baa-quality (lower quality securities) to 10% of its
portfolio. In contrast, Short-Term Bond's policies allow it to invest up to
5% of its portfolio in securities rated below Baa-quality without
limitation. Thus, while Short-Term Bond has the ability to invest in
securities of lower quality than Short-Term World with respect to 5% of its
portfolio, Short-Term World may invest up to 10% of its assets in
securities rated below Baa (but not lower than Ba). However, Short-Term
World is required to invest 65% of its assets in securities of A-quality or
above and may, therefore, invest a higher portion of its assets in higher
quality securities than Short-Term Bond, which is not subject to a similar
limitation. As of April 30, 1996, assets invested in lower quality
securities for Short-Term World and Short-Term Bond were 1.6% and 2.2%,
respectively, and assets invested in securities rated A or above were 85.8%
and 71.8%, respectively.
DIVERSIFICATION. Short-Term World differs from Short-Term Bond with
respect to its policies on diversification. Unlike Short-Term Bond,
Short-Term World is a non-diversified fund. Generally, to meet federal tax
requirements at the close of each quarter, Short-Term World does not invest
more than 25% of its total assets in any one issuer and, with respect to
50% of total assets, does not invest more than 5% of its total assets in
any one issuer. Short-Term Bond, as a matter of fundamental policy, may
invest no more than 25% of its total assets in any one issuer, and with
respect to 75% of total assets, may not invest more than 5% in any one
issuer. Because Short-Term World can invest a greater portion of its assets
in securities of individual issuers than Short-Term Bond, changes in the
market value of a single issuer could cause greater share-price fluctuation
in Short-Term World than would occur in a more diversified fund such as
Short-Term Bond.
CONCENTRATION. As a matter of fundamental policy, Short-Term Bond may not
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the Fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry. Unlike Short-Term Bond,
Short-Term World must, under normal conditions, invest more than 25% of its
total assets in securities of issuers in the financial services industry.
It follows the same policy as Short-Term Bond, however, with respect to
concentration in the securities of issuers in any other industry. Companies
in the financial services industry are subject to various risks related to
that industry, such as government regulation, changes in interest rates,
and exposure on loans, including loans to foreign borrowers. Because
Short-Term World invests substantially in this industry, its performance
may be more directly affected by conditions affecting the industry than a
less concentrated fund such as Short-Term Bond.
ILLIQUID SECURITIES. Short-Term World may invest up to 15% of its assets
in illiquid securities while Short-Term Bond limits its investments in
illiquid securities to 10% of its assets. Because illiquid securities may
be difficult to sell at the prices at which they are valued, they may be
costly or result in a loss to a Fund. However, since January 1995, each
Fund has invested less than 5% of its assets in illiquid securities.
OTHER INVESTMENT POLICIES. Each Fund may borrow an amount equal to not
more than 33 1/3% of its total assets for temporary or emergency purposes
from banks or from other funds advised by FMR, or through reverse
repurchase agreements. Each Fund may lend securities or make other loans
equal to not more than 33 1/3% of its total assets to broker-dealers and
institutions, including Fidelity Brokerage Services Inc. (FBSI), an
affiliate of FMR, or to other funds advised by FMR, as a means of earning
income. In addition, each Fund may acquire loans, loan participations, or
other forms of direct debt instruments.
FMR normally invests each Fund's assets according to its investment
strategy. However, Short-Term Bond reserves the right to invest without
limitation in investment-grade money market instruments, and Short-Term
World may invest substantially in U.S. financial markets or U.S.
dollar-denominated instruments for temporary, defensive purposes. Both
Funds may also enter into when-issued and delayed delivery transactions and
invest in asset-backed and mortgage-backed securities and stripped
securities. As stated above, for more information about the risks and
restrictions associated with these polices see each Fund's Prospectus, and
for a more detailed discussion of the Funds' investments, see their
Statements of Additional Information, which are incorporated herein by
reference.
OPERATIONS OF SHORT-TERM BOND FOLLOWING THE REORGANIZATION
FMR does not expect Short-Term Bond to revise its investment policies as a
result of the Reorganization. In addition, FMR does not anticipate
significant changes to the Fund's management or to agents that provide the
Fund with services. Specifically, the Trustees and officers, the investment
adviser, distributor, and other agents will continue to serve Short-Term
Bond in their current capacities. Charles Morrison, who currently manages
Short-Term Bond's entire portfolio and Short-Term World's U.S. investments,
will continue to be responsible for Short-Term Bond's portfolio management
after the Reorganization.
All of the current investments held by Short-Term World are permissible
investments for Short-Term Bond. As explained above, however, Short-Term
World has a much larger percentage of its portfolio invested in foreign
securities. Therefore, if the Reorganization is approved, it is anticipated
that Short-Term World and Short-Term Bond may sell a portion of their
investments prior to or after the Closing Date so that the portfolio of the
combined fund will be more consistent with the allocation of assets of
Short-Term Bond's current portfolio. With respect to Short-Term World, if
the present strategy is maintained, the Fund may sell substantially all of
its foreign holdings between the date of shareholder approval of the
Reorganization and the Closing Date. Any transaction costs associated with
such adjustment to the portfolios of Short-Term World and Short-Term Bond
will be borne by Short-Term World and Short-Term Bond, respectively, or by
Short-Term Bond after the Reorganization takes place.
The Funds may recognize a taxable gain or loss due to these portfolio
adjustments. The sale or maturity of bonds or other short-term debt
instruments denominated in a foreign currency by Short-Term World or
Short-Term Bond may result in foreign currency gains or losses, which are
treated as ordinary income or loss for tax purposes. The sale or
disposition of foreign currency contracts by the Funds may also result in
foreign currency gain or loss. Short-Term Bond may acquire certain bonds
from Short-Term World with unrealized foreign currency losses; Short-Term
Bond may subsequently sell such bonds and realize these foreign currency
losses. Foreign currency losses may result in the recharacterization of all
or a portion of the Funds' dividend distributions as returns of capital.
PURCHASES AND REDEMPTIONS
The purchase and redemption policies for both Funds are substantially the
same and those for Short-Term Bond will remain unchanged after the
Reorganization.
Both Funds' share price, or net asset value per share (NAV), is normally
calculated at 4:00 p.m. Eastern time every business day. Shares of both
Funds are sold without a sales charge. Shares are purchased at the next
share price calculated after an investment is received and accepted. Refer
to a Fund's Prospectus for more information regarding how to buy shares.
Shares of both Funds may be redeemed on any business day at their NAV.
Shares of both Funds are redeemed at the next share price calculated after
an order is received and accepted, normally 4:00 p.m. Eastern time.
On or about July 15, 1996, Short-Term World's shares ceased to be
available to new accounts, so that starting on July 16, 1996, the Fund's
shares were no longer available for purchase or exchange by
non-shareholders. However, existing shareholders of Short-Term World,
including participants in an employee benefit plan which offered the Fund
as an investment vehicle on or prior to that date (except participants in
an employee benefit plan for which an affiliate of FMR maintains the
accounts at the participant level other than pursuant to a record-keeping
agreement), will continue to be able to purchase shares of Short-Term World
up to August 14, 1996 (the Record Date). As of the Record Date, Short-Term
World will be closed to all new and subsequent purchases with the exception
of reinvestment of dividends or other distributions; however, all
shareholders will be permitted to continue to redeem shares through the
Closing Date.
EXCHANGES
The exchange privilege currently offered by both Funds is the same and is
not expected to change after the Reorganization. Shareholders of the Funds
may exchange their shares of a Fund for shares of any other Fidelity fund
registered in a shareholder's state. Refer to each Fund's Prospectus for
restrictions governing exchanges.
DIVIDENDS AND OTHER DISTRIBUTIONS
Each Fund distributes substantially all of its net investment income and
capital gains to shareholders each year. Short-Term Bond declares dividends
daily and pays them monthly and normally distributes capital gains in June
and December. Short-Term World declares dividends daily and pays them
monthly and normally distributes capital gains in February and December. On
or before the Closing Date, Short-Term World will distribute substantially
all of its investment company taxable income and net realized capital gain,
if any, in order to maintain its tax status as a regulated investment
company.
Short-Term World will be required to recognize gain or loss on Section
1256 contracts held by the Fund on the last day of its taxable year, which
is typically December 31. If the Reorganization is approved, gains or
losses on Section 1256 contracts held on the Closing Date will be
recognized on the Closing Date.
Dispositions of securities and foreign currency contracts prior to the
merger may result in foreign currency losses which, for tax purposes, may
result in the recharacterization of certain distributions as non-taxable
(or return of capital) distributions. Such recharacterization would reduce
the taxable portion of a shareholder's distributions. A shareholder's cost
basis will be reduced by the amount of the return of capital.
FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION
Each Fund has received an opinion of its counsel, Kirkpatrick & Lockhart
LLP, that the Reorganization will constitute a tax-free reorganization
within the meaning of Section 368 (a)(1)(C) of the Internal Revenue Code of
1986, as amended (the Code). Accordingly, except with respect to Section
1256 contracts, no gain or loss will be recognized to the Funds or their
shareholders as a result of the Reorganization. Please see the section
entitled "Federal Income Tax Considerations" for more information.
Short-Term World and Short-Term Bond have capital loss carryforwards for
federal tax purposes of $32,195,526 and $134,757,243 as of December 31,
1995 and April 30, 1996, respectively. Under current federal tax law,
Short-Term Bond may be limited to using only a portion, if any, of the
capital loss carryforward transferred by Short-Term World at the time of
the Reorganization. There is no assurance that Short-Term Bond will be able
to realize sufficient capital gains to use its capital loss carryforward as
well as a portion, if any, of Short-Term World's capital loss carryforward,
before they expire. The capital loss carryforward attributable to
Short-Term World will expire between April 30, 1999 and April 30, 2003. The
capital loss carryforward attributable to Short-Term Bond will expire
between April 30, 1997 and April 30, 2004.
COMPARISON OF PRINCIPAL RISK FACTORS
Both Funds are subject to the risks normally associated with bond funds.
As described more fully below, however, although both Funds have the
ability to invest in foreign debt securities, Short-Term World currently
exercises this flexibility to a more significant extent. Investments in
foreign securities may involve risks in addition to those attributable to
domestic investments.
FOREIGN DEBT SECURITIES. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations may
involve additional risks and considerations compared to the risks
associated with domestic securities. These risks include those relating to
political or economic conditions in foreign countries, fluctuations in
foreign currencies, withholding or other taxes, operational risks,
increased regulatory burdens, and the potentially less stringent investor
protection and disclosure standards of foreign markets. Additionally,
governmental issuers of foreign securities may be unwilling to repay
principal and interest when due or allow repatriation of amounts paid, and
may require that the conditions for payment be renegotiated. All of these
factors can make the prices of foreign investments more volatile.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. Diversification may include limiting the amount of
money invested in any one issuer or, on a broader scale, in any one
industry. A fund that is not diversified may be more sensitive to changes
in the market value of a single issuer or industry. As described above,
Short-Term World has the flexibility to invest in fewer issuers than
Short-Term Bond because it is a non-diversified fund.
CONCENTRATION. Concentrating a fund's investment portfolio in a certain
industry can increase the risks of investing. As described above,
Short-Term World, as a matter of fundamental policy, invests at least 25%
of its assets in the financial services industry. A fund that is
concentrated in the financial services industry is subject to various risks
related to that industry, including government regulation, changes in
interest rates, and exposure on loans, including loans to foreign
borrowers. Therefore, because Short-Term World is required to invest at
least 25% of its assets in the financial services industry, its performance
may be affected to a greater extent than would Short-Term Bond's by
conditions affecting the industry.
THE PROPOSED TRANSACTION
TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN FIDELITY
SHORT-TERM WORLD BOND FUND AND FIDELITY SHORT-TERM BOND FUND.
REORGANIZATION PLAN
The terms and conditions under which the proposed transaction may be
consummated are set forth in the Agreement. Significant provisions of the
Agreement are summarized below; however, this summary is qualified in its
entirety by reference to the Agreement, a copy of which is attached as
Exhibit I to this Proxy Statement.
The Agreement contemplates (a) Short-Term Bond acquiring on the Closing
Date all of the assets of Short-Term World in exchange solely for shares of
Short-Term Bond and the assumption by Short-Term Bond of Short-Term World's
liabilities; and (b) the distribution of shares of Short-Term Bond on the
Closing Date to the shareholders of Short-Term World as provided for in the
Agreement.
The assets of Short-Term World to be acquired by Short-Term Bond include
all cash, cash equivalents, securities, receivables (including interest or
dividends receivable), claims, choses in action, and other property owned
by Short-Term World, and any deferred or prepaid expenses shown as an asset
on the books of Short-Term World on the Closing Date. Short-Term Bond will
assume from Short-Term World all liabilities, debts, obligations, and
duties of Short-Term World of whatever kind or nature, whether absolute,
accrued, contingent, or otherwise, whether or not arising in the ordinary
course of business, whether or not determinable on the Closing Date, and
whether or not specifically referred to in the Agreement; provided,
however, that Short-Term World will use its best efforts, to the extent
practicable, to discharge all of its known liabilities prior to the Closing
Date. Short-Term Bond will deliver to Short-Term World shares of Short-Term
Bond equal in value to the net asset value per share of Short-Term World
multiplied by the number of shares of Short-Term World then outstanding,
which Short-Term World shall then distribute PRO RATA to its shareholders.
The value of Short-Term World's assets to be acquired by Short-Term Bond
and the amount of its liabilities to be assumed by Short-Term Bond will be
determined as of the close of business (4:00 p.m. Eastern time) of
Short-Term World on the Closing Date, using the valuation procedures set
forth in Short-Term World's then-current Prospectus and Statement of
Additional Information. The net asset value of a share of Short-Term Bond
will be determined as of the same time using the valuation procedures set
forth in its then-current Prospectus and Statement of Additional
Information.
On the Closing Date, Short-Term World will distribute to its shareholders
of record the shares of Short-Term Bond it received in exchange for their
shares of Short-Term World, so that each Short-Term World shareholder will
receive the number of full and fractional shares of Short-Term Bond equal
in value to the aggregate net asset value of shares of Short-Term World
held by such shareholder on the Closing Date; Short-Term World will be
liquidated as soon as practicable thereafter. Such distribution will be
accomplished by opening accounts on the books of Short-Term Bond in the
names of the Short-Term World shareholders and by transferring thereto
shares of Short-Term Bond. Each Short-Term World shareholder's account
shall be credited with the respective PRO RATA number of full and
fractional shares (rounded to the third decimal place) of Short-Term Bond
due that shareholder. Short-Term Bond shall not issue certificates
representing its shares in connection with such exchange.
Accordingly, immediately after the Reorganization, each former Short-Term
World shareholder will own shares of Short-Term Bond equal to the aggregate
net asset value of that shareholder's shares of Short-Term World
immediately prior to the Reorganization. The net asset value per share of
Short-Term Bond will be unchanged by the transaction. Thus, the
Reorganization will not result in a dilution of any shareholder interest.
Any transfer taxes payable upon issuance of shares of Short-Term Bond in a
name other than that of the registered holder of the shares on the books of
Short-Term World as of that time shall be paid by the person to whom such
shares are to be issued as a condition of such transfer. Any reporting
responsibility of Short-Term World is and will continue to be its
responsibility up to and including the Closing Date and such later date on
which Short-Term World is liquidated.
Short-Term World will bear the cost of the Reorganization, including
professional fees, expenses associated with the filing of registration
statements, and the cost of soliciting proxies for the Meeting, which will
consist principally of printing and mailing prospectuses and proxy
statements, together with the cost of any supplementary solicitation.
Additionally, there may be some transaction costs associated with portfolio
adjustments to Short-Term World and Short-Term Bond due to the
Reorganization, which will be borne by Short-Term World and Short-Term
Bond, respectively. The Funds may recognize a taxable gain or loss on the
disposition of securities pursuant to these portfolio adjustments. See the
section entitled "Reasons for the Reorganization."
The consummation of the Reorganization is subject to a number of
conditions set forth in the Agreement, some of which may be waived by a
Fund. In addition, the Agreement may be amended in any mutually agreeable
manner, except that no amendment that may have a materially adverse effect
on the shareholders' interests may be made subsequent to the Meeting.
REASONS FOR THE REORGANIZATION
The Boards of Trustees (the Boards) of both Funds have determined that the
Reorganization is in the best interests of the shareholders of both Funds
and that the Reorganization will not result in a dilution of any
shareholders' interests.
In considering the Reorganization, the Boards considered a number of
factors, including the following:
(1) the compatibility of the Funds' investment objectives and policies;
(2) the historical performance and volatility of the Funds;
(3) the relative expense ratios of the Funds;
(4) the costs to be incurred by each Fund as a result of the
Reorganization;
(5) the tax consequences of the Reorganization;
(6) the services available to shareholders before and after the
Reorganization;
(7) the relative size of the Funds; and
(8) the elimination of duplicative funds and benefit to FMR.
FMR recommended the Reorganization to the Boards at a meeting of the
Boards on May 16, 1996. In recommending the Reorganization, FMR also
advised the Boards that the Funds have generally compatible investment
objectives and policies, with the material differences noted, and that the
Funds have similar investment strategies, with the material differences
noted.
The Boards further considered the relative risk/return characteristics of
the Funds. The Board specifically weighed the fact that Short-Term World's
attempt to reduce volatility by hedging its investments in foreign currency
denominated securities into U.S. dollars has reduced the potential for
higher returns that otherwise might be gained from foreign exposure and
considered that, while this strategy still exposes the Fund to foreign
investment risk, it does not provide any significant benefit over similarly
positioned domestic funds. Accordingly, the Boards considered that if the
Reorganization is approved, the former shareholders of Short-Term World
would have the opportunity to invest in a short-term bond fund with a
similar performance and volatility profile as Short-Term World.
The Boards also considered that former shareholders of Short-Term World
will receive shares of Short-Term Bond equal to the value of their shares
of Short-Term World. In addition, the Funds will receive an opinion of
counsel that the Reorganization will not result in any gain or loss for
federal income tax purposes either to Short-Term World or Short-Term Bond
or to the shareholders of either Fund.
Furthermore, the Boards considered that combining the Funds would result
in an immediate benefit to shareholders of Short-Term World by lowering
expenses, as a percentage of net assets, currently borne by the
shareholders of Short-Term World, because Short-Term Bond's management fee
and other expenses are lower than Short-Term World's. In addition, FMR
informed the Boards that Short-Term World would pay the costs associated
with the Reorganization, including professional fees and the costs of proxy
solicitation. FMR further informed the Boards that although the Funds would
bear any costs (as described above) associated with portfolio adjustments
resulting from the Reorganization, FMR believed that such costs would be
minimal. Moreover, the Boards weighed these potential costs against the
reduction in expenses that would be experienced by Short-Term World
shareholders if the Reorganization is approved.
In addition, the Boards considered that the Funds have the same dividend
policies, purchase and exchange provisions, fees, redemption procedures,
and automatic reinvestment policies.
Finally, the Boards considered the proposed Reorganization in the context
of a general goal of reducing the number of duplicative funds managed by
FMR. FMR advised the Boards that Short-Term World has not been successful
in attracting or retaining assets and that Short-Term Bond has a wider
appeal among investors. While the reduction of duplicative funds and funds
with lower assets potentially would benefit FMR, it also should benefit
shareholders by facilitating increased operational efficiencies.
DESCRIPTION OF THE SECURITIES TO BE ISSUED
Fidelity Fixed-Income Trust (the trust) is registered with the Securities
and Exchange Commission as an open-end management investment company. The
trust's Trustees are authorized to issue an unlimited number of shares of
beneficial interest of separate series. Short-Term Bond is one of five
funds of the trust. Each share of Short-Term Bond represents an equal
proportionate interest with each other share of the Fund, and each such
share of Short-Term Bond is entitled to equal voting, dividend,
liquidation, and redemption rights. Each shareholder of the Fund is
entitled to one vote for each dollar value of net asset value of the Fund
that shareholder owns. Shares of Short-Term Bond have no preemptive or
conversion rights. The voting and dividend rights, the right of redemption,
and the privilege of exchange are described in the Fund's Prospectus.
Shares are fully paid and nonassessable, except as set forth in the Fund's
Statement of Additional Information under the heading "Shareholder and
Trustee Liability."
The trust does not hold annual meetings of shareholders. There normally
will be no meetings of shareholders for the purpose of electing Trustees
unless less than a majority of the Trustees holding office have been
elected by shareholders, at which time the Trustees then in office will
call a shareholders meeting for the election of Trustees. Under the 1940
Act, shareholders of record of at least two-thirds of the outstanding
shares of an investment company may remove a Trustee by votes cast in
person or by proxy at a meeting called for that purpose. The Trustees are
required to call a meeting of shareholders for the purpose of voting upon
the question of removal of any Trustee when requested in writing to do so
by the shareholders of record holding at least 10% of the trust's
outstanding shares.
FEDERAL INCOME TAX CONSIDERATIONS
The exchange of Short-Term World's assets for Short-Term Bond's shares and
the assumption of the liabilities of Short-Term World by Short-Term Bond
are intended to qualify for federal income tax purposes as a tax-free
reorganization under the Code. With respect to the Reorganization, the
participating Funds have received an opinion from Kirkpatrick & Lockhart
LLP, counsel to Short-Term World and Short-Term Bond, substantially to the
effect that:
(i) The acquisition by Short-Term Bond of all of the assets of Short-Term
World solely in exchange for Short-Term Bond shares and the assumption by
Short-Term Bond of Short-Term World's liabilities, followed by the
distribution by Short-Term World of Short-Term Bond shares to the
shareholders of Short-Term World pursuant to the liquidation of Short-Term
World and constructively in exchange for their Short-Term World shares will
constitute a reorganization within the meaning of section 368(a)(1)(C) of
the Code, and Short-Term World and Short-Term Bond will each be "a party to
a reorganization" within the meaning of section 368(b) of the Code;
(ii) No gain or loss will be recognized by Short-Term World upon the
transfer of all of its assets to Short-Term Bond in exchange solely for
Short-Term Bond shares and Short-Term Bond's assumption of Short-Term
World's liabilities, followed by Short-Term World's subsequent distribution
of those shares to shareholders in liquidation of Short-Term World;
(iii) No gain or loss will be recognized by Short-Term Bond upon the
receipt of the assets of Short-Term World in exchange solely for Short-Term
Bond shares and its assumption of Short-Term World's liabilities;
(iv) The shareholders of Short-Term World will recognize no gain or loss
upon the exchange of their Short-Term World shares solely for Short-Term
Bond shares pursuant to the terms of the Reorganization;
(v) The basis of Short-Term World's assets in the hands of Short-Term Bond
will be the same as the basis of those assets in the hands of Short-Term
World immediately prior to the Reorganization, and the holding period of
those assets in the hands of Short-Term Bond will include the holding
period of those assets in the hands of Short-Term World;
(vi) The basis of Short-Term World shareholders in Short-Term Bond shares
will be the same as their basis in Short-Term World shares to be
surrendered in exchange therefor; and
(vii) The holding period of the Short-Term Bond shares to be received by
the Short-Term World shareholders will include the period during which the
Short-Term World shares to be constructively surrendered in exchange
therefore were held, provided such Short-Term World shares were held as
capital assets by those shareholders on the date of the Reorganization.
Shareholders of Short-Term World should consult their tax advisers
regarding the effect, if any, of the proposed Reorganization in light of
their individual circumstances. Because the foregoing discussion only
relates to the federal income tax consequences of the Reorganization, those
shareholders also should consult their tax advisers as to state and local
tax consequences, if any, of the Reorganization.
CAPITALIZATION
The following tables show the capitalization of the Funds as of April 30,
1996 and on a pro forma combined basis (unaudited) as of that date giving
effect to the Reorganization.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PRO FORMA
SHORT-TERM WORLD SHORT-TERM BOND COMBINED FUND

Net Assets $105,426,765 $1,048,497,279 $1,153,924,044

Net Asset Value Per Share $8.92 $8.72 $8.72

Shares Outstanding 11,822,123 120,287,155 132,377,380
</TABLE>
CONCLUSION
The Agreement and Plan of Reorganization and the transactions provided for
therein were approved by the Boards at a meeting held on May 16, 1996. The
Boards of Trustees of Fidelity Investment Trust and Fidelity Fixed-Income
Trust determined that the proposed Reorganization is in the best interests
of shareholders of each Fund and that the interests of existing
shareholders of Short-Term World and Short-Term Bond would not be diluted
as a result of the Reorganization. In the event that the Reorganization is
not consummated, Short-Term World will continue to engage in business as a
fund of a registered investment company and the Board of Fidelity
Investment Trust will consider other proposals for the reorganization or
liquidation of the Fund.
ADDITIONAL INFORMATION ABOUT FIDELITY SHORT-TERM BOND FUND
FINANCIAL HIGHLIGHTS

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

2.Years ended April 30 1996 1995F 1994C 1993 1992 1991 1990 1989 1988 1987D

3.Net asset value, $ 8.72 $ 9.08 $ 9.51 $ 9.43 $ 9.18 $ 9.17 $ 9.18 $ 9.47 $ 9.67 $ 10.0
beginning of period 0 0 0 0 0 0 0 0 0 00

4.Income from Investment
Operations .579 .344 .588 .744 .810 .792 .778 .809 .840 .481
Net investment income

5. Net realized and (.020) (.156) (.392) .063 .251 .040 (.010) (.290) (.200) (.330)
unrealized gain (loss) E

6. Total from investment .559 .188 .196 .807 1.061 .832 .768 .519 .640 .151
operations

7.Less Distributions (.504) (.430) (.592) (.727) (.811) (.822) (.778) (.809) (.840) (.481)
From net investment income

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

9. Return of capital (.055) (.118) -- -- -- -- -- -- -- --

10. Total distributions (.559) (.548) (.626) (.727) (.811) (.822) (.778) (.809) (.840) (.481)

11.Net asset value, end of
period $ 8.72 $ 8.72 $ 9.08 $ 9.51 $ 9.43 $ 9.18 $ 9.17 $ 9.18 $ 9.47 $ 9.67
0 0 0 0 0 0 0 0 0 0

12.Total returnA,G 6.52 2.17 1.99 8.85 12.00 9.49 8.58 5.74 6.91 1.49
% % % % % % % % % %

</TABLE>

RATIOS AND SUPPLEMENTAL DATA

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
13.Net assets, end of period $ 1,04 $ 1,30 $ 1,96 $ 1,99 $ 984 $ 235 $ 197 $ 237 $ 382 $ 137
(In millions) 8 4 2 0

14.Ratio of expenses .69% .69% .80% .77% .86% .83% .83% .89% .88% .90%
to average net assets H H,I

15.Ratio of expenses to .68% .69% .80% .77% .86% .83% .83% .89% .88% .90%I
average net assets after
expense reductions B

16.Ratio of net investment
income to average net assets 6.37 6.37 6.70 7.68 8.23 8.65 8.28 8.77 8.77 8.40
% % % % % % % % % %I

17.Portfolio turnover rate 151% 113% 73% 63% 87% 164% 148% 171% 251% 149%I

</TABLE>

A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
B FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
C 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.
D FROM SEPTEMBER 15, 1986 (COMMENCEMENT OF OPERATIONS).
E THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET GAIN ON INVESTMENTS FOR THE PERIOD ENDED DUE TO THE TIMING OF
SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING MARKET
VALUES OF INVESTMENTS OF THE FUND.
F AMOUNTS HAVE BEEN ADJUSTED TO CONFORM WITH PRESENT PERIOD ACCOUNTING
POLICIES.
G TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
H FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
I ANNUALIZED
MISCELLANEOUS
AVAILABLE INFORMATION. Fidelity Fixed-Income Trust and Fidelity Investment
Trust are subject to the informational requirements of the Securities
Exchange Act of 1934 and the 1940 Act, and in accordance therewith file
reports, proxy material, and other information with the Securities and
Exchange Commission (the Commission). Such reports, proxy material, and
other information can be inspected and copied at the Public Reference Room
maintained by the Commission at 450 Fifth Street, N.W., Washington D.C.
20549. Copies of such material can also be obtained from the Public
Reference Branch Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington D.C. 20549, at prescribed
rates.
LEGAL MATTERS. Certain legal matters in connection with the issuance of
Short-Term Bond's shares will be passed upon by Kirkpatrick & Lockhart LLP,
counsel to the trusts.
EXPERTS. The audited financial statements of Short-Term Bond, incorporated
herein by reference into the Statement of Additional Information, have been
examined by Coopers & Lybrand, L.L.P, independent accountants (Coopers),
whose report thereon is included in the Annual Report to Shareholders for
the fiscal year ended April 30, 1996. The audited financial statements of
Short-Term World, incorporated herein by reference into the Statement of
Additional Information, have been examined by Coopers, whose report thereon
is included in the Annual Report to Shareholders for the fiscal year ended
December 31, 1995. The financial statements audited by Coopers have been
incorporated by reference in reliance on their reports given on their
authority as experts in auditing and accounting.

Exhibit 1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the Agreement) is made as of
the 12th day of August, 1996, by and between Fidelity Investment Trust, a
Massachusetts business trust, on behalf of Fidelity Short-Term World Bond
Fund (Short-Term World), a series of Fidelity Investment Trust, and
Fidelity Fixed-Income Trust, a Massachusetts business trust, on behalf of
Fidelity Short-Term Bond Fund (Short-Term Bond), a series of Fidelity
Fixed-Income Trust. Fidelity Investment Trust and Fidelity Fixed-Income
Trust may be referred to herein collectively as the "Trusts" or each
individually as a "Trust." Short-Term Bond and Short-Term World may be
referred to herein collectively as the "Funds" or each individually as the
"Fund."
This Agreement is intended to be, and is adopted as, a plan of
reorganization within the meaning of Section 368(a)(1)(C) of the Internal
Revenue Code of 1986, as amended (the Code). The reorganization will
comprise: (a) the transfer of all of the assets of Short-Term World to
Short-Term Bond solely in exchange for shares of beneficial interest in
Short-Term Bond (the Short-Term Bond Shares) and the assumption by
Short-Term Bond of Short-Term World's liabilities; and (b) the constructive
distribution of such shares by Short-Term World PRO RATA to its
shareholders in complete liquidation and termination of Short-Term World in
exchange for all of Short-Term World's outstanding shares. Short-Term World
shall receive shares of Short-Term Bond having an aggregate net asset value
equal to the value of the assets of Short-Term World on the closing date
(as defined below), which Short-Term World shall then distribute PRO RATA
to its shareholders. The foregoing transactions are referred to herein as
the "Reorganization."
In consideration of the mutual promises and subject to the terms and
conditions herein, the parties covenant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF SHORT-TERM WORLD. Short-Term World
represents and warrants to and agrees with Short-Term Bond that:
(a) Short-Term World is a series of Fidelity Investment Trust, a business
trust duly organized, validly existing, and in good standing under the laws
of the Commonwealth of Massachusetts, and has the power to own all of its
properties and assets and to carry out its obligations under this
Agreement. It has all necessary federal, state, and local authorizations to
carry on its business as now being conducted and to carry out this
Agreement;
(b) Fidelity Investment Trust is an open-end, management investment
company duly registered under the Investment Company Act of 1940, as
amended (the 1940 Act), and such registration is in full force and effect;
(c) The Prospectus and Statement of Additional Information of Short-Term
World dated February 26, 1996 and Supplement to the Prospectus dated June
24, 1996 previously furnished to Short-Term Bond, did not and does not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading;
(d) There are no material legal, administrative, or other proceedings
pending or, to the knowledge of Short-Term World, threatened against
Short-Term World which assert liability on the part of Short-Term World.
Short-Term World knows of no facts which might form the basis for the
institution of such proceedings;
(e) Short-Term World is not in, and the execution, delivery, and
performance of this Agreement will not result in, violation of any
provision of its Restated Declaration of Trust or By-laws, or, to the
knowledge of Short-Term World, of any agreement, indenture, instrument,
contract, lease, or other undertaking to which Short-Term World is a party
or by which Short-Term World is bound or result in the acceleration of any
obligation or the imposition of any penalty under any agreement, judgment
or decree to which Short-Term World is a party or is bound;
(f) The Statement of Assets and Liabilities, the Statement of Operations,
the Statement of Changes in Net Assets, Financial Highlights, and the
Schedule of Investments (including market values) of Short-Term World at
December 31, 1995, have been audited by Coopers & Lybrand L.L.P.,
independent accountants, and have been furnished to Short-Term Bond. Said
Statement of Assets and Liabilities and Schedule of Investments fairly
present the Fund's financial position as of such date and said Statement of
Operations, Changes in Net Assets, and Financial Highlights fairly reflect
its results of operations, changes in financial position, and financial
highlights for the periods covered thereby in conformity with generally
accepted accounting principles consistently applied;
(g) Short-Term World has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on its
Statement of Assets and Liabilities as of December 31, 1995 and those
incurred in the ordinary course of Short-Term World's business as an
investment company since December 31, 1995;
(h) The registration statement (Registration Statement) filed with the
Securities and Exchange Commission (Commission) by Short-Term Bond on Form
N-14 relating to the shares of Short-Term Bond issuable hereunder and the
proxy statement of Short-Term World included therein (Proxy Statement), on
the effective date of the Registration Statement and insofar as they relate
to Short-Term World (i) will comply in all material respects with the
provisions of the Securities Act of 1933, as amended (the 1933 Act), the
Securities Exchange Act of 1934, as amended (the 1934 Act), and the 1940
Act, and the rules and regulations thereunder, and (ii) will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; and at the time of the shareholders' meeting referred to in
Section 7 and on the Closing Date, the prospectus contained in the
Registration Statement of which the Proxy Statement is a part (the
Prospectus), as amended or supplemented, insofar as it relates to
Short-Term World, will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading;
(i) All material contracts and commitments of Short-Term World (other than
this Agreement) will be terminated without liability to Short-Term World
prior to the Closing Date (other than those made in connection with
redemption of shares and the purchase and sale of portfolio securities made
in the ordinary course of business);
(j) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by Short-Term World
of the transactions contemplated by this Agreement, except such as have
been obtained under the 1933 Act, the 1934 Act, the 1940 Act, and state
securities or blue sky laws (which term as used herein shall include the
District of Columbia and Puerto Rico);
(k) Short-Term World has filed or will file all federal and state tax
returns which, to the knowledge of Short-Term World's officers, are
required to be filed by Short-Term World and has paid or will pay all
federal and state taxes shown to be due on said returns or provision shall
have been made for the payment thereof, and, to the best of Short-Term
World's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to such returns;
(l) Short-Term World has met the requirements of Subchapter M of the Code
for qualification and treatment as a regulated investment company for all
prior taxable years and intends to meet such requirements for its current
taxable year ending on the Closing Date (as defined in Section 6);
(m) All of the issued and outstanding shares of Short-Term World are, and
at the Closing Date will be, duly and validly issued and outstanding and
fully paid and nonassessable as a matter of Massachusetts law (except as
disclosed in the Fund's Statement of Additional Information), and have been
offered for sale and in conformity with all applicable federal securities
laws. All of the issued and outstanding shares of Short-Term World will, at
the Closing Date, be held by the persons and in the amounts set forth in
the list of shareholders submitted to Short-Term Bond in accordance with
this Agreement;
(n) At both the Valuation Time (as defined in Section 4) and the Closing
Date (as defined in Section 6), Short-Term World will have the full right,
power, and authority to sell, assign, transfer, and deliver its portfolio
securities and any other assets of Short-Term World to be transferred to
Short-Term Bond pursuant to this Agreement. At the Closing Date, subject
only to the delivery of Short-Term World's portfolio securities and any
such other assets as contemplated by this Agreement, Short-Term Bond will
acquire Short-Term World's portfolio securities and any such other assets
subject to no encumbrances, liens, or security interests (except for those
that may arise in the ordinary course and are disclosed to Short-Term Bond)
and without any restrictions upon the transfer thereof; and
(o) The execution, performance, and delivery of this Agreement will have
been duly authorized prior to the Closing Date by all necessary corporate
action on the part of Short-Term World, and this Agreement constitutes a
valid and binding obligation of Short-Term World enforceable in accordance
with its terms, subject to shareholder approval.
2. REPRESENTATIONS AND WARRANTIES OF SHORT-TERM BOND. Short-Term Bond
represents and warrants to and agrees with Short-Term World that:
(a) Short-Term Bond is a series of Fidelity Fixed-Income Trust, a business
trust duly organized, validly existing, and in good standing under the laws
of the Commonwealth of Massachusetts, and has the power to own all of its
properties and assets and to carry out its obligations under this
Agreement. It has all necessary federal, state, and local authorizations to
carry on its business as now being conducted and to carry out this
Agreement;
(b) Fidelity Fixed-Income Trust is an open-end, management investment
company duly registered under the 1940 Act, and such registration is in
full force and effect;
(c) The Prospectus and Statement of Additional Information of Short-Term
Bond, dated June 24, 1996, previously furnished to Short-Term World did not
and does not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading;
(d) There are no material legal, administrative, or other proceedings
pending or, to the knowledge of Short-Term Bond, threatened against
Short-Term Bond which assert liability on the part of Short-Term Bond.
Short-Term Bond knows of no facts which might form the basis for the
institution of such proceedings;
(e) Short-Term Bond is not in, and the execution, delivery, and
performance of this Agreement will not result in, violation of any
provision of its Amended and Restated Declaration of Trust or By-laws, or,
to the knowledge of Short-Term Bond, of any agreement, indenture,
instrument, contract, lease, or other undertaking to which Short-Term Bond
is a party or by which Short-Term Bond is bound or result in the
acceleration of any obligation or the imposition of any penalty under any
agreement, judgment, or decree to which Short-Term Bond is a party or is
bound;
(f) The Statement of Assets and Liabilities, the Statement of Operations,
the Statement of Changes in Net Assets, Financial Highlights, and the
Schedule of Investments (including market values) of Short-Term Bond at
April 30, 1996, have been audited by Coopers & Lybrand L.L.P., independent
accountants, and have been furnished to Short-Term World. Said statement of
Assets and Liabilities and Schedule of Investments fairly present its
financial position as of such date and said Statement of Operations,
Changes in Net Assets, and Financial Highlights fairly reflect its results
of operations, changes in financial position, and financial highlights for
the periods covered thereby in conformity with generally accepted
accounting principles consistently applied;
(g) Short-Term Bond has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on its
Statement of Assets and Liabilities as of April 30, 1996 and those incurred
in the ordinary course of Short-Term Bond's business as an investment
company since April 30, 1996;
(h) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by Short-Term Bond
of the transactions contemplated by this Agreement, except such as have
been obtained under the 1933 Act, the 1934 Act, the 1940 Act, and state
securities or blue sky laws (which term as used herein shall include the
District of Columbia and Puerto Rico);
(i) Short-Term Bond has filed or will file all federal and state tax
returns which, to the knowledge of Short-Term Bond's officers, are required
to be filed by Short-Term Bond and has paid or will pay all federal and
state taxes shown to be due on said returns or provision shall have been
made for the payment thereof, and, to the best of Short-Term Bond's
knowledge, no such return is currently under audit and no assessment has
been asserted with respect to such returns;
(j) Short-Term Bond has met the requirements of Subchapter M of the Code
for qualification and treatment as a regulated investment company for all
prior taxable years and intends to meet such requirements for its current
taxable year ending on April 30, 1997;
(k) By the Closing Date, the shares of beneficial interest of Short-Term
Bond to be issued to Short-Term World will have been duly authorized and,
when issued and delivered pursuant to this Agreement, will be legally and
validly issued and will be fully paid and nonassessable (except as
disclosed in the Fund's Statement of Additional Information) by Short-Term
Bond, and no shareholder of Short-Term Bond will have any preemptive right
of subscription or purchase in respect thereof;
(l) The execution, performance, and delivery of this Agreement will have
been duly authorized prior to the Closing Date by all necessary corporate
action on the part of Short-Term Bond, and this Agreement constitutes a
valid and binding obligation of Short-Term Bond enforceable in accordance
with its terms, subject to approval by the shareholders of Short-Term
World;
(m) The Registration Statement and the Proxy Statement, on the effective
date of the Registration Statement and insofar as they relate to Short-Term
Bond, (i) will comply in all material respects with the provisions of the
1933 Act, the 1934 Act, and the 1940 Act, and the rules and regulations
thereunder, and (ii) will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and at the time of
the shareholders' meeting referred to in Section 7 and on the Closing Date,
the Prospectus, as amended or supplemented, insofar as it relates to
Short-Term Bond, will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading;
(n) The issuance of the Short-Term Bond Shares pursuant to this Agreement
will be in compliance with all applicable federal securities laws; and
(o) All of the issued and outstanding shares of Short-Term Bond have been
offered for sale and sold in conformity with the federal securities laws.
3. REORGANIZATION.
(a) Subject to the requisite approval of the shareholders of Short-Term
World and to the other terms and conditions contained herein, Short-Term
World agrees to assign, sell, convey, transfer, and deliver to Short-Term
Bond on the Closing Date (as defined in Section 6) all of the assets of
Short-Term World of every kind and nature existing on the Closing Date.
Short-Term Bond agrees in exchange therefore: (i) to assume all of
Short-Term World's liabilities existing on or after the Closing Date,
whether or not determinable on the Closing Date, and (ii) to issue and
deliver to Short-Term World the number of full and fractional shares of
Short-Term Bond having an aggregate net asset value equal to the value of
the assets of Short-Term World transferred hereunder, less the value of the
liabilities of Short-Term World, determined as provided for under Section
4.
(b) The assets of Short-Term World to be acquired by Short-Term Bond shall
include, without limitation, all cash, cash equivalents, securities,
receivables (including interest or dividends receivable), claims, choses in
action, and other property owned by Short-Term World, and any deferred or
prepaid expenses shown as an asset on the books of Short-Term World on the
Closing Date. Short-Term World will pay or cause to be paid to Short-Term
Bond any dividend or interest payments received by it on or after the
Closing Date with respect to the assets transferred to Short-Term Bond
hereunder, and Short-Term Bond will retain any dividend or interest
payments received by it after the Valuation Time (as defined in Section 4)
with respect to the assets transferred hereunder without regard to the
payment date thereof.
(c) The liabilities of Short-Term World to be assumed by Short-Term Bond
shall include (except as otherwise provided for herein) all of Short-Term
World's liabilities, debts, obligations, and duties, of whatever kind or
nature, whether absolute, accrued, contingent, or otherwise, whether or not
arising in the ordinary course of business, whether or not determinable on
the Closing Date, and whether or not specifically referred to in this
Agreement. Notwithstanding the foregoing, Short-Term World agrees to use
its best efforts to discharge all of its known liabilities prior to the
Closing Date.
(d) Pursuant to this Agreement, as soon after the Closing Date as is
conveniently practicable (the Liquidation Date), Short-Term World will
constructively distribute PRO RATA to its shareholders of record,
determined as of the Valuation Time on the Closing Date, the Short-Term
Bond Shares in exchange for such shareholders' shares of beneficial
interest in Short-Term World and Short-Term World will be liquidated in
accordance with Short-Term World's Restated Declaration of Trust. Such
distribution shall be accomplished by the Funds' transfer agent opening
accounts on Short-Term Bond's Share transfer books for the Short-Term Bond
Shares in the names of Short-Term World shareholders and transferring the
Short-Term Bond Shares thereto. Each Short-Term World shareholder's account
shall be credited with the respective PRO RATA number of full and
fractional (rounded to the third decimal place) Short-Term Bond Shares due
that shareholder. All outstanding Short-Term World shares, including any
represented by certificates, shall simultaneously be canceled on Short-Term
World's share transfer records. Short-Term Bond shall not issue
certificates representing the Short-Term Bond Shares in connection with the
Reorganization.
(e) Any reporting responsibility of Short-Term World is and shall remain
its responsibility up to and including the date on which it is terminated.
(f) Any transfer taxes payable upon issuance of the Short-Term Bond Shares
in a name other than that of the registered holder on Short-Term World's
books of the Short-Term World shares constructively exchanged for the
Short-Term Bond Shares shall be paid by the person to whom such Short-Term
Bond Shares are to be issued, as a condition of such transfer.
4. VALUATION.
(a) The Valuation Time shall be 4:00 p.m. Eastern time on the Closing Date
(as defined in Section 6), or such other date as may be mutually agreed
upon in writing by the parties hereto (the Valuation Time).
(b) On the Closing Date, Short-Term Bond will deliver to Short-Term World
the number of Short-Term Bond Shares having an aggregate net asset value
equal to the value of the assets of Short-Term World transferred hereunder
less the liabilities of Short-Term World, determined as provided in this
Section 4.
(c) The net asset value of the Short-Term Bond Shares to be delivered to
Short-Term World, the value of the assets of Short-Term World transferred
hereunder, and the value of the liabilities of Short-Term World to be
assumed hereunder shall in each case be determined as of the Valuation
Time.
(d) The net asset value of the Short-Term Bond Shares shall be computed in
the manner set forth in the then-current Short-Term Bond Prospectus and
Statement of Additional Information, and the value of the assets and
liabilities of Short-Term World shall be computed in the manner set forth
in the then-current Short-Term World Prospectus and Statement of Additional
Information.
(e) All computations pursuant to this Section shall be made by or under
the direction of Fidelity Service Co., a division of FMR Corp., in
accordance with its regular practice as pricing agent for Short-Term World
and Short-Term Bond.
5. FEES; EXPENSES.
(a) Short-Term World shall be responsible for all expenses, fees and other
charges in connection with entering into and carrying out the provisions of
this Agreement, whether or not the transactions contemplated hereby are
consummated. Such expenses shall include legal, accounting, printing,
filing, and proxy solicitation expenses, portfolio transfer taxes (if any),
costs incurred in connection with the purchase or sale of portfolio
securities, or other similar expenses incurred with respect to the
Reorganization.
(b) Each of Short-Term Bond and Short-Term World represents that there is
no person who has dealt with it who by reason of such dealings is entitled
to any broker's or finder's or other similar fee or commission arising out
of the transactions contemplated by this Agreement.
6. CLOSING DATE.
(a) The Reorganization, together with related acts necessary to consummate
the same (the Closing), unless otherwise provided herein, shall occur at
the principal office of the Trusts, 82 Devonshire Street, Boston,
Massachusetts, at the Valuation Time on October 31, 1996, or at some other
time, date, and place agreed to by Short-Term World and Short-Term Bond
(the Closing Date).
(b) In the event that on the Closing Date: (i) any of the markets for
securities held by the Funds is closed to trading, or (ii) trading thereon
is restricted, or (iii) trading or the reporting of trading on said market
or elsewhere is disrupted, all so that accurate appraisal of the total net
asset value of Short-Term World and the total net asset value of Short-Term
Bond is impracticable, the Valuation Time and the Closing Date shall be
postponed until the first business day after the day when such trading
shall have been fully resumed and such reporting shall have been restored,
or such other date as the parties may agree.
7. SHAREHOLDER MEETING AND TERMINATION OF SHORT-TERM WORLD.
(a) Short-Term World agrees to call a meeting of its shareholders after
the effective date of the Registration Statement, to consider transferring
its assets to Short-Term Bond as herein provided, adopting this Agreement,
and authorizing the liquidation of Short-Term World.
(b) Short-Term World agrees that as soon as reasonably practicable after
distribution of the Short-Term Bond Shares, Short-Term World shall be
terminated as a series of Fidelity Investment Trust pursuant to its
Restated Declaration of Trust, any further actions shall be taken in
connection therewith as required by applicable law, and on and after the
Closing Date Short-Term World shall not conduct any business except in
connection with its liquidation and termination.
8. CONDITIONS TO SHORT-TERM BOND'S OBLIGATIONS. The obligations of
Short-Term Bond hereunder shall be subject to the following conditions:
(a) That Short-Term World furnishes to Short-Term Bond a statement, dated
as of the Closing Date, signed by an officer of Fidelity Investment Trust,
certifying that as of the Valuation Time and the Closing Date all
representations and warranties of Short-Term World made in this Agreement
are true and correct in all material respects and that Short-Term World has
complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to such dates;
(b) That Short-Term World furnishes Short-Term Bond with copies of the
resolutions, certified by an officer of Fidelity Investment Trust,
evidencing the adoption of this Agreement and the approval of the
transactions contemplated herein by the requisite vote of the holders of
the outstanding shares of beneficial interest of Short-Term World;

(c) That, on or prior to the Closing Date, Short-Term World will declare
one or more dividends or distributions which, together with all previous
such dividends or distributions, shall have the effect of distributing to
the shareholders of Short-Term World substantially all of Short-Term
World's investment company taxable income and all of its net realized
capital gain, if any, as of the Closing Date;
(d) That Short-Term World shall deliver to Short-Term Bond at the Closing
a statement of its assets and liabilities, together with a list of its
portfolio securities showing each such security's adjusted tax basis and
holding period by lot, with values determined as provided in Section 4 of
this Agreement, all as of the Valuation Time, certified on Short-Term
World's behalf by its Treasurer or Assistant Treasurer;
(e) That Short-Term World's custodian shall deliver to Short-Term Bond a
certificate identifying the assets of Short-Term World held by such
custodian as of the Valuation Time on the Closing Date and stating that at
the Valuation Time: (i) the assets held by the custodian will be
transferred to Short-Term Bond; (ii) Short-Term World's assets have been
duly endorsed in proper form for transfer in such condition as to
constitute good delivery thereof; and (iii) to the best of the custodian's
knowledge, all necessary taxes in conjunction with the delivery of the
assets, including all applicable federal and state stock transfer stamps,
if any, have been paid or provision for payment has been made;
(f) That Short-Term World's transfer agent shall deliver to Short-Term
Bond at the Closing a certificate setting forth the number of shares of
Short-Term World outstanding as of the Valuation Time and the name and
address of each holder of record of any such shares and the number of
shares held of record by each such shareholder;
(g) That Short-Term World calls a meeting of its shareholders to be held
after the effective date of the Registration Statement, to consider
transferring its assets to Short-Term Bond as herein provided, adopting
this Agreement, and authorizing the liquidation and termination of
Short-Term World;
(h) That Short-Term World delivers to Short-Term Bond a certificate of an
officer of Fidelity Investment Trust, dated the Closing Date, that there
has been no material adverse change in Short-Term World's financial
position since December 31, 1995, other than changes in the market value of
its portfolio securities, or changes due to net redemptions of its shares,
dividends paid, or losses from operations; and
(i) That all of the issued and outstanding shares of beneficial interest
of Short-Term World shall have been offered for sale and sold in conformity
with all applicable state securities laws and, to the extent that any audit
of the records of Short-Term World or its transfer agent by Short-Term Bond
or its agents shall have revealed otherwise, Short-Term World shall have
taken all actions that in the opinion of Short-Term Bond are necessary to
remedy any prior failure on the part of Short-Term World to have offered
for sale and sold such shares in conformity with such laws.
9. CONDITIONS TO OBLIGATIONS OF SHORT-TERM WORLD.
(a) That Short-Term Bond shall have executed and delivered to Short-Term
World an Assumption of Liabilities, certified by an officer of Fidelity
Fixed-Income Trust, dated as of the Closing Date pursuant to which
Short-Term Bond will assume all of the liabilities of Short-Term World
existing at the Valuation Time in connection with the transactions
contemplated by this Agreement;
(b) That Short-Term Bond furnishes to Short-Term World a statement, dated
as of the Closing Date, signed by an officer of Fidelity Fixed-Income
Trust, certifying that as of the Valuation Time and the Closing Date all
representations and warranties of Short-Term Bond made in this Agreement
are true and correct in all material respects, and Short-Term Bond has
complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to such dates; and
(c) That Short-Term World shall have received an opinion of Kirkpatrick &
Lockhart LLP, counsel to Short-Term World and Short-Term Bond, to the
effect that the Short-Term Bond Shares are duly authorized and upon
delivery to Short-Term World as provided in this Agreement will be validly
issued and will be fully paid and nonassessable by Short-Term Bond (except
as disclosed in Short-Term World's Statement of Additional Information) and
no shareholder of Short-Term Bond has any preemptive right of subscription
or purchase in respect thereof.
10. CONDITIONS TO OBLIGATIONS OF SHORT-TERM BOND AND SHORT-TERM WORLD.
(a) That this Agreement shall have been adopted and the transactions
contemplated herein shall have been approved by the requisite vote of the
holders of the outstanding shares of beneficial interest of Short-Term
World;
(b) That all consents of other parties and all other consents, orders, and
permits of federal, state, and local regulatory authorities (including
those of the Commission and of state Blue Sky and securities authorities,
including "no action" positions of such federal or state authorities)
deemed necessary by Short-Term Bond or Short-Term World to permit
consummation, in all material respects, of the transactions contemplated
hereby shall have been obtained, except where failure to obtain any such
consent, order, or permit would not involve a risk of a material adverse
effect on the assets or properties of Short-Term Bond or Short-Term World,
provided that either party hereto may for itself waive any of such
conditions;
(c) That all proceedings taken by either Fund in connection with the
transactions contemplated by this Agreement and all documents incidental
thereto shall be satisfactory in form and substance to it and its counsel,
Kirkpatrick & Lockhart LLP;
(d) That there shall not be any material litigation pending with respect
to the matters contemplated by this Agreement;
(e) That the Registration Statement shall have become effective under the
1933 Act, and no stop order suspending such effectiveness shall have been
instituted or, to the knowledge of Short-Term Bond and Short-Term World,
threatened by the Commission; and
(f) That Short-Term Bond and Short-Term World shall have received an
opinion of Kirkpatrick & Lockhart LLP satisfactory to Short-Term Bond and
Short-Term World that for federal income tax purposes:
(i) The Reorganization will be a reorganization under section
368(a)(1)(C) of the Code, and Short-Term World and Short-Term Bond will
each be parties to the Reorganization under section 368(b) of the Code;
(ii) No gain or loss will be recognized by Short-Term World upon the
transfer of all of its assets to Short-Term Bond in exchange solely for the
Short-Term Bond Shares and the assumption of Short-Term World's liabilities
followed by the distribution of those Short-Term Bond Shares to the
shareholders of Short-Term World in liquidation of Short-Term World;
(iii) No gain or loss will be recognized by Short-Term Bond on the
receipt of Short-Term World's assets in exchange solely for the Short-Term
Bond Shares and the assumption of Short-Term World's liabilities;
(iv) The basis of Short-Term World's assets in the hands of Short-Term
Bond will be the same as the basis of such assets in Short-Term World's
hands immediately prior to the Reorganization;
(v) Short-Term Bond's holding period in the assets to be received from
Short-Term World will include Short-Term World's holding period in such
assets;
(vi) A Short-Term World shareholder will recognize no gain or loss on the
exchange of his or her shares of beneficial interest in Short-Term World
for the Short-Term Bond Shares in the Reorganization;
(vii) A Short-Term World shareholder's basis in the Short-Term Bond
Shares to be received by him or her will be the same as his or her basis in
the Short-Term World shares exchanged therefor;
(viii) A Short-Term World shareholder's holding period for his or her
Short-Term Bond Shares will include the holding period of Short-Term World
shares exchanged therefor, provided that those Short-Term World shares were
held as capital assets on the date of the Reorganization.

Notwithstanding anything herein to the contrary, each of Short-Term World
and Short-Term Bond may not waive the conditions set forth in this
subsection 10(f).
11. COVENANTS OF SHORT-TERM BOND AND SHORT-TERM WORLD.
(a) Short-Term Bond and Short-Term World each covenants to operate its
respective business in the ordinary course between the date hereof and the
Closing Date, it being understood that such ordinary course of business
will include the payment of customary dividends and distributions;
(b) Short-Term World covenants that it is not acquiring the Short-Term
Bond Shares for the purpose of making any distribution other than in
accordance with the terms of this Agreement;
(c) Short-Term World covenants that it will assist Short-Term Bond in
obtaining such information as Short-Term Bond reasonably requests
concerning the beneficial ownership of Short-Term World's shares; and
(d) Short-Term World covenants that its liquidation and termination will
be effected in the manner provided in its Restated Declaration of Trust in
accordance with applicable law and after the Closing Date, Short-Term World
will not conduct any business except in connection with its liquidation and
termination.
12. TERMINATION; WAIVER.
Short-Term Bond and Short-Term World may terminate this Agreement by
mutual agreement. In addition, either Short-Term Bond or Short-Term World
may at its option terminate this Agreement at or prior to the Closing Date
because:
(i) of a material breach by the other of any representation, warranty, or
agreement contained herein to be performed at or prior to the Closing Date;
or
(ii) a condition herein expressed to be precedent to the obligations of
the terminating party has not been met and it reasonably appears that it
will not or cannot be met.
In the event of any such termination, there shall be no liability for
damages on the part of Short-Term World or Short-Term Bond, or their
respective Trustees or officers.
13. SOLE AGREEMENT; AMENDMENTS; WAIVERS; SURVIVAL OF WARRANTIES.
(a) This Agreement supersedes all previous correspondence and oral
communications between the parties regarding the subject matter hereof,
constitutes the only understanding with respect to such subject matter, may
not be changed except by a letter of agreement signed by each party hereto
and shall be construed in accordance with and governed by the laws of the
Commonwealth of Massachusetts.
(b) This Agreement may be amended, modified, or supplemented in such
manner as may be mutually agreed upon in writing by the respective
President, any Vice President, or Treasurer of Short-Term Bond or
Short-Term World; provided, however, that following the shareholders'
meeting called by Short-Term World pursuant to Section 7 of this Agreement,
no such amendment may have the effect of changing the provisions for
determining the number of Short-Term Bond Shares to be paid to Short-Term
World shareholders under this Agreement to the detriment of such
shareholders without their further approval.
(c) Either Fund may waive any condition to its obligations hereunder,
provided that such waiver does not have any material adverse effect on the
interests of such Fund's shareholders.
The representations, warranties, and covenants contained in the Agreement,
or in any document delivered pursuant hereto or in connection herewith,
shall survive the consummation of the transactions contemplated hereunder.
14. DECLARATIONS OF TRUST.
A copy of the Declaration of Trust of each Fund, as restated and amended,
is on file with the Secretary of State of the Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed
on behalf of the Trustees of each Fund as trustees and not individually and
that the obligations of each Fund under this instrument are not binding
upon any of such Fund's Trustees, officers, or shareholders individually
but are binding only upon the assets and property of such Fund. Each Fund
agrees that its obligations hereunder apply only to such Fund and not to
its shareholders individually or to the Trustees of such Fund.
15. ASSIGNMENT.
This Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns, but no assignment or transfer
of any rights or obligations hereunder shall be made by any party without
the written consent of the other parties. Nothing herein expressed or
implied is intended or shall be construed to confer upon or give any
person, firm, or corporation other than the parties hereto and their
respective successors and assigns any rights or remedies under or by reason
of this Agreement.
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by an appropriate officer.
SIGNATURE LINES OMITTED
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
To learn more about the funds and their investments, you can obtain a copy
of each fund's most recent financial report and portfolio listing, or a
copy of the Statement of Additional Information (SAI) dated June 24, 1996.
The SAI has been filed with the Securities and Exchange Commission (SEC)
and is available along with other related materials, for reference on the
SEC's Internet Web site (http://www.sec.gov). The SAI is incorporated
herein by reference (legally forms a part of the prospectus). For a free
copy of either document, call Fidelity at 1-800-544-8888.
Mutual fund shares are not deposits or obligations of, or guaranteed by,
any depository institution. Shares are not insured by the FDIC, Federal
Reserve Board, or any other agency, and are subject to investment risks,
including possible loss of principal amount invested.

LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
BON-pro-696
FIDELITY
SHORT-TERM
BOND
FUND
and
FIDELITY
INVESTMENT
GRADE BOND
FUND
Each fund invests normally in investment-grade debt securities. Short-Term
Bond seeks high current income with preservation of capital. Investment
Grade Bond seeks high current income from securities with longer
maturities.
PROSPECTUS
JUNE 24, 1996

(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA 02109

CONTENTS

KEY FACTS THE FUNDS AT A GLANCE

WHO MAY WANT TO INVEST

EXPENSES Each fund's yearly
operating expenses.

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

PERFORMANCE How each fund has
done over time.

THE FUNDS IN DETAIL CHARTER How each fund is
organized.

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

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

YOUR ACCOUNT DOING BUSINESS WITH FIDELITY

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

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

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

INVESTOR SERVICES Services to
help you manage your account.

SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS,
ACCOUNT POLICIES AND TAXES

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

EXCHANGE RESTRICTIONS

KEY FACTS

THE FUNDS AT A GLANCE
MANAGEMENT: Fidelity Management & Research Company (FMR) is the management
arm of Fidelity Investments, which was established in 1946 and is now
America's largest mutual fund manager.
As with any mutual fund, there is no assurance that a fund will achieve its
goal.
SHORT-TERM BOND
GOAL: High current income with preservation of capital.
STRATEGY: Invests normally in investment-grade debt securities while
maintaining an average maturity of three years or less.
SIZE: As of April 30, 1996, the fund had over $1 billion in assets.
INVESTMENT GRADE BOND
GOAL: High current income.
STRATEGY: Invests normally in investment-grade debt securities.
SIZE: As of April 30, 1996, the fund had over $1.3 billion in assets.
WHO MAY WANT TO INVEST
Either fund may be appropriate for investors who seek high current income
with a focus on investment-grade debt securities. A fund's level of risk
and potential reward depend on the quality and maturity of its investments.
Short-Term Bond is designed to offer greater share price stability by
investing in shorter-term securities. Investment Grade Bond, because it can
invest in securities with any maturity, has potential for higher
yields and capital appreciation, but also carries more risk.
The value of the funds' investments and the income they generate will vary
from day to day, and generally reflect interest rates, market conditions,
and other economic and political news. When you sell your shares, they may
be worth more or less than what you paid for them. By themselves, the funds
do not constitute a balanced investment plan.

THE SPECTRUM OF
FIDELITY FUNDS
Broad categories of Fidelity
funds are presented here in
order of ascending risk.
Generally, investors seeking
to maximize return must
assume greater risk. The
funds in this prospectus are
in the INCOME category.
(solid bullet) MONEY MARKET Seeks
income and stability by
investing in high-quality,
short-term investments.
(right arrow) INCOME Seeks income by
investing in bonds.
(solid bullet) GROWTH AND INCOME
Seeks long-term growth and
income by investing in stocks
and bonds.
(solid bullet) GROWTH Seeks long-term
growth by investing mainly in
stocks.
(checkmark)
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy, sell or
hold shares of a fund. See page for more information about these fees.
Maximum sales charge on purchases and
reinvested distributions None
Deferred sales charge on redemptions None
Exchange fee None
Annual account maintenance fee
(for accounts under $2500) $12.00
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to FMR. It also incurs other expenses for
services such as maintaining shareholder records and furnishing shareholder
statements and financial reports. The fund's expenses are factored into its
share price or dividends and are not charged directly to shareholder
accounts (see page ).
The following are based on historical expenses, and are calculated as a
percentage of average net assets. Each fund has entered into arrangements
with its custodian and transfer agent whereby interest earned on uninvested
cash balances is used to reduce custodian and transfer agent expenses. If
these reductions are included, the total fund operating expenses presented
in the tables would be .68% for Short-Term Bond and .76% for Investment
Grade Bond.
SHORT-TERM BOND
Management fee .45%

12b-1 fee None

Other expenses .24%

Total fund operating expenses .69%

INVESTMENT GRADE BOND
Management fee .45%

12b-1 fee None

Other expenses .32%

Total fund operating expenses .77%

EXAMPLES: Let's say, hypothetically, that each fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses if you
close your account after the number of years indicated:
SHORT-TERM BOND
After 1 year $ 7

After 3 years $ 22

After 5 years $ 38

After 10 years $ 86

INVESTMENT GRADE BOND
After 1 year $ 8

After 3 years $ 25

After 5 years $ 43

After 10 years $ 95

These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
FINANCIAL HIGHLIGHTS
The tables that follow are included in each fund's Annual Report and have
been audited by Coopers & Lybrand L.L.P., independent accountants. Their
reports on the financial statements and financial highlights are included
in the Annual Reports. The financial statements and financial highlights
are incorporated by reference into (are legally a part of) the funds'
Statement of Additional Information.
SHORT-TERM BOND

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

19.Years
ended 1996 1995F 1994C 1993 1992 1991 1990 1989 1988 1987D
April 30

20.Net
asset $ 8.72 $ 9.08 $ 9.51 $ 9.43 $ 9.18 $ 9.17 $ 9.18 $ 9.47 $ 9.67 $ 10.0
value, 0 0 0 0 0 0 0 0 0 00
beginning of period

21.Income
from .579 .344 .588 .744 .810 .792 .778 .809 .840 .481
Investment
Operations
Net investment
income

22. Net
realized (.020) (.156) (.392) .063 .251 .040 (.010) (.290) (.200) (.330)
and E
unrealized gain
(loss)

23. Total
from .559 .188 .196 .807 1.061 .832 .768 .519 .640 .151
investment
operations

24.Less (.504) (.430) (.592) (.727) (.811) (.822) (.778) (.809) (.840) (.481)
Distributions
From net
investment income

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

26. Return
of (.055) (.118) -- -- -- -- -- -- -- --
capital

27. Total (.559) (.548) (.626) (.727) (.811) (.822) (.778) (.809) (.840) (.481)
distributions

28.Net asset $ 8.72 $ 8.72 $ 9.08 $ 9.51 $ 9.43 $ 9.18 $ 9.17 $ 9.18 $ 9.47 $ 9.67
value, end of 0 0 0 0 0 0 0 0 0 0
period

29.Total
returnA,G 6.52 2.17 1.99 8.85 12.00 9.49 8.58 5.74 6.91 1.49
% % % % % % % % % %

30.Net
assets, $ 1,04 $ 1,30 $ 1,96 $ 1,99 $ 984 $ 235 $ 197 $ 237 $ 382 $ 137
end of
period 8 4 2 0
(In millions)

31.Ratio of .69% .69% .80% .77% .86% .83% .83% .89% .88% .90%
expenses H H,I
to average net
assets

32.Ratio of .68% .69% .80% .77% .86% .83% .83% .89% .88% .90%I
expenses to B
average net assets
after expense
reductions

33.Ratio of
net 6.37 6.37 6.70 7.68 8.23 8.65 8.28 8.77 8.77 8.40
investment
income % % % % % % % % % %I
to average net
assets

34.Portfolio 151% 113% 73% 63% 87% 164% 148% 171% 251% 149%I
turnover rate

</TABLE>

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

36.Years ended
April 30 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
A

37.Net asset
value, $ 7.01 $ 7.30 $ 7.57 $ 7.07 $ 6.83 $ 6.56 $ 6.67 $ 6.77 $ 7.00 $ 7.46
beginning
of period 0 0 0 0 0 0 0 0 0 0

38.Income
from .484 .464 .522 .570 .591 .592 .597 .595 .609 .674
Investment
Operations
Net investment
income

39. Net
realized and .047 (.147) (.254) .499 .244 .277 (.110) (.095) (.230) (.460)
unrealized gain (loss)

40. Total
from .531 .317 .268 1.069 .835 .869 .487 .500 .379 .214
investment
operations

41.Less
Distributions (.471) (.487) (.525) (.569) (.595) (.599) (.597) (.600) (.609) (.674)
From net investment
income

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

43. From net
realized -- (.120) -- -- -- -- -- -- -- --
gain

44. In excess
of net (.030) -- -- -- -- -- -- -- -- --
realized gain

45. Total
distributions (.501) (.607) (.538) (.569) (.595) (.599) (.597) (.600) (.609) (.674)

46.Net asset
value, $ 7.04 $ 7.01 $ 7.30 $ 7.57 $ 7.07 $ 6.83 $ 6.56 $ 6.67 $ 6.77 $ 7.00
end of
period 0 0 0 0 0 0 0 0 0 0

47.Total
returnC 7.62 4.63 3.35 15.63 12.63 13.82 7.31 7.74 5.75 2.86
% % % % % % % % % %

48.Net
assets, end
of $ 1,35 $ 1,08 $ 943 $ 1,01 $ 943 $ 455 $ 360 $ 334 $ 316 $ 384
period (In
millions) 8 7 8

49.Ratio of
expenses to .77% .75% .74% .68% .70% .67% .70% .66% .76% .69%

average net assets

50.Ratio of
expenses to .76% .75% .74% .68% .70% .67% .70% .66% .76% .69%
average net
assets after B
expense reductions

51.Ratio of
net 6.58 7.00 6.94 7.74 8.29 8.84 8.76 8.91 8.95 9.17
investment
income to % % % % % % % % % %
average net assets

52.Portfolio
turnover 134% 90% 61% 74% 77% 101% 103% 128% 118% 127%
rate

</TABLE>

A 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.
B FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
PERFORMANCE
Bond fund performance can be measured as TOTAL RETURN or YIELD. The total
returns that follow are based on historical fund results and do not reflect
the effect of taxes.
Each fund's fiscal year runs from May 1 through April 30. The tables below
show each fund's performance over past fiscal years compared to different
measures, including a comparative index and a competitive funds average.
The charts on page present calendar-year performance.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. Yields are
calculated according to a standard that is required for all stock and bond
funds. Because this differs from other accounting methods, the quoted yield
may not equal the income actually paid to shareholders.
AVERAGE ANNUAL TOTAL RETURNS

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fiscal periods ended Past 1 Past 5 Past 10
April 30, 1996 year years years

Short-Term Bond 6.52 % 6.23 % 6.57 %
A

Lehman Bros. 1-3 Yr. Gov't/Corp. Bond 6.92 % 6.37 % n/a
Index

Lipper Sht. Inv. Gr. Debt Funds Avg. 6.47 % 6.03 % n/a

Investment Grade Bond 7.62 % 8.67 % 8.05 %

Lehman Bros. Aggregate Bond Index 8.64 % 8.13 % 8.50 %

Lipper Corp. Debt BBB Funds Avg. 8.95 % 9.11 % 8.48 %

</TABLE>

A FROM SEPTEMBER 15, 1986
CUMULATIVE TOTAL RETURNS

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fiscal periods ended Past 1 Past 5 Past 10
April 30, 1996 year years years

Short-Term Bond 6.52 % 35.31 % 84.58 %
A

Lehman Bros. 1-3 Yr. Gov't/Corp. Bond 6.92 % 36.16 % n/a
Index

Lipper Sht. Inv. Gr. Debt Funds Avg. 6.47 % 34.06 % n/a

Investment Grade Bond 7.62 % 51.55 % 116.92 %

Lehman Bros. Aggregate Bond Index 8.64 % 47.82 % 126.10 %

Lipper Corp. Debt BBB Funds Avg. 8.95 % 54.82 % 126.34 %

</TABLE>

A FROM SEPTEMBER 15, 1986
THE LEHMAN BROTHERS 1-3 YEAR GOVERNMENT/CORPORATE BOND INDEX, the
comparative index for Short-Term Bond, is comprised of government and
corporate fixed-rate debt issues. Issues included in the Index have
maturities of one to three years.
SHORT-TERM BOND
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year
total returns 1987 1988 1989 1990 1991 1992 1993 1994 1995
Short-Term Bond 3.97% 5.71% 10.52% 5.78% 14.03% 7.39% 9.13% -4.09% 9.82%
Lehman Bros.
1-3 Yr.
Govt./Corp. Bond
Index 5.76% 6.34% 10.97% 9.69% 11.83% 6.35% 5.55% 0.55% 10.96%
Lipper Sht. Inv.
Gr. Debt
Funds Avg. 4.32% 6.86% 10.22% 7.87% 12.88% 5.97% 6.45% -0.44% 10.84%
Consumer Price
Index 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54%

Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: 3.97
Row: 3, Col: 1, Value: 5.71
Row: 4, Col: 1, Value: 10.52
Row: 5, Col: 1, Value: 5.78
Row: 6, Col: 1, Value: 14.03
Row: 7, Col: 1, Value: 7.39
Row: 8, Col: 1, Value: 9.129999999999999
Row: 9, Col: 1, Value: -4.09
Row: 10, Col: 1, Value: 9.82
(LARGE SOLID BOX) Short-Term
Bond

INVESTMENT GRADE BOND
Calendar year
total returns 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
Investment Grade
Bond 13.62% .11% 7.92% 13.00% 6.07% 18.91% 8.31% 16.23% -5.35% 15.51%
Lehman Bros.
Aggregate
Bond Index 15.26% 2.76% 7.89% 14.53% 8.96% 16.00% 7.40% 9.75% -2.92% 18.47%
Lipper Corp.
Debt BBB
Funds Avg. 15.02% 2.93% 9.32% 10.48% 5.06% 18.53% 8.79% 13.67% -4.69% 20.07%
Consumer Price
Index 1.10% 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 13.62
Row: 2, Col: 1, Value: 0.11
Row: 3, Col: 1, Value: 7.92
Row: 4, Col: 1, Value: 13.0
Row: 5, Col: 1, Value: 6.07
Row: 6, Col: 1, Value: 18.91
Row: 7, Col: 1, Value: 8.31
Row: 8, Col: 1, Value: 16.23
Row: 9, Col: 1, Value: -5.35
Row: 10, Col: 1, Value: 15.51
(LARGE SOLID BOX) Investment

Grade Bond
THE LEHMAN BROTHERS AGGREGATE BOND INDEX, the comparative index for
Investment Grade Bond, is comprised of fixed-rate debt issues, including
government, corporate, asset-backed, and mortgage-backed securities. Issues
included in the Index are rated investment-grade or above and have
maturities of at least one year.
THE COMPETITIVE FUNDS AVERAGES are the Lipper Short Investment Grade Debt
Funds Average (Short-Term Bond) and the Lipper Corporate Debt BBB Funds
Average (Investment Grade Bond), which currently reflect the performance of
over 98 and 92 mutual funds, respectively, with similar objectives. These
averages, which assume reinvestment of distributions, are published by
Lipper Analytical Services, Inc.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.

UNDERSTANDING

PERFORMANCE
Because these funds invest in
fixed-income securities, their
performance is related to
changes in interest rates.
Funds that hold short-term
bonds are usually less affected
by changes in interest rates
than long-term bond funds.
For that reason, long-term
bond funds typically offer
higher yields and carry more
risk than short-term bond
funds.
(checkmark)
THE FUNDS IN DETAIL

CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. Each fund is a diversified fund of
Fidelity Fixed-Income Trust, an open-end management investment company
organized as a Massachusetts business trust on September 5, 1984.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review the funds' performance. The majority of trustees are not
otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
Fidelity will mail proxy materials in advance, including a voting card and
information about the proposals to be voted on. The number of votes you are
entitled to is based upon the dollar value of your investment.
FMR AND ITS AFFILIATES
The funds are managed by FMR, which chooses their investments and handles
their business affairs. Fidelity Management & Research (U.K.) Inc. (FMR
U.K.), in London, England, and Fidelity Management & Research (Far East)
Inc. (FMR Far East), in Tokyo, Japan, assist FMR with foreign investments.
Charles Morrison is manager of Short-Term Bond, which he has managed since
February 1995. He also manages Spartan Short-Term Bond and Advisor
Short-Fixed-Income. Mr. Morrison is vice president of Fidelity Management
Trust Company. He joined Fidelity in 1987.
Michael Gray is manager and vice president of Fidelity Investment Grade
Bond, which he has managed since September 1987. Mr. Gray also manages
several Fidelity funds. Mr. Gray joined Fidelity in 1982.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
FDC distributes and markets Fidelity's funds and services. Fidelity Service
Co. (FSC) performs transfer agent servicing functions for each fund.
FMR Corp. is the ultimate parent company of FMR, FMR U.K., and FMR Far
East. Members of the Edward C. Johnson 3d family are the predominant owners
of a class of shares of common stock representing approximately 49% of the
voting power of FMR Corp. Under the Investment Company Act of 1940 (the
1940 Act), control of a company is presumed where one individual or group
of individuals owns more than 25% of the voting stock of that company;
therefore, the Johnson family may be deemed under the 1940 Act to form a
controlling group with respect to FMR Corp.
A broker-dealer may use a portion of the commissions paid by a fund to
reduce custodian or transfer agent fees for the fund. FMR may use its
broker-dealer affiliates and other firms that sell fund shares to carry out
a fund's transactions, provided that the fund receives brokerage services
and commission rates comparable to those of other broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
EACH FUND'S INVESTMENT APPROACH
Short-Term Bond seeks as high a level of current income as consistent with
preservation of capital, by normally investing in fixed-income obligations
of investment-grade quality. Although the fund can invest in securities of
any maturity, the fund maintains a dollar-weighted average maturity of
three years or less under normal conditions. In determining a security's
maturity for purposes of calculating the fund's average maturity, an
estimate of the average time for its principal to be paid may be used. This
can be substantially shorter than its stated final maturity. As of April
30, 1996, the fund's dollar-weighted average maturity was approximately 2.2
years.
Investment Grade Bond seeks high current income, consistent with reasonable
risk, by normally investing in fixed-income obligations of investment-grade
quality. The fund also considers preservation of capital and, where
appropriate, takes advantage of opportunities to realize capital
appreciation. Although the fund can invest in securities of any maturity,
FMR seeks to manage the fund so that it generally reacts to changes in
interest rates similarly to bonds with maturities between four and ten
years. As of April 30, 1996, the fund's dollar-weighted average maturity
was approximately 7.4 years.
Both funds may also invest in futures contracts and other derivatives to
adjust their investment exposure. Short-Term Bond limits its average
maturity to three years or less while Investment Grade Bond has no stated
maturity policy.
The total return from a bond is a combination of income and price gains or
losses. While income is the most important component of bond returns over
time, a fund's emphasis on income does not mean that a fund invests only in
the highest-yielding bonds available, or that it can avoid risks to
principal. In selecting investments for the funds, FMR considers a bond's
income potential together with its potential for price gains or losses. FMR
focuses on assembling a portfolio of income-producing securities that it
believes will provide the best tradeoff between risk and return within the
range of securities that are eligible investments for the funds.
Each fund's yield and share price change daily and are based on changes in
interest rates, market conditions, and other economic and political news,
and on the quality and maturity of it's investments. In general, bond
prices rise when interest rates fall, and vice versa. This effect is
usually more pronounced for longer-term securities. Lower-quality
securities offer higher yields, but also carry more risk. FMR may use
various investment techniques to hedge a portion of the funds' risks, but
there is no guarantee that these strategies will work as intended. When you
sell your shares of the funds, they may be worth more or less than what you
paid for them.
FMR normally invests each fund's assets according to its investment
strategy. Each fund also reserves the right to invest without limitation in
investment-grade money market instruments and Investment Grade Bond may
invest in short-term debt instruments for temporary, defensive purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related risks.
Any restrictions listed supplement those discussed earlier in this section.
A complete listing of each fund's limitations and more detailed information
about each fund's investments are contained in a fund's SAI. Policies and
limitations are considered at the time of purchase; the sale of instruments
is not required in the event of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques
unless it believes that they are consistent with a fund's investment
objective and policies and that doing so will help a fund achieve its goal.
Fund holdings and recent investment strategies are detailed in each fund's
financial reports, which are sent to shareholders twice a year. For a free
SAI or financial report, call 1-800-544-8888.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. In
general, bond prices rise when interest rates fall, and vice versa. Debt
securities, loans, and other direct debt have varying degrees of quality
and varying levels of sensitivity to changes in interest rates. Longer-term
bonds are generally more sensitive to interest rate changes than short-term
bonds.
Investment-grade debt securities are medium- and high-quality securities.
Some, however, may possess speculative characteristics and may be more
sensitive to economic changes and to changes in the financial condition of
issuers.
RESTRICTIONS: A fund normally invests in investment-grade securities, but
reserves the right to invest up to 5% of its assets in below
investment-grade securities (sometimes called "junk bonds"). A security is
considered to be investment grade if it is rated investment-grade by
Moody's Investors Service, Standard & Poor's, Duff and Phelps Credit Rating
Co., or Fitch Investor Service, L.P., or is unrated but judged to be of
equivalent quality by FMR.
MONEY MARKET SECURITIES are high-quality, short-term obligations issued by
the U.S. Government, corporations, financial institutions, and other
entities. These obligations may carry fixed, variable, or floating interest
rates.
U.S. GOVERNMENT SECURITIES are high-quality debt instruments issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the
U.S. Government. Not all U.S. Government securities are backed by the full
faith and credit of the United States. For example, securities issued by
the Federal National Mortgage Association are supported by the
instrumentality's right to borrow money from the U.S. Treasury under
certain circumstances. However, securities issued by the Federal Farm
Credit Bank Funding Corporation are supported only by the credit of the
entity that issued them.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations may
involve additional risks and considerations. These include risks relating
to political or economic conditions in foreign countries, fluctuations in
foreign currencies, withholding or other taxes, operational risks,
increased regulatory burdens, and the potentially less stringent investor
protection and disclosure standards of foreign markets. Additionally,
governmental issuers of foreign debt securities may be unwilling to repay
principal and interest when due and may require that the conditions for
payment be renegotiated. All of these factors can make foreign investments,
especially those in developing countries, more volatile than U.S.
investments.
ASSET-BACKED SECURITIES include interests in pools of lower-rated debt
securities or consumer loans. The value of these securities may be
significantly affected by changes in the market's perception of the issuers
and the creditworthiness of the parties involved.
MORTGAGE SECURITIES are interests in pools of commercial or residential
mortgages, and may include complex instruments such as collateralized
mortgage obligations and stripped mortgage-backed securities. Mortgage
securities may be issued by the U.S. Government or by private entities. For
example, Ginnie Maes are interests in pools of mortgage loans insured or
guaranteed by a U.S. Government agency. Because mortgage securities pay
both interest and principal as their underlying mortgages are paid off,
they are subject to prepayment risk. This is especially true for stripped
securities. Also, the value of a mortgage security may be significantly
affected by changes in interest rates. Some mortgage securities may have a
structure that makes their reaction to interest rates and other factors
difficult to predict, making their value highly volatile.
STRIPPED SECURITIES are the separate income or principal components of a
debt security. Their risks are similar to those of other debt securities,
although they may be more volatile and the value of certain types of
stripped securities may move in the same direction as interest rates.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security at
one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, currency exchange rates, commodity prices, or other factors that
affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts,
entering into currency exchange contracts or swap agreements, and
purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with a
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of a fund and may involve a small investment of
cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of some illiquid securities and some other securities may be
subject to legal restrictions. Difficulty in selling securities may result
in a loss or may be costly to a fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more than
10% of its assets would be invested in illiquid securities.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period.
OTHER INSTRUMENTS may include convertible securities and preferred stocks.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry.
RESTRICTIONS: With respect to 75% of its total assets, Short-Term Bond and
Investment Grade Bond may not purchase a security if, as a result, more
than 5% of its total assets would be invested in the securities of any
issuer. A fund may not invest more than 25% of its total assets in any one
industry. These limitations do not apply to U.S. Government securities.
BORROWING. Each fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements. If a fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. If a fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: Each fund may borrow only for temporary or emergency
purposes, but not in an amount exceeding 331/3% of its total assets.
LENDING securities to broker-dealers and institutions, including Fidelity
Brokerage Services, Inc. (FBSI), an affiliate of FMR, is a means of earning
income. This practice could result in a loss or a delay in recovering a
fund's securities. A fund may also lend money to other funds advised by
FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 331/3% of a fund's
total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
SHORT-TERM BOND seeks to obtain a high level of current income, consistent
with preservation of capital, by investing primarily in a broad range of
fixed-income securities.
INVESTMENT GRADE BOND seeks to provide a high rate of income, consistent
with reasonable risk, by investing in a broad range of fixed-income
securities. In addition, the fund seeks to protect your capital. Where
appropriate, the fund will take advantage of opportunities to realize
capital appreciation.
EACH FUND, with respect to 75% of total assets, may not invest more than 5%
of its total assets in any one issuer. Each fund may not invest more than
25% of its total assets in any one industry. Each fund may borrow only for
temporary or emergency purposes, but not in an amount exceeding 33% of its
total assets. Loans, in the aggregate, may not exceed 33% of a fund's total
assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its share
price or dividends; they are neither billed directly to shareholders nor
deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to affiliates who provide
assistance with these services. Each fund also pays OTHER EXPENSES, which
are explained on page .
FMR may, from time to time, agree to reimburse the funds for management
fees and other expenses above a specified limit. FMR retains the ability to
be repaid by a fund if expenses fall below the specified limit prior to the
end of the fiscal year. Reimbursement arrangements, which may be terminated
at any time without notice, can decrease a fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The fee is
calculated by adding a group fee rate to an individual fund fee rate, and
multiplying the result by the fund's average net assets.
The group fee rate is based on the average net assets of all the mutual
funds advised by FMR. This rate cannot rise above .37%, and it drops as
total assets under management increase.
For April 1996, the group fee rate was .1458%. The individual fee rate for
each fund is .30%. Each fund's total management fee rate for fiscal 1996
was .45%.
FMR HAS SUB-ADVISORY AGREEMENTS with FMR U.K. and FMR Far East. These
sub-advisers provide FMR with investment research and advice on issuers
based outside the United States. Under the sub-advisory agreements, FMR
pays FMR U.K. and FMR Far East fees equal to 110% and 105%, respectively,
of the costs of providing these services.
OTHER EXPENSES
While the management fee is a significant component of the funds' annual
operating costs, the funds have other expenses as well.
The funds contract with FSC to perform many transaction and accounting
functions. These services include processing shareholder transactions,
valuing each fund's investments, and handling securities loans. In fiscal
1996, Short-Term Bond and Investment Grade Bond paid FSC fees equal to .23%
and .30%, respectively, of average net assets.
The funds also pay other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of trustees who are
not affiliated with Fidelity.
Each fund has adopted a Distribution and Service Plan. These plans
recognize that FMR may use its resources, including management fees, to pay
expenses associated with the sale of fund shares. This may include payments
to third parties, such as banks or broker-dealers, that provide shareholder
support services or engage in the sale of the fund's shares. It is
important to note, however, that the funds do not pay FMR any separate fees
for this service.
For fiscal 1996, the portfolio turnover rates for Short-Term Bond and
Investment Grade Bond were 151% and 134%, respectively. These rates vary
from year to year. High turnover rates increase transaction costs and may
increase taxable capital gains. FMR considers these effects when evaluating
the anticipated benefits of short-term investing.
YOUR ACCOUNT

DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of America's
first mutual funds. Today, Fidelity is the largest mutual fund company in
the country, and is known as an innovative provider of high-quality
financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, FBSI. Fidelity is also a leader
in providing tax-sheltered retirement plans for individuals investing on
their own or through their employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(small solid bullet) For mutual funds, 1-800-544-8888
(small solid bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity has
over 80 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in a fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in a fund through a brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed in the table that follows.
The account guidelines that follow may not apply to certain retirement
accounts. If your employer offers a fund through a retirement program,
contact your employer for more information. Otherwise, call Fidelity
directly.
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(solid bullet) Number of Fidelity mutual
funds: over 215
(solid bullet) Assets in Fidelity mutual
funds: over $ 386 billion
(solid bullet) Number of shareholder
accounts: over 26 million
(solid bullet) Number of investment
analysts and portfolio
managers: over 225
(checkmark)
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(solid bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal
age and under 70 with earned income to invest up to $2,000 per tax year.
Individuals can also invest in a spouse's IRA if the spouse has earned
income of less than $250.
(solid bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(solid bullet) KEOGH OR CORPORATE PROFIT SHARING AND MONEY PURCHASE PENSION
PLANS allow self-employed individuals or small business owners (and their
employees) to make tax-deductible contributions for themselves and any
eligible employees up to $30,000 per year.
(solid bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employed income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(solid bullet) 403(B) CUSTODIAL ACCOUNTS are available to employees of most
tax-exempt institutions, including schools, hospitals, and other charitable
organizations.
(solid bullet) 401(K) PROGRAMS allow employees of corporations of all sizes
to contribute a percentage of their wages on a tax-deferred basis. These
accounts need to be established by the trustee of the plan.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
EACH FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. Each fund's shares are sold without a sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page . If there is no application accompanying this
prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(small solid bullet) Mail in an application with a check, or
(small solid bullet) Open your account by exchanging from another Fidelity
fund.
IF YOU ARE INVESTING THROUGH A TAX-SHELTERED RETIREMENT PLAN, such as an
IRA, for the first time, you will need a special application. Retirement
investing also involves its own investment procedures. Call 1-800-544-8888
for more information and a retirement application.
If you buy shares by check or Fidelity Money Line(registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business days to
ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For Fidelity retirement accounts $500
TO ADD TO AN ACCOUNT $250
For Fidelity retirement accounts $250
Through automatic investment plans $100
MINIMUM BALANCE $1,000
For Fidelity retirement accounts $500
These minimums may vary for investments through Fidelity Portfolio Advisory
Services or a Fidelity Payroll Deduction Program account in the fund. Refer
to the program materials for details.

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TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT

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

Money Line: $50,000.
Mail
(mail_graphic) (small solid bullet) Complete and sign the (small solid bullet) Make your check
application. Make your payable to the complete
check payable to the name of the fund.
complete name of the Indicate your fund
fund of your choice. account number on
Mail to the address your check and mail to
indicated on the the address printed on
application. your account statement.
(small solid bullet) Exchange by mail: call
1-800-544-6666 for
instructions.

In Person
(hand_graphic) (small solid bullet) Bring your application (small solid bullet) Bring your check to a
and check to a Fidelity Fidelity Investor Center.
Investor Center. Call Call 1-800-544-9797 for
1-800-544-9797 for the the center nearest you.
center nearest you.

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

Automatically
(automatic_
graphic) (small solid bullet) Not available. (small solid bullet) Use Fidelity Automatic
Account Builder. Sign
up for this service
when opening your
account, or call
1-800-544-6666 to add
it.

(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

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

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ACCOUNT TYPE SPECIAL REQUIREMENTS

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

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

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

Check (check_graphic) All account types: (small solid bullet) Minimum check: $500.
(small solid bullet) All account owners must sign
a signature card to receive a
checkbook.

(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

</TABLE>

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

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

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

DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA

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

FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND

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

</TABLE>

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

DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income and
capital gains to shareholders each year. Income dividends are declared
daily and paid monthly. Capital gains are normally distributed in June and
December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. Each fund offers four
options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions will
be automatically reinvested in additional shares of the fund. If you do not
indicate a choice on your application, you will be assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested, but you will be sent a check for each dividend
distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions.
4. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividend and
capital gain distributions will be automatically invested in another
identically registered Fidelity fund.
FOR RETIREMENT ACCOUNTS, all distributions are automatically reinvested.
When you are over 59 years old, you can receive distributions in cash.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions will be reinvested at the NAV as of the
date the fund deducts the distribution from its NAV. The mailing of
distribution checks will begin within seven days.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
Each fund earns interest from
its investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund may
realize capital gains if it sells
securities for a higher price
than it paid for them. These
are passed along as CAPITAL
GAIN DISTRIBUTIONS.
(checkmark)
TAXES
As with any investment, you should consider how your investment in a fund
will be taxed. If your account is not a tax-deferred retirement account,
you should be aware of these tax implications.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax,
and may also be subject to state or local taxes. If you live outside the
United States, your distributions could also be taxed by the country in
which you reside. Your distributions are taxable when they are paid,
whether you take them in cash or reinvest them. However, distributions
declared in December and paid in January are taxable as if they were paid
on December 31.
For federal tax purposes, each fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions
are taxed as long-term capital gains. Every January, Fidelity will send you
and the IRS a statement showing the taxable distributions paid to you in
the previous year.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other
Fidelity funds - are subject to capital gains tax. A capital gain or loss
is the difference between the cost of your shares and the price you receive
when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a fund deducts a capital
gain distribution from its NAV, you will pay the full price for the shares
and then receive a portion of the price back in the form of a taxable
distribution.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on a fund and
its investments and these taxes generally will reduce the fund's
distributions. However, an offsetting tax credit or deduction may be
available to you. If so, your tax statement will show more taxable income
or capital gains than were actually distributed by the fund, but will also
show the amount of the available offsetting credit or deduction.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, a fund may
have to limit its investment activity in some types of instruments.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates each fund's NAV as of the close of
business of the NYSE, normally 4 p.m. Eastern time.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
Each fund's assets are valued primarily on the basis of market quotations.
Foreign securities are valued on the basis of quotations from the primary
market in which they are traded, and are translated from the local currency
into U.S. dollars using current exchange rates. If quotations are not
readily available, or if the values have been materially affected by events
occurring after the closing of a foreign market, assets are valued by a
method that the Board of Trustees believes accurately reflects fair value.
EACH FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity may only be
liable for losses resulting from unauthorized transactions if it does not
follow reasonable procedures designed to verify the identity of the caller.
Fidelity will request personalized security codes or other information, and
may also record calls. You should verify the accuracy of your confirmation
statements immediately after you receive them. If you do not want the
ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they would
disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(small solid bullet) All of your purchases must be made in U.S. dollars and
checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check, each
check must have a value of at least $50.
(small solid bullet) Each fund reserves the right to limit the number of
checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will be
cancelled and you could be liable for any losses or fees a fund or its
transfer agent has incurred.
(small solid bullet) You begin to earn dividends as of the first business
day following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUNDS THROUGH AN INVESTMENT
PROFESSIONAL, INCLUDING A BROKER, who may charge you a transaction fee
for this service. If you invest through an investment professional, read
your investment professional's program materials for any additional service
features or fees that may apply. Certain features of the fund, such as the
minimum initial or subsequent investment amounts, may be modified.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
FDC may enter confirmed purchase orders on behalf of customers by phone,
with payment to follow no later than the time when a fund is priced on the
following business day. If payment is not received by that time, the
financial institution could be held liable for resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(small solid bullet) Normally, redemption proceeds will be mailed to you on
the next business day, but if making immediate payment could adversely
affect a fund, it may take up to seven days to pay you.
(small solid bullet) Shares will earn dividends through the date of
redemption; however, shares redeemed on a Friday or prior to a holiday will
continue to earn dividends until the next business day.
(small solid bullet) Fidelity Money Line redemptions generally will be
credited to your bank account on the second or third business day after
your phone call.
(small solid bullet) Each fund may hold payment on redemptions until it is
reasonably satisfied that investments made by check or Fidelity Money Line
have been collected, which can take up to seven business days.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays), when
trading on the NYSE is restricted, or as permitted by the SEC.
(small solid bullet) If you sell shares by writing a check and the amount
of the check is greater than the value of your account, your check will be
returned to you and you may be subject to additional charges.
FIDELITY RESERVES THE RIGHT TO DEDUCT AN ANNUAL MAINTENANCE FEE of $12.00
from accounts with a value of less than $2,500, subject to an annual
maximum charge of $60.00 per shareholder. It is expected that accounts will
be valued on the second Friday in November of each year. Accounts opened
after September 30 will not be subject to the fee for that year. The fee,
which is payable to the transfer agent, is designed to offset in part the
relatively higher costs of servicing smaller accounts. The fee will not be
deducted from retirement accounts (except non-prototype retirement
accounts), accounts using regular investment plans, or if total assets in
Fidelity funds exceed $50,000. Eligibility for the $50,000 waiver is
determined by aggregating Fidelity mutual fund accounts maintained by FSC
or FBSI which are registered under the same social security number or which
list the same social security number for the custodian of a Uniform
Gifts/Transfers to Minors Act account.
IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to qualified
recipients who support the sale of shares of the funds without
reimbursement from the funds. Qualified recipients are securities dealers
who have sold fund shares or others, including banks and other financial
institutions, under special arrangements in connection with FDC's sales
activities. In some instances, these incentives may be offered only to
certain institutions whose representatives provide services in connection
with the sale or expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of a fund for
shares of other Fidelity funds. However, you should note the following:
(small solid bullet) The fund you are exchanging into must be registered
for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification number.
(small solid bullet) Before exchanging into a fund, read its prospectus.
(small solid bullet) If you exchange into a fund with a sales charge, you
pay the percentage-point difference between that fund's sales charge and
any sales charge you have previously paid in connection with the shares you
are exchanging. For example, if you had already paid a sales charge of 2%
on your shares and you exchange them into a fund with a 3% sales charge,
you would pay an additional 1% sales charge.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Because excessive trading can hurt fund performance
and shareholders, each fund reserves the right to temporarily or
permanently terminate the exchange privilege of any investor who makes more
than four exchanges out of the fund per calendar year. Accounts under
common ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(small solid bullet) The exchange limit may be modified for accounts in
certain institutional retirement plans to conform to plan exchange limits
and Department of Labor regulations. See your plan materials for further
information.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would be
unable to invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
(small solid bullet) Your exchanges may be restricted or refused if a fund
receives or anticipates simultaneous orders affecting significant portions
of the fund's assets. In particular, a pattern of exchanges that coincides
with a "market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.

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

Fidelity Short-Term World Bond Fund
(A Fund of Fidelity Investment Trust)
Fidelity Short-Term Bond Fund
(A Fund of Fidelity Fixed-Income Trust)
FORM N-14
STATEMENT OF ADDITIONAL INFORMATION
August 14, 1996

This Statement of Additional Information, relates to the proposed
reorganization whereby Fidelity Short-Term Bond Fund (Short-Term Bond), a
Fund of Fidelity Fixed-Income Trust, would acquire substantially all of the
assets of Fidelity Short-Term World Bond Fund (Short-Term World), a Fund of
Fidelity Investment Trust, and assume all of Short-Term World's liabilities
in exchange solely for shares of beneficial interest in Short-Term Bond.
This Statement of Additional Information consists of this cover page and
the following described documents, each of which is attached hereto and
incorporated herein by reference:
1. The Statement of Additional Information of Fidelity Short-Term Bond
Fund, dated June 24, 1996.
2. The Prospectus and Statement of Additional Information of Fidelity
Short-Term World Bond Fund, dated February 26, 1996 and Supplement to the
Prospectus dated June 24, 1996.
3. The Annual Report of Fidelity Short-Term Bond Fund for the fiscal year
ended April 30, 1996.
4. The Annual Report of Fidelity Short-Term World Bond Fund for the fiscal
year ended December 31, 1995.
This Statement of Additional Information is not a prospectus. A Proxy
Statement and Prospectus dated August 14, 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 August 14, 1996.

FIDELITY SHORT-TERM BOND FUND
FIDELITY INVESTMENT GRADE BOND FUND
FUNDS OF FIDELITY FIXED-INCOME TRUST
STATEMENT OF ADDITIONAL INFORMATION
JUNE 24, 1996
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated June 24, 1996) . Please retain
this document for future reference. The funds' financial statements and
financial highlights, included in Annual Reports for the fiscal year ended
April 30, 1996, are incorporated herein by reference. To obtain an
additional copy of the Prospectus or an Annual Report, please call Fidelity
Distributors Corporation at 1-800-544-8888.
TABLE OF CONTENTS PAGE

Investment Policies and Limitations

Portfolio Transactions

Valuation of Portfolio Securities

Performance

Additional Purchase and Redemption Information

Distributions and Taxes

FMR

Trustees and Officers

Management Contracts

Distribution and Service Plans

Contracts with FMR Affiliates

Description of the Trust

Financial Statements

Appendix

INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
Fidelity Management & Research (Far East) Inc. (FMR Far East)
DISTRIBUTOR
Fidelity Distributor's Corporation (FDC)
TRANSFER AGENT
Fidelity Service Co . (FSC)
BON-ptb-696
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in values,
net assets, or other circumstances will not be considered when determining
whether the investment complies with the fund's investment policies and
limitations.
A fund's fundamental investment policies and limitations cannot be changed
without approval by a "majority of the outstanding voting securities" (as
defined in the Investment Company Act of 1940) of the fund. However, except
for the fundamental investment limitations listed below, the investment
policies and limitations described in this Statement of Additional
Information are not fundamental and may be changed without shareholder
approval.
INVESTMENT LIMITATIONS OF FIDELITY SHORT-TERM BOND FUND
(SHO RT-TERM BOND)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of the fund's total assets would be invested in the
securities of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
sale of restricted securities or the purchase of bonds in accordance with
the fund's investment objective, policies, and limitations, either directly
from the issuer, or from an underwriter for an issuer, may be deemed to be
underwriting;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or its agencies or instrumentalities) if,
as a result, more than 25% of the value of its total assets would be
invested in securities of companies having their principal business
activities in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(x) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
For purposes of limitation (viii), pass-through entities and other special
purpose vehicles or pools of financial assets, such as issuers of
asset-backed securities or investment companies, are not considered
"business enterprises."
For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT LIMITATIONS OF FIDELITY INVESTMENT GRADE BOND FUND
( INVESTMENT GRADE BOND )
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of the fund's total assets would be invested in the
securities of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities);
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements; or
(9) invest in companies for the purpose of exercising control or
management.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(ix) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
For purposes of limitation (viii), pass-through entities and other special
purpose vehicles or pools of financial assets, such as issuers of
asset-backed securities or investment companies, are not considered
"business enterprises."
For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions"
beginning on page .
Each fund's investments must be consistent with its investment objective
and policies. Accordingly, not all of the security types and investment
techniques discussed below are eligible investments for each of the funds.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the fund under the Investment Company Act of 1940. These
transactions may include repurchase agreements with custodian banks;
short-term obligations of, and repurchase agreements with, the 50 largest
U.S. banks (measured by deposits); municipal securities; U.S. government
securities with affiliated financial institutions that are primary dealers
in these securities; short-term currency transactions; and short-term
borrowings. In accordance with exemptive orders issued by the Securities
and Exchange Commission (SEC), the Board of Trustees has established and
periodically reviews procedures applicable to transactions involving
affiliated financial institutions.
CLOSED-END INVESTMENT COMPANIES. Each fund may purchase the shares of
closed-end investment companies to facilitate investment in certain
countries. Shares of closed-end investment companies may trade at a premium
or a discount to their net asset value.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security. Typically, no
interest accrues to the purchaser until the security is delivered. The
funds may receive fees for entering into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, each fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the fund's other investments. If a fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, the fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a delayed-delivery
basis, the fund does not participate in further gains or losses with
respect to the security. If the other party to a delayed-delivery
transaction fails to deliver or pay for the securities, the fund could miss
a favorable price or yield opportunity, or could suffer a loss.
Each fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations may
involve significant risks in addition to the risks inherent in U.S.
investments. The value of securities denominated in foreign currencies and
of dividends and interest paid with respect to such securities will
fluctuate based on the relative strength of the U.S. dollar.
Foreign investments involve a risk of local political, economic, or social
instability, military action or unrest, or adverse diplomatic developments,
and may be affected by actions of foreign governments adverse to the
interests of U.S. investors. Such actions may include the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention. There
is no assurance that FMR will be able to anticipate these potential events
or counter their effects. These risks are magnified for investments in
developing countries, which may have relatively unstable governments,
economies based on only a few industries, and securities markets that trade
a small number of securities.
Economies of particular countries or areas of the world may differ
favorably or unfavorably from the economy of the United States. Foreign
markets may offer less protection to investors than U.S. markets. It is
anticipated that in most cases the best available market for foreign
securities will be on an exchange or in over-the-counter markets located
outside of the United States. Foreign stock markets, while growing in
volume and sophistication, are generally not as developed as those in the
United States, and securities of some foreign issuers (particularly those
located in developing countries) may be less liquid and more volatile than
securities of comparable U.S. issuers. Foreign security trading practices,
including those involving securities settlement where fund assets may be
released prior to receipt of payment, may result in increased risk in the
event of a failed trade or the insolvency of a foreign broker-dealer, and
may involve substantial delays. In addition, the costs of foreign
investing, including withholding taxes, brokerage commissions and custodial
costs, are generally higher than for U.S. investors. In general, there is
less overall governmental supervision and regulation of securities
exchanges, brokers, and listed companies than in the United States. It may
also be difficult to enforce legal rights in foreign countries. Foreign
issuers are generally not bound by uniform accounting, auditing, and
financial reporting requirements and standards of practice comparable to
those applicable to U.S. issuers.
Some foreign securities impose restrictions on transfer within the United
States or to U.S. persons. Although securities subject to such transfer
restrictions may be marketable abroad, they may be less liquid than foreign
securities of the same class that are not subject to such restrictions.
American Depository Receipts (ADR's) as well as other "hybrid" forms of
ADRs including European Depository Receipts (EDRs) and Global Depository
Receipts (GDRs), are certificates evidencing ownership of shares of a
foreign issuer. These certificates are issued by depository banks and
generally trade on an established market in the United States or elsewhere.
The underlying shares are held in trust by a custodian bank or similar
financial institution in the issuer's home country. The depository bank may
not have physical custody of the underlying securities at all times and may
charge fees for various services, including forwarding dividends and
interest and corporate actions. ADRs are an alternative to directly
purchasing the underlying foreign securities in their national markets and
currencies. However, ADRs continue to be subject to many of the risks
associated with investing directly in foreign securities. These risks
include foreign exchange risk as well as the political and economic risks
of the underlying issuer's country.
FOREIGN CURRENCY TRANSACTIONS. The funds may conduct foreign currency
transactions on a spot (i.e., cash) basis or by entering into forward
contracts to purchase or sell foreign currencies at a future date and
price. The funds will convert currency on a spot basis from time to time,
and investors should be aware of the costs of currency conversion. Although
foreign exchange dealers generally do not charge a fee for conversion, they
do realize a profit based on the difference between the prices at which
they are buying and selling various currencies. Thus, a dealer may offer to
sell a foreign currency to the fund at one rate, while offering a lesser
rate of exchange should the fund desire to resell that currency to the
dealer. Forward contracts are generally traded in an interbank market
conducted directly between currency traders (usually large commercial
banks) and their customers. The parties to a forward contract may agree to
offset or terminate the contract before its maturity, or may hold the
contract to maturity and complete the contemplated currency exchange.
Each fund may use currency forward contracts for any purpose consistent
with its investment objective. The following discussion summarizes the
principal currency management strategies involving forward contracts that
could be used by each fund. The funds may also use swap agreements, indexed
securities, and options and futures contracts relating to foreign
currencies for the same purposes.
When a fund agrees to buy or sell a security denominated in a foreign
currency, it may desire to "lock in" the U.S. dollar price of the security.
By entering into a forward contract for the purchase or sale, for a fixed
amount of U.S. dollars, of the amount of foreign currency involved in the
underlying security transaction, the fund will be able to protect itself
against an adverse change in foreign currency values between the date the
security is purchased or sold and the date on which payment is made or
received. This technique is sometimes referred to as a "settlement hedge"
or "transaction hedge." The funds may also enter into forward contracts to
purchase or sell a foreign currency in anticipation of future purchases or
sales of securities denominated in foreign currency, even if the specific
investments have not yet been selected by FMR.
The funds may also use forward contracts to hedge against a decline in the
value of existing investments denominated in foreign currency. For example,
if a fund owned securities denominated in pounds sterling, it could enter
into a forward contract to sell pounds sterling in return for U.S. dollars
to hedge against possible declines in the pound's value. Such a hedge,
sometimes referred to as a "position hedge," would tend to offset both
positive and negative currency fluctuations, but would not offset changes
in security values caused by other factors. A fund could also hedge the
position by selling another currency expected to perform similarly to the
pound sterling - for example, by entering into a forward contract to sell
Deutschemarks or European Currency Units in return for U.S. dollars. This
type of hedge, sometimes referred to as a "proxy hedge," could offer
advantages in terms of cost, yield, or efficiency, but generally would not
hedge currency exposure as effectively as a simple hedge into U.S. dollars.
Proxy hedges may result in losses if the currency used to hedge does not
perform similarly to the currency in which the hedged securities are
denominated.
Each fund may enter into forward contracts to shift its investment exposure
from one currency into another. This may include shifting exposure from
U.S. dollars to a foreign currency, or from one foreign currency to another
foreign currency. For example, if a fund held investments denominated in
Deutschemarks, the fund could enter into forward contracts to sell
Deutschemarks and purchase Swiss Francs. This type of strategy, sometimes
known as a "cross-hedge," will tend to reduce or eliminate exposure to the
currency that is sold, and increase exposure to the currency that is
purchased, much as if the fund had sold a security denominated in one
currency and purchased an equivalent security denominated in another.
Cross-hedges protect against losses resulting from a decline in the hedged
currency, but will cause the fund to assume the risk of fluctuations in the
value of the currency it purchases.
Under certain conditions, SEC guidelines require mutual funds to set aside
appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, the funds will
segregate assets to cover currency forward contracts, if any, whose purpose
is essentially speculative. The funds will not segregate assets to cover
forward contracts entered into for hedging purposes, including settlement
hedges, position hedges, and proxy hedges.
Successful use of currency management strategies will depend on FMR's skill
in analyzing and predicting currency values. Currency management strategies
may substantially change a fund's investment exposure to changes in
currency exchange rates, and could result in losses to the fund if
currencies do not perform as FMR anticipates. For example, if a currency's
value rose at a time when FMR had hedged a fund by selling that currency in
exchange for dollars, the fund would be unable to participate in the
currency's appreciation. If FMR hedges currency exposure through proxy
hedges, a fund could realize currency losses from the hedge and the
security position at the same time if the two currencies do not move in
tandem. Similarly, if FMR increases a fund's exposure to a foreign
currency, and that currency's value declines, the fund will realize a loss.
There is no assurance that FMR's use of currency management strategies will
be advantageous to the funds or that it will hedge at an appropriate time.
FUNDS' RIGHTS AS A SHAREHOLDER. The funds do not intend to direct or
administer the day-to-day operations of any company. Each fund, however,
may exercise its rights as a shareholder and may communicate its views on
important matters of policy to management, the Board of Directors, and
shareholders of a company when FMR determines that such matters could have
a significant effect on the value of the fund's investment in the company.
The activities that a fund may engage in, either individually or in
conjunction with others, may include, among others, supporting or opposing
proposed changes in a company's corporate structure or business activities;
seeking changes in a company's directors or management; seeking changes in
a company's direction or policies; seeking the sale or reorganization of
the company or a portion of its assets; or supporting or opposing third
party takeover efforts. This area of corporate activity is increasingly
prone to litigation and it is possible that a fund could be involved in
lawsuits related to such activities. FMR will monitor such activities with
a view to mitigating, to the extent possible, the risk of litigation
against a fund and the risk of actual liability if a fund is involved in
litigation. No guarantee can be made, however, that litigation against a
fund will not be undertaken or liabilities incurred.
FUTURES AND OPTIONS. The following sections pertain to futures and options:
Asset Coverage for Futures and Options Positions, Combined Positions,
Correlation of Price Changes, Futures Contracts, Futures Margin Payments,
Limitations on Futures and Options Transactions, Liquidity of Options and
Futures Contracts, Options and Futures Relating to Foreign Currencies, OTC
Options, Purchasing Put and Call Options, and Writing Put and Call Options.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The funds will comply
with guidelines established by the SEC with respect to coverage of options
and futures strategies by mutual funds, and if the guidelines so require
will set aside appropriate liquid assets in a segregated custodial account
in the amount prescribed. Securities held in a segregated account cannot be
sold while the futures or option strategy is outstanding, unless they are
replaced with other suitable assets. As a result, there is a possibility
that segregation of a large percentage of a fund's assets could impede
portfolio management or the fund's ability to meet redemption requests or
other current obligations.
COMBINED POSITIONS. A fund may purchase and write options in combination
with each other, or in combination with futures or forward contracts, to
adjust the risk and return characteristics of the overall position. For
example, a fund may purchase a put option and write a call option on the
same underlying instrument, in order to construct a combined position whose
risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at
one strike price and buying a call option at a lower price, in order to
reduce the risk of the written call option in the event of a substantial
price increase. Because combined options positions involve multiple trades,
they result in higher transaction costs and may be more difficult to open
and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match a fund's current or
anticipated investments exactly. The funds may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which they typically
invest, which involves a risk that the options or futures position will not
track the performance of a fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. A fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in a fund's options or futures positions are poorly correlated with
its other investments, the positions may fail to produce anticipated gains
or result in losses that are not offset by gains in other investments.
FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees to
purchase a specified underlying instrument at a specified future date. When
a fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the fund enters into the contract. Some
currently available futures contracts are based on specific securities,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Bond Buyer Municipal Bond Index. Futures can
be held until their delivery dates, or can be closed out before then if a
liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase a fund's exposure to positive and negative
price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When a fund sells a futures
contract, by contrast, the value of its futures position will tend to move
in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of a fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of a fund, the fund may be
entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each fund has filed a
notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets. The funds intend to comply with Rule 4.5 under the
Commodity Exchange Act, which limits the extent to which the funds can
commit assets to initial margin deposits and option premiums.
In addition, each fund will not: (a) sell futures contracts, purchase put
options, or write call options if, as a result, more than 25% of the fund's
total assets would be hedged with futures and options under normal
conditions; (b) purchase futures contracts or write put options if, as a
result, the fund's total obligations upon settlement or exercise of
purchased futures contracts and written put options would exceed 25% of its
total assets; or (c) purchase call options if, as a result, the current
value of option premiums for call options purchased by the fund would
exceed 5% of the fund's total assets. These limitations do not apply to
options attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
The above limitations on the funds' investments in futures contracts and
options, and the funds' policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, may be
changed as regulatory agencies permit.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular options or futures contract
at any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for a fund to
enter into new positions or close out existing positions. If the secondary
market for a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable positions,
and potentially could require a fund to continue to hold a position until
delivery or expiration regardless of changes in its value. As a result, a
fund's access to other assets held to cover its options or futures
positions could also be impaired.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally
is purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the
right to sell the underlying currency.
The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above. The
funds may purchase and sell currency futures and may purchase and write
currency options to increase or decrease their exposure to different
foreign currencies. A fund may also purchase and write currency options in
conjunction with each other or with currency futures or forward contracts.
Currency futures and options values can be expected to correlate with
exchange rates, but may not reflect other factors that affect the value of
a fund's investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not protect a
fund against a price decline resulting from deterioration in the issuer's
creditworthiness. Because the value of a fund's foreign-denominated
investments changes in response to many factors other than exchange rates,
it may not be possible to match the amount of currency options and futures
to the value of the fund's investments exactly over time.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter (OTC) options (options not
traded on exchanges) generally are established through negotiation with the
other party to the option contract. While this type of arrangement allows
the funds greater flexibility to tailor an option to its needs, OTC options
generally involve greater credit risk than exchange-traded options, which
are guaranteed by the clearing organization of the exchanges where they are
traded.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a fund obtains
the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the fund pays
the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. The fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the fund will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. A fund may also terminate a put option position by closing it out in
the secondary market at its current price, if a liquid secondary market
exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When a fund writes a put option, it takes the
opposite side of the transaction from the option's purchaser. In return for
receipt of the premium, the fund assumes the obligation to pay the strike
price for the option's underlying instrument if the other party to the
option chooses to exercise it. When writing an option on a futures
contract, the fund will be required to make margin payments to an FCM as
described above for futures contracts. A fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option the fund has written, however, the
fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates a fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of a fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of a fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment).
Investments currently considered by a fund to be illiquid include
repurchase agreements not entitling the holder to payment of principal and
interest within seven days, non-government stripped fixed-rate
mortgage-backed securities, and over-the-counter options. Also, FMR may
determine some restricted securities, government-stripped fixed-rate
mortgage-backed securities, loans and other direct debt instruments,
emerging market securities, and swap agreements to be illiquid. However,
with respect to over-the-counter options a fund writes, all or a portion of
the value of the underlying instrument may be illiquid depending on the
assets held to cover the option and the nature and terms of any agreement
the fund may have to close out the option before expiration.
In the absence of market quotations, illiquid investments are priced at
fair value as determined in good faith by a committee appointed by the
Board of Trustees. If through a change in values, net assets, or other
circumstances, a fund were in a position where more than 10% of its net
assets was invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
INDEXED SECURITIES. Each fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, currencies,
precious metals or other commodities, or other financial indicators.
Indexed securities typically, but not always, are debt securities or
deposits whose value at maturity or coupon rate is determined by reference
to a specific instrument or statistic. Gold-indexed securities, for
example, typically provide for a maturity value that depends on the price
of gold, resulting in a security whose price tends to rise and fall
together with gold prices. Currency-indexed securities typically are
short-term to intermediate-term debt securities whose maturity values or
interest rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed
securities may be positively or negatively indexed; that is, their maturity
value may increase when the specified currency value increases, resulting
in a security that performs similarly to a foreign-denominated instrument,
or their maturity value may decline when foreign currencies increase,
resulting in a security whose price characteristics are similar to a put on
the underlying currency. Currency-indexed securities may also have prices
that depend on the values of a number of different foreign currencies
relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they
are indexed, and may also be influenced by interest rate changes in the
United States and abroad. At the same time, indexed securities are subject
to the credit risks associated with the issuer of the security, and their
values may decline substantially if the issuer's creditworthiness
deteriorates. Recent issuers of indexed securities have included banks,
corporations, and certain U.S. government agencies. Indexed securities may
be more volatile than the underlying instruments.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive order
issued by the SEC, each fund has received permission to lend money to, and
borrow money from, other funds advised by FMR or its affiliates. Interfund
loans and borrowings normally extend overnight, but can have a maximum
duration of seven days. Loans may be called on one day's notice. A fund
will lend through the program only when the returns are higher than those
available from other short-term instruments (such as repurchase
agreements), and will borrow through the program only when the costs are
equal to or lower than the cost of bank loans. A fund may have to borrow
from a bank at a higher interest rate if an interfund loan is called or not
renewed. Any delay in repayment to a lending fund could result in a lost
investment opportunity or additional borrowing costs.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other borrower
to lenders or lending syndicates (loans and loan participations), to
suppliers of goods or services (trade claims or other receivables), or to
other parties. Direct debt instruments are subject to each fund's policies
regarding the quality of debt securities.
Purchasers of loans and other forms of direct indebtedness depend primarily
upon the creditworthiness of the borrower for payment of principal and
interest. Direct debt instruments may not be rated by any nationally
recognized rating service. If a fund does not receive scheduled interest or
principal payments on such indebtedness, the fund's share price and yield
could be adversely affected. Loans that are fully secured offer a fund more
protections than an unsecured loan in the event of non-payment of scheduled
interest or principal. However, there is no assurance that the liquidation
of collateral from a secured loan would satisfy the borrower's obligation,
or that the collateral could be liquidated. Indebtedness of borrowers whose
creditworthiness is poor involves substantially greater risks and may be
highly speculative. Borrowers that are in bankruptcy or restructuring may
never pay off their indebtedness, or may pay only a small fraction of the
amount owed. Direct indebtedness of developing countries also involves a
risk that the governmental entities responsible for the repayment of the
debt may be unable, or unwilling, to pay interest and repay principal when
due.
Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks to a fund.
For example, if a loan is foreclosed, the fund could become part owner of
any collateral, and would bear the costs and liabilities associated with
owning and disposing of the collateral. In addition, it is conceivable that
under emerging legal theories of lender liability, the fund could be held
liable as a co-lender. Direct debt instruments may also involve a risk of
insolvency of the lending bank or other intermediary. Direct debt
instruments that are not in the form of securities may offer less legal
protection to a fund in the event of fraud or misrepresentation. In the
absence of definitive regulatory guidance, each fund relies on FMR's
research in an attempt to avoid situations where fraud or misrepresentation
could adversely affect the fund.
A loan is often administered by a bank or other financial institution that
acts as agent for all holders. The agent administers the terms of the loan,
as specified in the loan agreement. Unless, under the terms of the loan or
other indebtedness, each fund has direct recourse against the borrower, it
may have to rely on the agent to apply appropriate credit remedies against
a borrower. If assets held by the agent for the benefit of a fund were
determined to be subject to the claims of the agent's general creditors,
the fund might incur certain costs and delays in realizing payment on the
loan or loan participation and could suffer a loss of principal or
interest.
Direct indebtedness purchased by each fund may include letters of credit,
revolving credit facilities, or other standby financing commitments
obligating the fund to pay additional cash on demand. These commitments may
have the effect of requiring the fund to increase its investment in a
borrower at a time when it would not otherwise have done so, even if the
borrower's condition makes it unlikely that the amount will ever be repaid.
Each fund will set aside appropriate liquid assets in a segregated
custodial account to cover its potential obligations under standby
financing commitments.
Each fund limits the amount of total assets that it will invest in any one
issuer or in issuers within the same industry (see limitations (1) and (5).
For purposes of these limitations, each fund generally will treat the
borrower as the "issuer" of indebtedness held by the fund. In the case of
loan participations where a bank or other lending institution serves as
financial intermediary between each fund and the borrower, if the
participation does not shift to the fund the direct debtor-creditor
relationship with the borrower, SEC interpretations require the fund, in
appropriate circumstances, to treat both the lending bank or other lending
institution and the borrower as "issuers" for these purposes. Treating a
financial intermediary as an issuer of indebtedness may restrict a fund's
ability to invest in indebtedness related to a single financial
intermediary, or a group of intermediaries engaged in the same industry,
even if the underlying borrowers represent many different companies and
industries.
MORTGAGE-BACKED SECURITIES. The funds may purchase mortgage-backed
securities issued by government and non-government entities such as banks,
mortgage lenders, or other financial institutions. A mortgage-backed
security is an obligation of the issuer backed by a mortgage or pool of
mortgages or a direct interest in an underlying pool of mortgages. Some
mortgage-backed securities, such as collateralized mortgage obligations or
CMOs, make payments of both principal and interest at a variety of
intervals; others make semiannual interest payments at a predetermined rate
and repay principal at maturity (like a typical bond). Mortgage-backed
securities are based on different types of mortgages including those on
commercial real estate or residential properties. Other types of
mortgage-backed securities will likely be developed in the future, and the
funds may invest in them if FMR determines they are consistent with the
funds' investment objective and policies.
The value of mortgage-backed securities may change due to shifts in the
market's perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities market as a whole. Non-government
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
government issues. Mortgage-backed securities are subject to prepayment
risk. Prepayment, which occurs when unscheduled or early payments are made
on the underlying mortgages, may shorten the effective maturities of these
securities and may lower their total returns.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to sell that security back to the
original seller at an agreed-upon price. The resale price reflects the
purchase price plus an agreed-upon incremental amount which is unrelated to
the coupon rate or maturity of the purchased security. To protect the fund
from the risk that the original seller will not fulfill its obligation, the
securities are held in an account of the fund at a bank, marked-to-market
daily, and maintained at a value at least equal to the sale price plus the
accrued incremental amount. While it does not presently appear possible to
eliminate all risks from these transactions (particularly the possibility
that the value of the underlying security will be less than the resale
price, as well as delays and costs to a fund in connection with bankruptcy
proceedings), it is each fund's current policy to engage in repurchase
agreement transactions with parties whose creditworthiness has been
reviewed and found satisfactory by FMR.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a fund may be obligated to pay all or part of the
registration expense and a considerable period may elapse between the time
it decides to seek registration and the time it may be permitted to sell a
security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, a fund might obtain a
less favorable price than prevailed when it decided to seek registration of
the security.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement. A
fund will enter into reverse repurchase agreements only with parties whose
creditworthiness has been found satisfactory by FMR. Such transactions may
increase fluctuations in the market value of the fund's assets and may be
viewed as a form of leverage.
SECURITIES LENDING. A fund may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange and
a subsidiary of FMR Corp.
Securities lending allows a fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there may be
delays in the recovery of loaned securities, or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be
made only to parties deemed by FMR to be of good standing. Furthermore,
they will only be made if, in FMR's judgment, the consideration to be
earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC Staff that a fund
may engage in loan transactions only under the following conditions: (1)
the fund must receive 100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or notes) from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of
the collateral; (3) after giving notice, the fund must be able to terminate
the loan at any time; (4) the fund must receive reasonable interest on the
loan or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest, or other distributions on the securities loaned and to
any increase in market value; (5) the fund may pay only reasonable
custodian fees in connection with the loan; and (6) the Board of Trustees
must be able to vote proxies on the securities loaned, either by
terminating the loan or by entering into an alternative arrangement with
the borrower.
Cash received through loan transactions may be invested in any security in
which a fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
STRIPPED MORTGAGE-BACKED SECURITIES are created when a U.S. government
agency or a financial institution separates the interest and principal
components of a mortgage-backed security and sells them as individual
securities. The holder of the "principal-only" security (PO) receives the
principal payments made by the underlying mortgage-backed security, while
the holder of the "interest-only" security (IO) receives interest payments
from the same underlying security.
The prices of stripped mortgage-backed securities may be particularly
affected by changes in interest rates. As interest rates fall, prepayment
rates tend to increase, which tends to reduce prices of IOs and increase
prices of POs. Rising interest rates can have the opposite effect.
SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of different types of
investments or market factors. Depending on their structure, swap
agreements may increase or decrease a fund's exposure to long- or
short-term interest rates (in the United States or abroad), foreign
currency values, mortgage securities, corporate borrowing rates, or other
factors such as security prices or inflation rates. Swap agreements can
take many different forms and are known by a variety of names. A fund is
not limited to any particular form of swap agreement if FMR determines it
is consistent with the fund's investment objective and policies.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains the
right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines elements
of buying a cap and selling a floor.
Swap agreements will tend to shift a fund's investment exposure from one
type of investment to another. For example, if the fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease the fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and interest rates. Caps and
floors have an effect similar to buying or writing options. Depending on
how they are used, swap agreements may increase or decrease the overall
volatility of a fund's investments and its share price and yield.
The most significant factor in the performance of swap agreements is the
change in the specific interest rate, currency, or other factors that
determine the amounts of payments due to and from a fund. If a swap
agreement calls for payments by the fund, the fund must be prepared to make
such payments when due. In addition, if the counterparty's creditworthiness
declined, the value of a swap agreement would be likely to decline,
potentially resulting in losses. Each fund expects to be able to eliminate
its exposure under swap agreements either by assignment or other
disposition, or by entering into an offsetting swap agreement with the same
party or a similarly creditworthy party.
Each fund will maintain appropriate liquid assets in a segregated custodial
account to cover its current obligations under swap agreements. If a fund
enters into a swap agreement on a net basis, it will segregate assets with
a daily value at least equal to the excess, if any, of the fund's accrued
obligations under the swap agreement over the accrued amount the fund is
entitled to receive under the agreement. If a fund enters into a swap
agreement on other than a net basis, it will segregate assets with a value
equal to the full amount of the fund's accrued obligations under the
agreement.
VARIABLE OR FLOATING RATE OBLIGATIONS bear variable or floating interest
rates and carry rights that permit holders to demand payment of the unpaid
principal balance plus accrued interest from the issuers or certain
financial intermediaries. Floating rate instruments have interest rates
that change whenever there is a change in a designated base rate while
variable rate instruments provide for a specified periodic adjustment in
the interest rate. These formulas are designed to result in a market value
for the instrument that approximates its par value.
ZERO COUPON BONDS. Zero coupon bonds do not make interest payments;
instead, they are sold at a deep discount from their face value and are
redeemed at face value when they mature. Because zero coupon bonds do not
pay current income, their prices can be very volatile when interest rates
change. In calculating its dividends, a fund takes into account as income a
portion of the difference between a zero coupon bond's purchase price and
its face value.
A broker-dealer creates a DERIVATIVE ZERO by separating the interest and
principal components of a U.S. Treasury security and selling them as two
individual securities. CATS (Certificates of Accrual on Treasury
Securities), TIGRs (Treasury Investment Growth Receipts), and TRs (Treasury
Receipts) are examples of derivative zeros.
The Federal Reserve Bank creates STRIPS (Separate Trading of Registered
Interest and Principal of Securities) by separating the interest and
principal components of an outstanding U.S. Treasury bond and selling them
as individual securities. Bonds issued by the Resolution Funding
Corporation (REFCORP) and the Financing Corporation (FICO) can also be
separated in this fashion. ORIGINAL ISSUE ZEROS are zero coupon securities
originally issued by the U.S. government, a government agency, or a
corporation in zero coupon form.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of each fund by FMR pursuant to authority contained in the
management contract. FMR is also responsible for the placement of
transaction orders for other investment companies and accounts for which it
or its affiliates act as investment adviser. In selecting broker-dealers,
subject to applicable limitations of the federal securities laws, FMR
considers various relevant factors, including, but not limited to: the size
and type of the transaction; the nature and character of the markets for
the security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; and the
reasonableness of any commissions. Commissions for investments traded on
foreign exchanges will be higher than for investments traded on U.S.
exchanges and may not be subject to negotiation.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; and the availability of
securities or the purchasers or sellers of securities. In addition, such
broker-dealers may furnish analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio strategy,
and performance of accounts; effect securities transactions, and perform
functions incidental thereto (such as clearance and settlement). The
selection of such broker-dealers generally is made by FMR (to the extent
possible consistent with execution considerations) based upon the quality
of research and execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the funds may be useful to FMR in rendering investment management
services to the funds or its other clients, and conversely, such research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the funds. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid the
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause
each fund to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or FMR's overall
responsibilities to the funds and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the funds or shares of other Fidelity
funds to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI) and Fidelity Brokerage Services (FBS), subsidiaries of FMR
Corp., if the commissions are fair, reasonable, and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services. From September 1992 through December 1994, FBS operated
under the name Fidelity Brokerage Services Limited, Inc. (FBSL). As of
January 1995, FBSL was converted to an unlimited liability company and
assumed the name FBS. Prior to September 4, 1992, FBSL operated under the
name Fidelity Portfolio Services, Ltd. (FPSL) as a wholly owned subsidiary
of Fidelity International Limited (FIL). Edward C. Johnson 3d is Chairman
of FIL. Mr. Johnson 3d, Johnson family members, and various trusts for the
benefit of the Johnson family own, directly or indirectly, more than 25% of
the voting common stock of FIL.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, unless certain requirements
are satisfied. Pursuant to such requirements, the Board of Trustees has
authorized FBSI to execute portfolio transactions on national securities
exchanges in accordance with approved procedures and applicable SEC rules.
Each fund's Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio transactions
on behalf of the funds and review the commissions paid by each fund over
representative periods of time to determine if they are reasonable in
relation to the benefits to the fund.
For the fiscal years ended April 30, 1996 and 1995, the portfolio turnover
rates were 151% and 113%, respectively, for Short-Term Bond and 134 %
and 90%, respectively, for Investment Grade Bond. Because a high turnover
rate increases transaction costs and may increase taxable gains, FMR
carefully weighs the anticipated benefits of short-term investing against
these consequences.
For fiscal 1996 , 1995, and 1994, Investment Grade Bond paid
brokerage commissions of $ 6,202, $ 2,898 , and $0,
respectively. Short-Term Bond paid no brokerage commissions for fiscal
1996, 1995, and 1994. Each fund pays both commissions and spreads in
connection with the placement of portfolio transactions.
D uring fiscal 199 6 , the Investment Grade Bond paid
$ 6,202 in commissions to brokerage firms that provided research
services involving approximately $ 3,030,995 of transactions. The
provision of research services was not necessarily a factor in the
placement of all this business with such firms.
From time to time the Trustees will review whether the recapture for the
benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to continue
to review whether recapture opportunities are available and are legally
permissible and, if so, to determine in the exercise of their business
judgment whether it would be advisable for each fund to seek such
recapture.
Although the Trustees and officers of each fund are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds and accounts
are managed by the same investment adviser, particularly when the same
security is suitable for the investment objective of more than one fund or
account.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with procedures believed to be appropriate and equitable for each fund. In
some cases this system could have a detrimental effect on the price or
value of the security as far as each fund is concerned. In other cases,
however, the ability of the funds to participate in volume transactions
will produce better executions and prices for the funds. It is the current
opinion of the Trustees that the desirability of retaining FMR as
investment adviser to each fund outweighs any disadvantages that may be
said to exist from exposure to simultaneous transactions.
VALUATION OF PORTFOLIO SECURITIES
Securities and other assets for which market quotations are readily
available are valued at market values determined by their most recent bid
prices (sales prices if the principal market is an exchange) in the
principal market in which such securities normally are traded. Securities
and other assets for which market quotations are not readily available
(including restricted securities, if any) are appraised at their fair value
as determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees.
Securities may also be valued on the basis of valuations furnished by a
pricing service that uses both dealer-supplied valuations and evaluations
based on expert analysis of market data and other factors if such
valuations are believed to reflect more accurately the fair value of such
securities. Use of a pricing service has been approved by the Board of
Trustees. There are a number of pricing services available, and the
Trustees, or officers acting on behalf of the Trustees, on the basis of
ongoing evaluation of these pricing services, may use other pricing
services or may discontinue the use of any pricing service in whole or in
part.
Securities not valued by the pricing service, and for which quotations are
readily available, are valued at market values determined on the basis of
their latest available bid prices as furnished by recognized dealers in
such securities. Futures contracts and options are valued on the basis of
market quotations, if available.
PERFORMANCE
The funds may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. Each fund's share price, yield, and
total return fluctuate in response to market conditions and other factors,
and the value of fund shares when redeemed may be more or less than their
original cost.
YIELD CALCULATIONS. Yields for a fund are computed by dividing the fund's
interest income for a given 30-day or one-month period, net of expenses, by
the average number of shares entitled to receive distributions during the
period, dividing this figure by the fund's net asset value (NAV) at the end
of the period, and annualizing the result (assuming compounding of income)
in order to arrive at an annual percentage rate. Income is calculated for
purposes of yield quotations in accordance with standardized methods
applicable to all stock and bond funds. In general, interest income is
reduced with respect to bonds trading at a premium over their par value by
subtracting a portion of the premium from income on a daily basis, and is
increased with respect to bonds trading at a discount by adding a portion
of the discount to daily income. For a fund's investments denominated in
foreign currencies, income and expenses are calculated first in their
respective currencies, and are then converted to U.S. dollars, either when
they are actually converted or at the end of the 30-day or one month
period, whichever is earlier. Capital gains and losses generally are
excluded from the calculation as are gains and losses from currency
exchange rate fluctuations.
Income calculated for the purposes of calculating a fund's yield differs
from income as determined for other accounting purposes. Because of the
different accounting methods used, and because of the compounding of income
assumed in yield calculations, a fund's yield may not equal its
distribution rate, the income paid to your account, or the income reported
in the fund's financial statements.
Yield information may be useful in reviewing a fund's performance and in
providing a basis for comparison with other investment alternatives.
However, each fund's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of the
portfolio securities of respective investment companies they have chosen to
consider.
Investors should recognize that in periods of declining interest rates a
fund's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates the fund's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to a fund from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the
fund's holdings, thereby reducing the fund's current yield. In periods of
rising interest rates, the opposite can be expected to occur.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of a fund's return, including the effect of reinvesting dividends
and capital gain distributions, and any change in the fund's NAV over a
stated period. Average annual total returns are calculated by determining
the growth or decline in value of a hypothetical historical investment in a
fund over a stated period, and then calculating the annually compounded
percentage rate that would have produced the same result if the rate of
growth or decline in value had been constant over the period. For example,
a cumulative total return of 100% over ten years would produce an average
annual total return of 7.18%, which is the steady annual rate of return
that would equal 100% growth on a compounded basis in ten years. While
average annual total returns are a convenient means of comparing investment
alternatives, investors should realize that a fund's performance is not
constant over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to the actual
year-to-year performance of the fund.
In addition to average annual total returns, a fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. Total returns may be quoted on a
before-tax or after-tax basis. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.
NET ASSET VALUE. Charts and graphs using a fund's net asset values,
adjusted net asset values, and benchmark indices may be used to exhibit
performance. An adjusted NAV includes any distributions paid by a fund and
reflects all elements of its return. Unless otherwise indicated, a fund's
adjusted NAVs are not adjusted for sales charges, if any.
HISTORICAL FUND RESULTS. The following table shows each fund's yield and
total returns for periods ended April 30, 19 96.

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

30-Day One Five Ten One Five Ten
Yield Year Years Years Year Years Years

Short-Term Bond 5.68 % 6.52 % 6.23 % 6.57 %* 6.52 % 35.31 % 84.58 %*

Investment Grade
Bond 5.92 % 7.62 % 8.67 % 8.05 % 7.62 % 51.55 % 116.92 %

</TABLE>

* From September 15, 1986 (commencement of operations).
The tables on the following page show the income and capital elements of
each fund's cumulative total return. The table compares each fund's return
to the record of the Standard & Poor's 500 Index (S&P 500), the Dow
Jones Industrial Average (DJIA), and the cost of living (measured by the
Consumer Price Index, or CPI) over the same period. The CPI information is
as of the month end closest to the initial investment date for each fund.
The S&P 500 and DJIA comparisons are provided to show how each fund's total
return compared to the record of a broad average of common stocks and a
narrower set of stocks of major industrial companies, respectively, over
the same period. Of course, since each fund invests in fixed-income
securities, common stocks represent a different type of investment from the
fund. Common stocks generally offer greater growth potential than the
funds, but generally experience greater price volatility, which means
greater potential for loss. In addition, common stocks generally provide
lower income than a fixed-income investment such as the funds. Figures for
the S&P 500 and DJIA are based on the prices of unmanaged groups of stocks
and, unlike the funds' returns, do not include the effect of paying
brokerage commissions or other costs of investing.
During the period from September 15, 1986 (commencement of operations) to
April 30, 1996, a hypothetical $10,000 investment in Short-Term Bond
would have grown to $ 18,458 , assuming all distributions were
reinvested. This was a period of fluctuating interest rates and bond prices
and the figures below should not be considered representative of the
dividend income or capital gain or loss that could be realized from an
investment in the fund today.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY SHORT-TERM BOND FUND INDICES

Year
Ended Value of Value of Value of Total S&P 500 DJIA Cost of
April 30 Initial Reinvested Reinvested Value Living**
$10,000 Dividend Capital Gain
Investment Distributions Distributions

1996 $ 8,720 $ 9,738 $ 0 $ 18,458 $ 38,267 $ 42,847 $ 14,183

1995 $ 8,720 $ 8,608 $ 0 $ 17,328 $ 29,388 $ 32,504 $ 13,784

1994 $ 9,080 $ 7,880 $ 0 $ 16,960 $ 25,020 $ 26,959 $ 13,376

1993 $ 9,510 $ 7,120 $ 0 $ 16,630 $ 23,755 $ 24,413 $ 13,067

1992 $ 9,430 $ 5,848 $ 0 $ 15,278 $ 21,743 $ 23,224 $ 12,659

1991 $ 9,180 $ 4,461 $ 0 $ 13,641 $ 19,065 $ 19,360 $ 12,269

1990 $ 9,170 $ 3,288 $ 0 $ 12,458 $ 16,210 $ 17,148 $ 11,697

1989 $ 9,180 $ 2,294 $ 0 $ 11,474 $ 14,662 $ 15,036 $ 11,171

1988 $ 9,470 $ 1,381 $ 0 $ 10,851 $ 11,929 $ 12,185 $ 10,626

1987* $ 9,670 $ 479 $ 0 $ 10,149 $ 12,755 $ 13,266 $ 10,227

</TABLE>

* From September 15, 1986 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on September
15, 1986, the net amount invested in fund shares was $10,000. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(their cash value at the time they were reinvested), amounted to
$ 20,345 . If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
cash payments for the period would have amounted to $ 6,999 for
dividends and $ 0 for capital gains distributions. Tax consequences
of different investments have not been factored into the above figures.
During the ten year period ended April 30, 1996, a hypothetical $10,000
investment in Investment Grade Bond would have grown to $ 21,692 ,
assuming all distributions were reinvested. This was a period of
fluctuating interest rates and bond prices and the figures below should not
be considered representative of the dividend income or capital gain or loss
that could be realized from an investment in the fund today.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY INVESTMENT GRADE BOND FUND INDICES

Year
Ended Value of Value of Value of Total S&P 500 DJIA Cost of
April
30 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions

1996 $ 9,437 $ 11,859 $ 396 $ 21,692 $ 37,959 $ 42,814 $ 14,392

1995 $ 9,397 $ 10,449 $ 3 11 $ 2 0,157 $ 29,151 $ 32,475 $ 1 3,987

1994 $ 9,786 $ 9,479 $ 0 $ 19,265 $ 24,818 $ 26,938 $ 13, 573

1993 $ 1 0,147 $ 8,493 $ 0 $ 18,640 $ 23,563 $ 24,394 $ 13, 260

1992 $ 9,477 $ 6,644 $ 0 $ 16,121 $ 21,568 $ 23,206 $ 1 2,845

1991 $ 9,155 $ 5,158 $ 0 $ 1 4,313 $ 18,911 $ 19,345 $ 12, 449

1990 $ 8,794 $ 3,783 $ 0 $ 1 2,577 $ 16,080 $ 17,135 $ 1 1,869

1989 $ 8,941 $ 2,778 $ 0 $ 1 1,719 $ 14,544 $ 15,024 $ 11, 335

1988 $ 9,075 $ 1,802 $ 0 $ 1 0,877 $ 1 1,833 $ 12,176 $ 10, 783

1987 $ 9,383 $ 903 $ 0 $ 1 0,286 $ 1 2,652 $ 1 3,256 $ 10, 378

</TABLE>

Explanatory Notes: With an initial investment of $10,000 made on April
30, 1986, the net amount invested in fund shares was $10,000. The cost
of the initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(their cash value at the time they were reinvested), amounted to
$ 22,329 . If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
cash payments for the period would have amounted to $ 7,692 for
dividends and $ 201 for capital gains distributions. Tax consequences
of different investments have not been factored into the above figures.
PERFORMANCE COMPARISONS. A fund's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed as
mutual fund rankings prepared by Lipper Analytical Services, Inc. (Lipper),
an independent service located in Summit, New Jersey that monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of
total return, assuming reinvestment of distributions, but does not take
sales charges or redemption fees into consideration, and is prepared
without regard to tax consequences. Lipper may also rank funds based on
yield. In addition to the mutual fund rankings, a fund's performance may be
compared to stock, bond, and money market mutual fund performance indices
prepared by Lipper or other organizations. Short-Term Bond may compare
to the Lehman Brothers 1-3 Year Government/Corporate Bond Index, which is
comprised of government and corporate fixed-rate debt issues. Government
and corporate issues include all public obligations of the U.S. Treasury
(excluding flower bonds and foreign-targeted issues), and U.S. government
agencies as well as nonconvertible investment-grade, SEC-registered
corporate debt. Issues included in the Index have an outstanding par value
of at least $100 million and maturities of one to three years. Investment
Grade Bond may be compared to the Lehman Brothers Aggregate Bond Index,
which is comprised of fixed-rate debt issues, including government,
corporate, asset-backed, and mortgage-backed securities. Government and
corporate issues include all public obligations of the U.S. Treasury
(excluding flower bonds and foreign-targeted issues) and U.S. government
agencies, as well as nonconvertible investment-grade, SEC-registered
corporate debt. Mortgage-backed securities include 15- and 30-year fixed
rate securities backed by mortgage pools of the Government National
Mortgage Association (GNMA), Federal Home Loan Mortgage Corporation
(FHLMC), and Federal National Mortgage Association (FNMA). Asset-backed
securities include credit card, auto, and home equity loans. Issues
included in the Index have an outstanding par value of at least $100
million and maturities of at least one year. When comparing these
indices, it is important to remember the risk and return characteristics of
each type of investment. For example, while stock mutual funds may offer
higher potential returns, they also carry the highest degree of share price
volatility. Likewise, money market funds may offer greater stability of
principal, but generally do not offer the higher potential returns
available from stock mutual funds.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
A fund may be compared in advertising to Certificates of Deposit (CDs) or
other investments issued by banks or other depository institutions. Mutual
funds differ from bank investments in several respects. For example, a fund
may offer greater liquidity or higher potential returns than CDs, a fund
does not guarantee your principal or your return, and fund shares are not
FDIC insured.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. Such
information may include information about current economic, market, and
political conditions; materials that describe general principles of
investing, such as asset allocation, diversification, risk tolerance, and
goal setting; questionnaires designed to help create a personal financial
profile; worksheets used to project savings needs based on assumed rates of
inflation and hypothetical rates of return; and action plans offering
investment alternatives. Materials may also include discussions of
Fidelity's asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
A fund may compare its performance or the performance of securities in
which it may invest to averages published by IBC USA (Publications), Inc.
of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The IBC 's/ All Taxable, which is reported in
IBC's MONEY FUND REPORT (trademark) , covers 791 taxable
money market funds. The IBC's Bond Fund Report
AverageS(trademark)/All Taxable, which is reported in the IBC's BOND
FUND REPORT (trademark) , covers 546 taxable bond funds. When
evaluating comparisons to money market funds, investors should consider the
relevant differences in investment objectives and policies. Specifically,
money market funds invest in short-term, high-quality instruments and seek
to maintain a stable $1.00 share price. Bond funds, however, invest in
longer-term instruments and their share prices change daily in response to
a variety of factors.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include other Fidelity funds; retirement investing;
brokerage products and services; model portfolios or allocations; saving
for college or other goals; charitable giving; and the Fidelity credit
card. In addition, Fidelity may quote or reprint financial or business
publications and periodicals as they relate to current economic and
political conditions, fund management, portfolio composition, investment
philosophy, investment techniques, the desirability of owning a particular
mutual fund, and Fidelity services and products. Fidelity may also reprint,
and use as advertising and sales literature, articles from Fidelity Focus,
a quarterly magazine provided free of charge to Fidelity fund shareholders.
A fund may present its fund number, Quotron(trademark) number, and CUSIP
number, and discuss or quote its current portfolio manager.
VOLATILITY. A fund may quote various measures of volatility and benchmark
correlation in advertising. In addition, the fund may compare these
measures to those of other funds. Measures of volatility seek to compare
the fund's historical share price fluctuations or total returns to those of
a benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. All measures of volatility and correlation
are calculated using averages of historical data. In advertising, a fund
may also discuss or illustrate examples of interest rate sensitivity.
MOMENTUM INDICATORS indicate a fund's price movements over specific periods
of time. Each point on the momentum indicator represents the fund's
percentage change in price movements over that period.
A fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an
investor invests a fixed dollar amount in a fund at periodic intervals,
thereby purchasing fewer shares when prices are high and more shares when
prices are low. While such a strategy does not assure a profit or guard
against loss in a declining market, the investor's average cost per share
can be lower than if fixed numbers of shares are purchased at the same
intervals. In evaluating such a plan, investors should consider their
ability to continue purchasing shares during periods of low price levels.
A fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which may
produce superior after-tax returns over time. For example, a $1,000
investment earning a taxable return of 10% annually would have an after-tax
value of $1,949 after ten years, assuming tax was deducted from the return
each year at a 31% rate. An equivalent tax-deferred investment would have
an after-tax value of $2,100 after ten years, assuming tax was deducted at
a 31% rate from the tax-deferred earnings at the end of the ten-year
period.
As of April 30, 1996, FMR advised over $ 25.5 billion in tax-free
fund assets, $ 82 billion in money market fund assets, $ 271
billion in equity fund assets, $ 54 billion in international fund
assets, and $ 23 billion in Spartan fund assets. The funds may
reference the growth and variety of money market mutual funds and the
adviser's innovation and participation in the industry. The equity funds
under management figure represents the largest amount of equity fund assets
under management by a mutual fund investment adviser in the United States,
making FMR America's leading equity (stock) fund manager. FMR, its
subsidiaries, and affiliates maintain a worldwide information and
communications network for the purpose of researching and managing
investments abroad.
In addition to performance rankings, each fund may compare its total
expense ratio to the average total expense ratio of similar funds tracked
by Lipper. A fund's total expense ratio is a significant factor in
comparing bond and money market investments because of its effect on yield.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Each fund is open for business and its net asset value per share (NAV) is
calculated each day the New York Stock Exchange (NYSE) is open for trading.
The NYSE has designated the following holiday closings for 1996: New Year's
Day, Presidents' Day, Good Friday, Memorial Day (observed), Independence
Day, Labor Day, Thanksgiving Day, and Christmas Day. Although FMR expects
the same holiday schedule to be observed in the future, the NYSE may modify
its holiday schedule at any time. In addition, the funds will not process
wire purchases and redemptions on days when the Federal Reserve Wire System
is closed.
FSC normally determines each fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier
if trading on the NYSE is restricted or as permitted by the Securities and
Exchange Commission (SEC). To the extent that portfolio securities are
traded in other markets on days when the NYSE is closed, a fund's NAV may
be affected on days when investors do not have access to the fund to
purchase or redeem shares. In addition, trading in some of a fund's
portfolio securities may not occur on days when the fund is open for
business.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing a fund's NAV. Shareholders receiving securities or other property
on redemption may realize a gain or loss for tax purposes, and will incur
any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the 1940
Act), each fund is required to give shareholders at least 60 days' notice
prior to terminating or modifying its exchange privilege. Under the Rule,
the 60-day notification requirement may be waived if (i) the only effect of
a modification would be to reduce or eliminate an administrative fee,
redemption fee, or deferred sales charge ordinarily payable at the time of
an exchange, or (ii) the fund suspends the redemption of the shares to be
exchanged as permitted under the 1940 Act or the rules and regulations
thereunder, or the fund to be acquired suspends the sale of its shares
because it is unable to invest amounts effectively in accordance with its
investment objective and policies.
In the Prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. Because each fund's income is primarily derived from interest,
dividends from the fund generally will not qualify for the
dividends-received deduction available to corporate shareholders.
Short-term capital gains are distributed as dividend income, but do not
qualify for the dividends-received deduction. A portion of each fund's
dividends derived from certain U.S. government obligations may be exempt
from state and local taxation. Gains (losses) attributable to foreign
currency fluctuations are generally taxable as ordinary income, and
therefore will increase (decrease) dividend distributions. As a
consequence, FMR may adjust a fund's income distributions to reflect the
effect of currency fluctuations. However, if foreign currency losses exceed
a fund's net investment income during a taxable year, all or a portion of
the distributions made in the same taxable year would be recharacterized as
a return of capital to shareholders, thereby reducing each shareholder's
cost basis in his or her fund. Each fund will send each shareholder a
notice in January describing the tax status of dividend and capital gain
distributions for the prior year.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by each fund on
the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains, regardless of the length of time
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of a fund, and such shares are held six
months or less and are sold at a loss, the portion of the loss equal to the
amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes. Short-term capital gains distributed by
each fund are taxable to shareholders as dividends, not as capital gains.
As of April 30 , 1996, Short-Term Bond had a capital loss
carryforward aggregating approximately $134,757,000 of which $6,892,000,
$7,352,000, $2,771,000, $4,373,000, $39,290,000, and $74,079,000 will
expire on April 30, 1997, 1998, 1999, 2002, 2003, and 2004, respectively.
As of April 30 , 1996, Investment Grade Bond had a capital loss
carryforward aggregating approximately $14,238,000, all of which will
expire on April 30, 2004.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Foreign governments may
also impose taxes on other payments or gains with respect to foreign
securities. If, at the close of its fiscal year, more than 50% of a fund's
total assets are invested in securities of foreign issuers, the fund may
elect to pass through foreign taxes paid and thereby allow shareholders to
take a credit or deduction on their individual tax returns.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company and
avoid being subject to federal income or excise taxes at the fund level,
each fund intends to distribute substantially all of its net investment
income and net realized capital gains within each calendar year as well as
on a fiscal year basis. Each fund intends to comply with other tax rules
applicable to regulated investment companies, including a requirement that
capital gains from the sale of securities held less than three months
constitute less than 30% of the fund's gross income for each fiscal year.
Gains from some forward currency contracts, futures contracts, and options
are included in this 30% calculation, which may limit a fund's investments
in such instruments.
If a fund purchases shares in certain foreign investment entities, defined
as passive foreign investment companies (PFICs) in the Internal Revenue
Code, it may be subject to U.S. federal income tax on a portion of any
excess distribution or gain from the disposition of such shares. Interest
charges may also be imposed on a fund with respect to deferred taxes
arising from such distributions or gains. Generally, each fund will elect
to mark-to-market any PFIC shares. Unrealized gains will be recognized as
income for tax purposes and must be distributed to shareholders as
dividends.
Each fund is treated as a separate entity from the other funds of Fidelity
Fixed-Income Trust for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting each fund and its shareholders,
and no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders may be subject to state and
local taxes on fund distributions, and shares may be subject to state and
local personal property taxes. Investors should consult their tax advisers
to determine whether a fund is suitable to their particular tax situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent organized in
1972. The voting common stock of FMR Corp. is divided into two classes.
Class B is held predominantly by members of the Edward C. Johnson 3d family
and is entitled to 49% of the vote on any matter acted upon by the voting
common stock. Class A is held predominantly by non-Johnson family member
employees of FMR Corp. and its affiliates and is entitled to 51% of the
vote on any such matter. The Johnson family group and all other Class B
shareholders have entered into a shareholders' voting agreement under which
all Class B shares will be voted in accordance with the majority vote of
Class B shares. Under t he Investment Company Act of 1940 (1940 Act),
control of a company is presumed where one individual or group of
individuals owns more than 25% of the voting stock of that company.
Therefore, through their ownership of voting common stock and the execution
of the shareholders' voting agreement, members of the Johnson family may be
deemed, under the 1940 Act, to form a controlling group with respect to FMR
Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by three of its divisions as follows: FSC, which is the transfer
and shareholder servicing agent for certain of the funds advised by FMR;
Fidelity Investments Institutional Operations Company, which performs
shareholder servicing functions for institutional customers and funds sold
through intermediaries; and Fidelity Investments Retail Marketing Company,
which provides marketing services to various companies within the Fidelity
organization.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures for
personal investing and restricts certain transactions. For example, all
personal trades in most securities require pre-clearance, and participation
in initial public offerings is prohibited. In addition, restrictions on the
timing of personal investing in relation to trades by Fidelity funds and on
short-term trading have been adopted.
TRUSTEES AND OFFICERS
The Trustees , Members of the Advisory Board, and executive officers
of the trust are listed below. Except as indicated, each individual has
held the office shown or other offices in the same company for the last
five years. All persons named as Trustees and Members of the Advisory
Board also serve in similar capacities for other funds advised by FMR.
The business address of each Trustee and officer who is an "interested
person" (as defined in the Investment Company Act of 1940) is 82 Devonshire
Street, Boston, Massachusetts 02109, which is also the address of FMR. The
business address of all the other Trustees and Members of the Advisory
Board is Fidelity Investments, P.O. Box 9235, Boston, Massachusetts
02205-9235. Those Trustees who are "interested persons" by virtue of their
affiliation with either the trust or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d ( 65) , Trustee and President, is Chairman,
Chief Executive Officer and a Director of FMR Corp.; a Director and
Chairman of the Board and of the Executive Committee of FMR; Chairman and a
Director of FMR Texas Inc., Fidelity Management & Research (U.K.) Inc., and
Fidelity Management & Research (Far East) Inc.
*J. GARY BURKHEAD ( 54) , Trustee and Senior Vice President, is
President of FMR; and President and a Director of FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc., and Fidelity Management & Research (Far
East) Inc.
RALPH F. COX ( 63) , Trustee (1991), is a consultant to Western Mining
Corporation (1994). Prior to February 1994, he was President of Greenhill
Petroleum Corporation (petroleum exploration and production). Until March
1990, Mr. Cox was President and Chief Operating Officer of Union Pacific
Resources Company (exploration and production). He is a Director of
Sanifill Corporation (non-hazardous waste, 1993) and CH2M Hill Companies
(engineering). In addition, he serves on the Board of Directors of the
Texas State Chamber of Commerce, and is a member of advisory boards of
Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS ( 64) , Trustee (1992). Prior to her retirement in
September 1991, Mrs. Davis was the Senior Vice President of Corporate
Affairs of Avon Products, Inc. She is currently a Director of BellSouth
Corporation (telecommunications), Eaton Corporation (manufacturing, 1991),
and the TJX Companies, Inc. (retail stores), and previously served as a
Director of Hallmark Cards, Inc. (1985-1991) and Nabisco Brands, Inc. In
addition, she is a member of the President's Advisory Council of The
University of Vermont School of Business Administration.
RICHARD J. FLYNN (72 ), Trustee and Chairman of the non-interested
Trustees, is a financial consultant. Prior to September 1986, Mr. Flynn was
Vice Chairman and a Director of the Norton Company (manufacturer of
industrial devices). He is currently a Trustee of College of the Holy Cross
and Old Sturbridge Village, Inc., and he previously served as a Director of
Mechanics Bank (1971-1995).
E. BRADLEY JONES ( 68) , Trustee. Prior to his retirement in 1984, Mr.
Jones was Chairman and Chief Executive Officer of LTV Steel Company. He is
a Director of TRW Inc. (original equipment and replacement products),
Cleveland-Cliffs Inc. (mining), Consolidated Rail Corporation, Birmingham
Steel Corporation, and RPM, Inc. (manufacturer of chemical products), and
he previously served as a Director of NACCO Industries, Inc. (mining and
marketing, 1985-1995) and Hyster-Yale Materials Handling, Inc. (1985-1995).
In addition, he serves as a Trustee of First Union Real Estate Investments,
a Trustee and member of the Executive Committee of the Cleveland Clinic
Foundation, a Trustee and member of the Executive Committee of University
School (Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK ( 63) , Trustee, is Executive-in-Residence (1995) at
Columbia University Graduate School of Business and a financial consultant.
From 1987 to January 1995, Mr. Kirk was a Professor at Columbia University
Graduate School of Business. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance), and he previously served as a Director of
Valuation Research Corp. (appraisals and valuations, 1993-1995). In
addition, he serves as Chairman of the Board of Directors of the National
Arts Stabilization Fund, Vice Chairman of the Board of Trustees of the
Greenwich Hospital Association, a Member of the Public Oversight Board of
the American Institute of Certified Public Accountants' SEC Practice
Section (1995), and as a Public Governor of the National Association of
Securities Dealers, Inc. (1996).
*PETER S. LYNCH ( 53) , Trustee, is Vice Chairman and Director of FMR
(1992). Prior to May 31, 1990, he was a Director of FMR and Executive Vice
President of FMR (a position he held until March 31, 1991); Vice President
of Fidelity Magellan Fund and FMR Growth Group Leader; and Managing
Director of FMR Corp. Mr. Lynch was also Vice President of Fidelity
Investments Corporate Services (1991-1992). He is a Director of W.R. Grace
& Co. (chemicals) and Morrison Knudsen Corporation (engineering and
construction). In addition, he serves as a Trustee of Boston College,
Massachusetts Eye & Ear Infirmary, Historic Deerfield (1989) and Society
for the Preservation of New England Antiquities, and as an Overseer of the
Museum of Fine Arts of Boston (1990).
GERALD C. McDONOUGH (66 ), Trustee and Vice-Chairman of the
non-interested Trustees, is Chairman of G.M. Management Group (strategic
advisory services). Prior to his retirement in July 1988, he was Chairman
and Chief Executive Officer of Leaseway Transportation Corp. (physical
distribution services). Mr. McDonough is a Director of ACME-Cleveland Corp.
(metal working, telecommunications and electronic products), Brush-Wellman
Inc. (metal refining), York International Corp. (air conditioning and
refrigeration), Commercial Intertech Corp. (water treatment equipment,
1992), and Associated Estates Realty Corporation (a real estate investment
trust, 1993).
EDWARD H. MALONE (71), Trustee. Prior to his retirement in 1985, Mr.
Malone was Chairman, General Electric Investment Corporation and a Vice
President of General Electric Company. He is a Director of Allegheny Power
Systems, Inc. (electric utility), General Re Corporation (reinsurance) and
Mattel Inc. (toy manufacturer). In addition, he serves as a Trustee of the
Naples Philharmonic Center for the Arts and Rensselaer Polytechnic
Institute, and he is a member of the Advisory Boards of Butler Capital
Corporation Funds and Warburg, Pincus Partnership Funds.
MARVIN L. MANN (63) , Trustee (1993) is Chairman of the Board,
President, and Chief Executive Officer of Lexmark International, Inc.
(office machines, 1991). Prior to 1991, he held the positions of Vice
President of International Business Machines Corporation ("IBM") and
President and General Manager of various IBM divisions and subsidiaries.
Mr. Mann is a Director of M.A. Hanna Company (chemicals, 1993) and Infomart
(marketing services, 1991), a Trammell Crow Co. In addition, he serves as
the Campaign Vice Chairman of the Tri-State United Way (1993) and is a
member of the University of Alabama President's Cabinet.
THOMAS R. WILLIAMS (67 ), Trustee, is President of The Wales Group,
Inc. (management and financial advisory services). Prior to retiring in
1987, Mr. Williams served as Chairman of the Board of First Wachovia
Corporation (bank holding company), and Chairman and Chief Executive
Officer of The First National Bank of Atlanta and First Atlanta Corporation
(bank holding company). He is currently a Director of BellSouth Corporation
(telecommunications), ConAgra, Inc. (agricultural products), Fisher
Business Systems, Inc. (computer software), Georgia Power Company (electric
utility), Gerber Alley & Associates, Inc. (computer software), National
Life Insurance Company of Vermont, American Software, Inc., and AppleSouth,
Inc. (restaurants, 1992).
WILLIAM O. McCOY (62), Member of the Advisory Board (1996), is the Vice
President of Finance for the University of North Carolina (16-school
system, 1995). Prior to his retirement in December 1994, Mr. McCoy was
Vice Chairman of the Board of BellSouth Corporation (telecommunications)
and President of BellSouth Enterprises. He is currently a Director of
Liberty Corporation (holding company), Weeks Corporation of Atlanta (real
estate, 1994), and Carolina Power and Light Company (electric utility,
1996). Previously, he was a Director of First American Corporation (bank
holding company, 1979-1996). In addition, Mr. McCoy serves as a member of
the Board of Visitors for the University of North Carolina at Chapel Hill
(1994) and for the Kenan Flager Business School (University of North
Carolina at Chapel Hill).
FRED L. HENNING, JR. (56 ), Vice President, is Vice President of
Fidelity's money market (1994) and fixed-income (1995) funds and Senior
Vice President of FMR Texas Inc.
MICHAEL GRAY ( 40 ) is manager and vice president of Fidelity
Investment Grade Bond, which he has managed since September 1987. Mr. Gray
also manages several Fidelity funds. Mr. Gray joined Fidelity in
1982.
ARTHUR S. LORING (48), Secretary, is Senior Vice President (1993) and
General Counsel of FMR, Vice President-Legal of FMR Corp., and Vice
President and Clerk of FDC.
KENNETH A. RATHGEBER ( 48 ), Treasurer (1995), is Treasurer of the
Fidelity funds and is an employee of FMR (1995). Before joining FMR, Mr.
Rathgeber was a Vice President of Goldman Sachs & Co. (1978-1995), where he
served in various positions, including Vice President of Proprietary
Accounting (1988-1992), Global Co-Controller (1992-1994), and Chief
Operations Officer of Goldman Sachs (Asia) LLC (1994-1995) .
JOHN H. COSTELLO ( 49), Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH (50) , Assistant Treasurer (1994), is an employee of
FMR (1994). Prior to becoming Assistant Treasurer of the Fidelity funds,
Mr. Rush was Chief Compliance Officer of FMR Corp. (1993-1994) and Chief
Financial Officer of Fidelity Brokerage Services, Inc. (1990-1993).
The table below sets forth information describing the compensation
of each current T rustee of each fund for his or her services as
T rustee for the fiscal year ended April 30, 1996.
COMPENSATION TABLE
Aggregate Compensation

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
J. Gary Ralph F. Phyllis Richard Edward C. E. Donald Peter S. Gerald C. Edward Marvin L. Thomas
Burkhead** Cox Burke J. Flynn Johnson 3d** Bradley J. Kirk Lynch** McDonough H. Mann R.
Davis Jones Malone Williams

Short-Term $ 0 $ 517 $ 499 $ 623 $ 0 $ 504 $

504 $0 $ 494 $ 509 $ 518 $ 501
Bond (dagger)

Investment 0 460 449 561 0 454 454 0 444 456 460 449
Grade Bond

</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Trustees Pension or Estimated Annual Total
Retirement Benefits Upon Compensation
Benefits Accrued Retirement from from the Fund
as Part of Fund the Fund Complex*
Expenses from the Complex*
Fund Complex*

J. Gary Burkhead** $ 0 $ 0 $ 0

Ralph F. Cox 5,200 52,000 128,000

Phyllis Burke Davis 5,200 52,000 125,000

Richard J. Flynn 0 52,000 160,500

Edward C. Johnson 3d** 0 0 0

E. Bradley Jones 5,200 49,400 128,000

Donald J. Kirk 5,200 52,000 129,500

Peter S. Lynch** 0 0 0

Gerald C. McDonough 5,200 52,000 128,000

Edward H. Malone 5,200 44,200 128,000

Marvin L. Mann 5,200 52,000 128,000

Thomas R. Williams 5,200 52,000 125,000
</TABLE>
* Information is as of December 31, 1995 for 219 funds in the complex.
** Interested T rustees of the fund are compensated by FMR.
(dagger) For the fiscal year ended April 30, 1996, certain of the
non-interested Trustees accrued deferred compensation as follows: Ralph F.
Cox, $190, Edward H. Malone $191, and Marvin L. Mann, $192.
The non-interested Trustees may elect to defer receipt of all or a
percentage of their annual fees in accordance with the terms of a Deferred
Compensation Plan (the Plan). Under the Plan, compensation deferred by a
Trustee is periodically adjusted as though an equivalent amount had been
invested and reinvested in shares of one or more funds in the complex
designated by such Trustee (designated securities). The amount paid to the
Trustee under the Plan will be determined based upon the performance of
such investments. Deferral of Trustees' fees in accordance with the Plan
will have a negligible effect on a fund's assets, liabilities, and net
income per share, and will not obligate the fund to retain the services of
any Trustee or to pay any particular level of compensation to the Trustee.
Each fund may invest in such designated securities under the Plan without
shareholder approval. Only non-interested Trustees are eligible to
participate in the Plan.
Under a retirement program adopted in July 1988, the non-interested
Trustees, at the end of the calendar year attaining age 72, become
eligible to participate in a retirement program under which they receive
payments during their lifetime from a fund based on their basic trustee
fees and length of service. The obligation of a fund to make such payments
is not secured or funded. Trustees become eligible if, at the time of
retirement, they have served on the Board for at least five years.
Currently, Messrs. Ralph S. Saul, William R. Spaulding, Bertram H. Witham,
and David L. Yunich, all former non-interested Trustees, receive retirement
benefits under the program.
As of April 30, 1996, approximately 5% of Short-Term Bond's total
outstanding shares was held by FMR affiliates. FMR Corp. is the ultimate
parent company of these FMR affiliates. Mr. Edward C. Johnson 3d, President
and Trustee of the fund, is a member of a family group which, by virtue of
owning approximately 49% of the voting securities of FMR Corp., may be
deemed under the 1940 Act to form a controlling group with respect to FMR
Corp. Based on his membership in this family group, Mr. Edward C. Johnson
3d may be deemed to be a beneficial owner of these shares. As of the above
date, with the exception of Mr. Johnson 3d's ownership of Short-Term Bond's
shares, the Trustees and officers of the funds owned, in the aggregate,
less than 1% of each fund's total outstanding shares.
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of each fund in accordance with its investment objective,
policies, and limitations. FMR also provides each fund with all necessary
office facilities and personnel for servicing each fund's investments,
compensates all officers of each fund and all Trustees who are "interested
persons" of the trust or of FMR, and all personnel of each fund or FMR
performing services relating to research, statistical, and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of each fund. These services include providing facilities
for maintaining each fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with each fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining each
fund's records and the registration of each fund's shares under federal and
state laws; developing management and shareholder services for each fund;
and furnishing reports, evaluations, and analyses on a variety of subjects
to the Trustees.
In addition to the management fee payable to FMR and the fees payable to
FSC, each fund pays all of its expenses, without limitation, that are not
assumed by those parties. Each fund pays for the typesetting, printing, and
mailing of its proxy materials to shareholders, legal expenses, and the
fees of the custodian, auditor and non-interested Trustees. Although each
fund's current management contract provides that each fund will pay for
typesetting, printing, and mailing prospectuses, statements of additional
information, notices, and reports to shareholders, the trust, on behalf of
each fund has entered into a revised transfer agent agreement with FSC,
pursuant to which FSC bears the costs of providing these services to
existing shareholders. Other expenses paid by each fund include interest,
taxes, brokerage commissions, and each fund's proportionate share of
insurance premiums and Investment Company Institute dues. Each fund is also
liable for such non-recurring expenses as may arise, including costs of any
litigation to which each fund may be a party, and any obligation it may
have to indemnify its officers and Trustees with respect to litigation.
FMR is each fund's manager pursuant to management contracts dated November
1, 1993, which were approved by shareholders on October 20, 1993.
For the services of FMR under the contract, each fund pays FMR a monthly
management fee composed of the sum of two elements: a group fee rate and an
individual fund fee rate.
The group fee rate is based on the monthly average net assets of all of the
registered investment companies with which FMR has management contracts and
is calculated on a cumulative basis pursuant to the graduated fee rate
schedule shown below on the left. The schedule below on the right shows the
effective annual group fee rate at various asset levels, which is the
result of cumulatively applying the annualized rates on the left. For
example, the effective annual fee rate at $ 401 billion of group net
assets - the approximate level for April 1996 - was .1458 %, which is
the weighted average of the respective fee rates for each level of group
net assets up to $ 401 billion.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES

Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate

0 - $3 billion .3700% $ 0.5 billion .3700%

3 - 6 .3400 25 .2664

6 - 9 .3100 50 .2188

9 - 12 .2800 75 .1986

12 - 15 .2500 100 .1869

15 - 18 .2200 125 .1793

18 - 21 .2000 150 .1736

21 - 24 .1900 175 .1695

24 - 30 .1800 200 .1658

30 - 36 .1750 225 .1629

36 - 42 .1700 250 .1604

42 - 48 .1650 275 .1583

48 - 66 .1600 300 .1565

66 - 84 .1550 325 .1548

84 - 120 .1500 350 .1533

120 - 174 .1450 400 .1507

174 - 228 .1400

228 - 282 .1375

282 - 336 .1350

Over 336 .1325
</TABLE>
Under each fund's current management contract with FMR, the group fee rate
is based on a schedule with breakpoints ending at .1400% for average group
assets in excess of $174 billion. Prior to November 1, 1993, the group fee
rate breakpoints shown above for average group assets in excess of $120
billion and under $228 billion were voluntarily adopted by FMR on January
1, 1992. The additional breakpoints shown above for average group assets in
excess of $228 billion were voluntarily adopted by FMR on November 1, 1993.
On August 1, 1994, FMR voluntarily revised the prior extensions to the
group fee rate schedule, and added new breakpoints for average group assets
in excess of $156 billion and under $372 billion as shown in the schedule
below. The revised group fee rate schedule was identical to the above
schedule for average group assets under $156 billion.
On January 1, 1996, FMR voluntarily added new breakpoints to the revised
schedule for average group assets in excess of $372 billion, pending
shareholder approval of a new management contract reflecting the revised
schedule and additional breakpoints. The revised group fee rate schedule
and its extensions provide for lower management fee rates as FMR's assets
under management increase. For average group assets in excess of $156
billion, the revised group fee rate schedule with additional breakpoints
voluntarily adopted by FMR is as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES

Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate

120 - $156 billion .1450% $ 150 billion .1736%

156 - 192 .1400 175 .1690

192 - 228 .1350 200 .1652

228 - 264 .1300 225 .1618

264 - 300 .1275 250 .1587

300 - 336 .1250 275 .1560

336 - 372 .1225 300 .1536

372 - 408 .1200 325 .1514

408 - 444 .1175 350 .1494

444 - 480 .1150 375 .1476

480 - 516 .1125 400 .1459

Over 516 .1100 425 .1443

450 .1427

475 .1413

500 .1399

525 .1385

550 .1372
</TABLE>
Each fund's individual fund fee rate is .30%. Based on the average group
net assets of the funds advised by FMR for April 1 996, each fund's
annual management fee rate would be calculated as follows:
Group Fee Rate Individual Fund Fee Rate Management Fee Rate

.1458 % + .30% = .4458 %

Pursuant to Investment Grade Bond's amended management contract dated
November 1, 1993, the individual fund fee rate was increased from .20% to
.30%.
One-twelfth of this annual management fee rate is applied to each fund's
net assets averaged for the most recent month, giving a dollar amount,
which is the fee for that month.
The table below shows the management fees paid to FMR by each fund for the
last three fiscal years:
Management Fees as a
Years Ended April 30 Management Fees % of Average Net Assets

Short-Term Bond

1996 $ 5,482,674 .45

1995 7,675,823 .46

1994 10,325,430 .46

Investment Grade Bond

1996 5,469,291 .45

1995 4,531,882 .46

1994 4,232,396 .41

FMR may, from time to time, voluntarily reimburse all or a portion of each
fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). FMR retains the ability to be
repaid for these expense reimbursements in the amount that expenses fall
below the limit prior to the end of the fiscal year. Expense reimbursements
by FMR will increase each fund's total returns and yield and repayment of
the reimbursement by each fund will lower its total returns and yield.
To comply with the California Code of Regulations, FMR will reimburse each
fund if and to the extent that each fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2% of the first $30 million, 2% of the next $70
million, and 1 1/2% of average net assets in excess of $100 million. When
calculating each fund's expenses for purposes of this regulation, each fund
may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its distribution plan expenses and
custodian fees attributable to investments in foreign securities.
SUB-ADVISERS. On behalf of the funds, FMR has entered into sub-advisory
agreements with FMR U.K. and FMR Far East. Pursuant to the sub-advisory
agreements, FMR may receive investment advice and research services outside
the United States from the sub-advisers.
Currently, FMR U.K. and FMR Far East each focus on issuers in countries
other than the United States such as those in Europe, Asia, and the Pacific
Basin.
FMR U.K. and FMR Far East, which were organized in 1986, are wholly owned
subsidiaries of FMR. Under the sub-advisory agreements FMR pays the fees of
FMR U.K. and FMR Far East. For providing non-discretionary investment
advice and research services, FMR pays FMR U.K. and FMR Far East fees equal
to 110% and 105%, respectively, of FMR U.K.'s and FMR Far East's costs
incurred in connection with providing investment advice and research
services.
For the fiscal years ended April 1996, 1995, and 1994, no fees were paid
by FMR to FMR U.K. and FMR Far East on behalf of the funds.
DISTRIBUTION AND SERVICE PLANS
The Trustees have approved Distribution and Service Plans on behalf of the
funds (the Plans) pursuant to Rule 12b-1 under the Investment Company Act
of 1940 (the Rule). The Rule provides in substance that a mutual fund may
not engage directly or indirectly in financing any activity that is
primarily intended to result in the sale of shares of a fund except
pursuant to a plan approved on behalf of the fund under the Rule. The
Plans, as approved by the Trustees, allow the funds and FMR to incur
certain expenses that might be considered to constitute indirect payment by
the funds of distribution expenses.
Under each Plan, if the payment of management fees by the funds to FMR is
deemed to be indirect financing by the funds of the distribution of their
shares, such payment is authorized by the Plans. Each Plan also
specifically recognizes that FMR, either directly or through FDC, may use
its management fee revenue, past profits, or other resources, without
limitation, to pay promotional and administrative expenses in connection
with the offer and sale of shares of each fund. In addition, each Plan
provides that FMR may use its resources, including its management fee
revenues, to make payments to third parties that assist in selling shares
of each fund, or to third parties, including banks, that render shareholder
support services.
Payments made by FMR to third parties during the fiscal year ended April
30, 1996 amounted to $ 60,000 for Short-Term Bond and $ 23,000
for Investment Grade Bond.
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan, and have
determined that there is a reasonable likelihood that the Plan will benefit
the fund and its shareholders. In particular, the Trustees noted that the
Plans do not authorize payments by a fund other than those made to FMR
under its management contract with the fund. To the extent that each Plan
gives FMR and FDC greater flexibility in connection with the distribution
of shares of each fund, additional sales of fund shares may result.
Furthermore, certain shareholder support services may be provided more
effectively under the Plans by local entities with whom shareholders have
other relationships.
The Plan was approved by shareholders of Short-Term Bond on November 18,
1987 and Investment Grade Bond on November 19, 1986.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services, or
servicing and recordkeeping functions. FDC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the funds
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. In addition, state securities laws on
this issue may differ from the interpretations of federal law expressed
herein, and banks and financial institutions may be required to register as
dealers pursuant to state law.
Each fund may execute portfolio transactions with, and purchase
securities issued by, depository institutions that receive payments under
the Plans. No preference for the instruments of such depository
institutions will be shown in the selection of investments .
CONTRACTS WITH FMR AFFILIATES
FSC, an affiliate of FMR, is transfer, dividend disbursing, and
shareholder servicing agent for each fund. FSC receives an annual
account fee and an asset-based fee each based on account size and fund
type for each retail account and certain institutional accounts. With
respect to certain institutional retirement accounts, FSC receives an
annual account fee and an asset-based fee based on account type or fund
type. These annual account fees are subject to increase based on postal
rate changes. FSC also collects small account fees from certain accounts
with balances of less than $2,500.
FSC pays out-of-pocket expenses associated with providing transfer agent
services. In addition, FSC bears the expense of typesetting, printing, and
mailing prospectuses, statements of additional information, and all other
reports, notices, and statements to shareholders, with the exception of
proxy statements.
FSC also performs the calculations necessary to determine each fund's
net asset value and dividends, and maintains each fund's accounting
records. The annual fee rates for these pricing and bookkeeping services
are based on each fund's average net assets, specifically, .0400% of the
first $500 million of average net assets and .0200% of average net assets
in excess of $500 million. The fee is limited to a minimum of $60,000 and a
maximum of $800,000 per year.
The table below shows the fees paid to FSC for pricing and bookkeeping
services, including related out-of-pocket expenses during each fund's last
three fiscal years:
Pricing and Bookkeeping Fees

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1996 1995 1994

Short-Term Bond $ 346,174 $ 301,439 $ 308,981

Investment Grade Bond $ 348,736 $ 440,385 $ 554,995

</TABLE>

FSC also receives fees for administering each fund's securities lending
program. For fiscal 1996, 1995, and 1994, there were no securities lending
fees incurred by the funds.
Each fund has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The distribution agreements call
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of each fund, which are continuously
offered at net asset value. Promotional and administrative expenses in
connection with the offer and sale of shares are paid by FMR.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Fidelity Short-Term Bond Fund and Fidelity Investment
Grade Bond Fund are funds of Fidelity Fixed Income Trust, an open-end
management investment company originally organized as a Massachusetts
corporation on June 25, 1970. On September 5, 1984, the trust was
reorganized as a Massachusetts business trust, at which time its name was
changed from Fidelity Corporate Bond Fund, Inc. to Fidelity Corporate Bond
Fund. On October 25, 1985, the trust's name was changed to Fidelity
Flexible Bond Fund and on August 31, 1986 the trust's name was changed to
Fidelity Fixed-Income Trust. Currently, there are five funds of Fidelity
Fixed-Income Trust: Fidelity Short-Term Bond Fund , Fidelity
Investment Grade Bond Fund, Spartan Government Income Fund, Spartan High
Income Fund, and Spartan Short-Intermediate Government Fund. The
Declaration of Trust permits the Trustees to create additional funds.
In the event that FMR ceases to be the investment adviser to the trust or a
fund, the right of the trust or fund to use the identifying names
"Fidelity" and "Spartan" may be withdrawn. There is a remote possibility
that one fund might become liable for any misstatement in its prospectus or
statement of additional information about another fund.
The assets of the trust received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the trust. Expenses with respect to the trust are to be
allocated in proportion to the asset value of the respective funds, except
where allocations of direct expense can otherwise be fairly made. The
officers of the trust, subject to the general supervision of the Board of
Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of the trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as "Massachusetts business trust." Under Massachusetts law,
shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. The Declaration of
Trust provides that the trust shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed by the
trust or the Trustees shall include a provision limiting the obligations
created thereby to the trust and its assets. The Declaration of Trust
provides for indemnification out of each fund's property of any
shareholders held personally liable for the obligations of the fund. The
Declaration of Trust also provides that each fund shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the risk of
a shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which the fund itself would be unable to
meet its obligations. FMR believes that, in view of the above, the risk of
personal liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees
against any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of their office.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder, you receive one vote for each dollar value of
net asset value you own. The shares have no preemptive or conversion
rights; the voting and dividend rights, the right of redemption, and the
privilege of exchange are described in the Prospectus. Shares are fully
paid and nonassessable, except as set forth under the heading "Shareholder
and Trustee Liability" above. Shareholders representing 10% or more of the
trust or a fund may, as set forth in the Declaration of Trust, call
meetings of the trust or a fund for any purpose related to the trust or
fund, as the case may be, including, in the case of a meeting of the entire
trust, the purpose of voting on removal of one or more Trustees. The trust
or any fund may be terminated upon the sale of its assets to another
open-end management investment company, or upon liquidation and
distribution of its assets, if approved by vote of the holders of a
majority of the trust or the fund, as determined by the current value of
each shareholder's investment in the fund or trust. If not so terminated,
the trust and the funds will continue indefinitely.
CUSTODIAN. The Bank of New York, 90 Washington Street, New York, N.Y., is
custodian of the assets of each fund. The custodian is responsible for the
safekeeping of a fund's assets and the appointment of the subcustodian
banks and clearing agencies. The custodian takes no part in determining the
investment policies of a fund or in deciding which securities are purchased
or sold by a fund. However, a fund may invest in obligations of the
custodian and may purchase securities from or sell securities to the
custodian. Chemical Bank, headquartered in New York, also may serve
as a special purpose custodian of certain assets in connection with pooled
repurchase agreement transactions.
FMR, its officers and directors, its affiliated companies, and the Board of
Trustees may, from time to time, conduct transactions with various banks,
including banks serving as custodians for certain funds advised by FMR.
Transactions that have occurred to date include mortgages and personal and
general business loans. In the judgment of FMR, the terms and conditions of
those transactions were not influenced by existing or potential custodial
or other fund relationships.
AUDITOR. Coopers & Lybrand L.L.P., One Post Office Square, Boston,
Massachusetts serves as the trust's independent accountant. The auditor
examines financial statements for the funds and provides other audit, tax,
and related services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the fiscal
year ended April 30, 1996 are included in the fund ' s Annual Report,
which is a separate report supplied with this Statement of
Additional Information. Each fund's financial statements and financial
highlights are incorporated herein by reference.
APPENDIX
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value of
each investment by the time remaining to its maturity, adding these
calculations, and then dividing the total by the value of the fund's
portfolio. An obligation's maturity is typically determined on a stated
final maturity basis, although there are some exceptions to this rule.
For example, if it is probable that the issuer of an instrument will take
advantage of a maturity-shortening device, such as a call, refunding, or
redemption provision, the date on which the instrument will probably be
called, refunded, or redeemed may be considered to be its maturity date.
Also, the maturities of mortgage-backed securities, including
collateralized mortgage obligations, and some asset-backed securities are
determined on a weighted average life basis, which is the average time for
principal to be repaid. For a mortgage security, this average time is
calculated by estimating the timing of principal payments, including
unscheduled prepayments, during the life of the mortgage. The weighted
average life of these securities is likely to be substantially shorter than
their stated final maturity.
The descriptions that follow are examples of eligible ratings for the
funds. A fund may, however, consider the ratings for other types of
investments and the ratings assigned by other rating organizations when
determining the eligibility of a particular investment.
DESCRIPTION OF MOODY'S INVESTORS SERVICE CORPORATE BOND RATINGS:
AAA - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
AA - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than the Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
BAA - Bonds which are rated Baa are considered as medium-grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
CAA - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
CA - Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
short-comings.
C - Bonds which are rated C are the lowest-rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
DESCRIPTION OF STANDARD & POOR'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's
to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rate BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
The BB rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB or BB- rating.
CC - Debt rated CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may
be used to cover a situation where a bankruptcy petition has been filed but
debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period. The D rating will also
be used upon the filing of a bankruptcy petition if debt service payments
are jeopardized.
The ratings from AA to B may be modified by the addition of a plus or minus
to show relative standing within the major rating categories.

SUPPLEMENT TO FIDELITY'S
INTERNATIONAL BOND FUNDS PROSPECTUS
DATED FEBRUARY 26, 1996
The following information replaces the similar information found in the
sixth paragraph of the "Investment Principles and Risks" section on page
11.
EACH FUND'S risk and reward depends on the quality and maturity of its
investments. Because Short-Term World Bond invests in higher-quality,
short-term debt securities, it has lower risk and yield potential than the
other funds. Global Bond normally invests in investment-grade securities of
any maturity. New Markets Income has even more flexibility as to the
quality and maturity of its investments. In addition, since New Markets
Income invests primarily in securities of emerging markets, which can be
considered speculative, it tends to offer higher income and total return
potential, but significantly greater risk. Lower quality, longer term
investments typically offer higher yields, but also carry more risk.
The following information replaces the similar information found in the
"Securities and Investment Practices" section under the heading "Debt
Securities" on page 12.
RESTRICTIONS: Purchase of a debt security is consistent with a fund's debt
quality policy if it is rated at or above the stated level by Moody's
Investors Services or rated in the equivalent categories by Standard &
Poor's, Duff & Phelps Credit Rating Co., or Fitch Investors Service, L.P.,
or is unrated but judged by FMR to be of equivalent quality. Short-Term
World Bond currently intends to limit its investments in lower than
A-quality debt securities to 35% of its total assets and in lower than
Baa-quality debt securities to 10% of its total assets. In addition, the
fund currently intends to limit its investments in debt securities to those
of Ba-quality or above. Global Bond normally invests in Baa-quality
securities, but reserves the right to invest up to 5% of its assets in
below Baa-quality securities (sometimes called "junk bonds").
PROPOSED REORGANIZATION. The Board of Trustees of Fidelity Short-Term World
Bond Fund has unanimously approved an Agreement and Plan of Reorganization
("Agreement") between Fidelity Short-Term World Bond Fund (Short-Term
World) and Fidelity Short-Term Bond Fund (Short-Term Bond), a fund of
Fidelity Fixed-Income Trust.
The Agreement provides for transfer of substantially all of the assets and
the assumption of all of the liabilities of Short-Term World solely in
exchange for the number of shares of Short-Term Bond equal in value to the
relative net asset value of the outstanding shares of Short-Term World.
Following such exchange, Short-Term World will distribute the Short-Term
Bond shares to its shareholders pro rata, in liquidation of Short-Term
World as provided in the Agreement (the transactions contemplated by the
Agreement referred to as the "Reorganization").
The Reorganization can be consummated only if, among other things, it is
approved by a majority vote of shareholders. A Special Meeting (the
"Meeting") of the Shareholders of Short-Term World will be held on October
11, 1996, and approval of the Agreement will be voted on at that time. In
connection with the Meeting, Short-Term World will be filing with the
Securities and Exchange Commission and delivering to its shareholders of
record a Proxy Statement describing the Reorganization and a Prospectus for
Short-Term Bond.
If the Agreement is approved at the Meeting and certain conditions required
by the Agreement are satisfied, the Reorganization is expected to become
effective on or about October 31, 1996. If shareholder approval of the
Agreement is delayed due to failure to meet a quorum or otherwise, the
Reorganization will become effective, if approved, as soon as practicable
thereafter.
In the event Short-Term World shareholders fail to approve the Agreement,
Short-Term World will continue to engage in business as a registered
investment company and the Board of Trustees will consider other proposals
for the reorganization or liquidation of Short-Term World.
Effective on or about July 15, 1996, the fund's shares will no longer be
available to new accounts pending the Reorganization. Shareholders of the
fund on or prior to that date, including participants in an employee
benefit plan which offered the fund on or prior to that date (except
participants in an employee benefit plan for which an affiliate of FMR
maintains the accounts at the participant level other than pursuant to a
recordkeeping agreement), will continue to be able to purchase shares of
the fund.
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
To learn more about each fund and its investments, you can obtain a copy of
the funds' most recent financial reports and portfolio listing, or a copy
of the Statement of Additional Information (SAI) dated February 26, 1996.
The SAI has been filed with the Securities and Exchange Commission (SEC)
and is incorporated herein by reference (legally forms a part of the
prospectus). For a free copy of either document, call Fidelity at
1-800-544-8888.
Mutual fund shares are not deposits or obligations of, or guaranteed by,
any depository institution. Shares are not insured by the FDIC, Federal
Reserve Board or any other agency, and are subject to investment risks,
including possible loss of principal amount invested .
New Markets Income may invest without limitation in lower-quality debt
securities, sometimes called "junk bonds." Investors should consider that
these securities carry greater risks, such as the risk of default, than
other debt securities. Refer to "Investment Principles and Risks" on page
for further information.

FIDELITY'S
INTERNATIONAL BOND
FUNDS
Each of these international funds invests in debt securities around the
world.
FIDELITY SHORT-TERM WORLD BOND FUND seeks high current income and
preservation of capital by investing mainly in short-term debt securities.
FIDELITY GLOBAL BOND FUND seeks high total return by focusing on a broad
range of debt securities.
FIDELITY NEW MARKETS INCOME FUND seeks high current income and capital
appreciation by focusing on issuers in emerging markets.
PROSPECTUS
FEBRUARY 26, 1996(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA
02109
CONTENTS

<TABLE>
<CAPTION>
<S> <C> <C>
KEY FACTS THE FUNDS AT A GLANCE

WHO MAY WANT TO INVEST

EXPENSES Each fund's yearly operating
expenses.

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

PERFORMANCE How each fund has done over
time.

THE FUNDS IN DETAIL CHARTER How each fund is organized.

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

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

YOUR ACCOUNT DOING BUSINESS WITH FIDELITY

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

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

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

INVESTOR SERVICES Services to help you manage
your account.

SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS, AND TAXES
ACCOUNT POLICIES

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

EXCHANGE RESTRICTIONS

</TABLE>

KEY FACTS

THE FUNDS AT A GLANCE
MANAGEMENT: Fidelity Management & Research Company (FMR) is the management
arm of Fidelity Investments, which was established in 1946 and is now
America's largest mutual fund manager. Foreign affiliates of FMR may help
choose investments for the funds.
As with any mutual fund, there is no assurance that a fund will achieve its
goal.
SHORT-TERM WORLD BOND
GOAL: High current income with preservation of capital.
STRATEGY: Invests mainly in short-term debt securities issued anywhere in
the world while maintaining an average maturity of three years or less.
SIZE: As of December 31, 1995, the fund had over $ 121 million in
assets.
GLOBAL BOND
GOAL: High total investment return.
STRATEGY: Invests in a broad range of debt securities issued anywhere in
the world.
SIZE: As of December 31, 1995, the fund had over $ 196 million in
assets.
NEW MARKETS INCOME
GOAL: High current income, with a secondary objective of capital
appreciation.
STRATEGY: Invests mainly in debt securities and other instruments of
issuers in emerging markets around the world.
SIZE: As of December 31, 1995, the fund had over $ 176 million in
assets.
WHO MAY WANT TO INVEST
These non-diversified funds may be appropriate for investors who want to
invest in debt securities issued around the world. By including
international investments in your portfolio, you can achieve additional
diversification and participate in growth opportunities around the world.
However, it is important to note that investments in foreign securities
involve risks in addition to those of U.S. investments.
Short-Term World Bond is designed for investors seeking income from
short-term securities. Global Bond is designed for those looking for both
income and the potential for capital growth, and who can accept a
higher degree of risk. New Markets Income is designed for investors seeking
higher income and capital appreciation than both Short-Term World Bond
and Global Bond, but who are also willing to accept the even greater
risks and volatility from investments in emerging market securities.
The value of the funds' investments and the income they generate will vary
from day to day, and generally reflect interest rates, market conditions,
and other economic and political news both here and abroad. Investments
in foreign securities may involve risks in addition to those of U.S.
investments, including increased political and economic risk, as well as
exposure to currency fluctuations. When you sell your shares, they may
be worth more or less than what you paid for them. By themselves, the funds
do not constitute a balanced investment plan.
Non-diversified funds may invest a greater portion of their assets in
securities of individual issuers than diversified funds. As a result,
changes in the market value of a single issuer could cause greater
fluctuations in share value than would occur in a more diversified
fund.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy, sell or
hold shares of a fund. See page for more information about these
fees.
Maximum sales charge on purchases and
reinvested distributions None
Deferred sales charge on redemptions None
Exchange fee None
Redemption fee on shares held less than 180 days
(New Markets Income only) 1.00%
Annual account maintenance fee
(for accounts under $2 , 500) $12.00
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to FMR. It also incurs other expenses for
services such as maintaining shareholder records and furnishing shareholder
statements and financial reports. A fund's expenses are factored into its
share price or dividends and are not charged directly to shareholder
accounts (see page ).
The following are projections based on historical expenses, and are
calculated as a percentage of average net assets.
SHORT-TERM WORLD BOND
Management fee .60 %

12b-1 fee None

Other expenses .46 %

Total fund operating expenses 1.06
%

GLOBAL BOND
Management fee .70 %

12b-1 fee None

Other expenses .46 %

Total fund operating expenses 1.16
%

NEW MARKETS INCOME
Management fee .70 %

12b-1 fee None

Other expenses .47 %

Total fund operating expenses 1.17
%

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
After 1 After 3 After 5 After 10
year years years years

Short-Term $11 $34 $58 $129
World Bond

Global Bond $12 $37 $64 $141

New Markets
$12 $37 $64 $142
Income

</TABLE>

These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
FMR has voluntarily agreed to temporarily limit New Markets Income's
operating expenses to 1.20% of its average net assets.
FINANCIAL HIGHLIGHTS
The tables that follow are included in each fund's Annual Report and have
been audited by Coopers & Lybrand, L.L.P., independent accountants, for
Short-Term World Bond and Global Bond, and by Price Waterhouse LLP,
independent accountants, for New Markets Income. Their reports on the
financial statements and financial highlights are included in the Annual
Reports. The financial statements and financial highlights are incorporated
by reference into (are legally a part of) the funds' Statement of
Additional Information.
SHORT-TERM WORLD BOND FUND

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

2.Years ended
December 31 1995 1994 1993E 1992G 1992F 1991D

3.Net asset value,
beginning of
period $ 8.910 $ 10.190 $ 9.680 $ 9.800 $ 10.040 $ 10.000

4.Income from
Investment
Operations .619 .644 .564 .191 .835 .061
Net investment income

5. Net realized
and unrealized gain
(loss) .049 (1.218) .621 (.203) (.338) .037

6. Total from
investment
operations .668 (.574) 1.185 (.012) .497 .098

7.Less
Distributions (.568) (.199) (.543) (.108) (.737) (.058)
From net investment income

8. In excess of net
investment
income -- (.050) (.132) -- -- --

9. Return of
capital -- (.457) -- -- -- --

10. Total
distributions (.568) (.706) (.675) (.108) (.737) (.058)

11.Net asset value,
end of period $ 9.010 $ 8.910 $ 10.190 $ 9.680 $ 9.800 $ 10.040

12.Total
returnB,C 7.79% (5.80)% 12.59% (.12)% 5.10% .98%

13.Net assets,
end of period (
000 omitted) $ 121,934 $ 265,407 $ 422,602 $ 458,846 $ 648,448 $ 44,318

14.Ratio of
expenses to average
net assets 1.06% 1.01% 1.00% 1.20%A, 1.09% 1.00%A,
H H

15.Ratio of net
investment income to
average net
assets 6.42% 7.54% 8.00% 8.63%A 9.04% 9.07%A

16.Portfolio
turnover rate 284% 134% 160% 117%A 154% 62%A

</TABLE>

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

18.Years ended December 31
1995 1994M 1993E 1992G 1992F,L 1991F 1990F 1989F 1988F 1987D

19.Net asset value, beginning of period
$ 9.880 $ 12.610 $ 11.340 $ 11.830 $ 11.980 $ 12.19 $ 11.22 $ 11.47 $ 10.45 $ 10.00

20.Income from Investment Operations
.685 .158 .731 .145 .839 .74 .89I .82I 1.08 .56
Net investment income

21. Net realized and unrealized gain
(.049) (2.178) 1.648 (.173) .110K .52 .57 (.17) .07 .45
(loss)

22. Total from investment operations
.636 (2.020) 2.379 (.028) .949 1.26 1.46 .65 1.15 1.01

23.Less Distributions
(.516) (.225) (.629) (.332) (1.099) (1.03) (.49) (.81) (.13) (.56)
From net investment income

24. In excess of net investment income
- -- (.054) -- -- -- -- -- -- -- --

25. From net realized gain
- -- -- (.280) (.130)J -- (.44) -- (.09)J -- --
J

26. In excess of net realized gain
- -- (.020) (.200) -- -- -- -- -- -- --

27. Return of capital
(.060) (.411) -- -- -- -- -- -- -- --

28. Total distributions
(.576) (.710) (1.109) (.462) (1.099) (1.47) (.49) (.90) (.13) (.56)

29.Net asset value, end of period
$ 9.940 $ 9.880 $ 12.610 $ 11.340 $ 11.830 $ 11.98 $ 12.19 $ 11.22 $ 11.47 $ 10.45

30.Total returnB,C
6.66 (16.31) 21.91 (.23) 8.18 11.31 13.45 6.04% 11.07% 10.30%
% % % % % % %

31.Net assets, end of period (000
$ 196,862 $ 382,803 $ 686,25 $ 279,204 $ 332,33 $ 160,08 $ 126,44 $ 56,520 $ 56,180 $ 43,846
omitted) 2 3 3 4

32.Ratio of expenses to average net
1.16 1.14 1.17 1.37 1.23 1.35 1.40 1.50% 1.14% .95%
assets
% % % %A % % % H H A,H

33.Ratio of net investment income to
6.19 6.50 6.79 6.92 8.02 7.92 7.82 7.56% 7.61% 7.14%
average net assets
% % % %A % % % A

34.Portfolio turnover rate
322 367 198 142 81 228 154 150% 227% 297%
% % % %A % % % A

</TABLE>

A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
D FROM DECEMBER 30, 1986 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1987.
E EFFECTIVE JANUARY 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 FISCAL YEAR ENDED OCTOBER 31.
G TWO-MONTH PERIOD ENDED DECEMBER 31, 1992.
H 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.
I NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
J INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY
RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
K 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.
L EFFECTIVE JULY 1, 1992, DIVIDENDS FROM NET INVESTMENT INCOME WERE
DECLARED DAILY AND PAID MONTHLY.
M AMOUNTS HAVE BEEN ADJUSTED TO CONFORM WITH PRESENT PERIOD ACCOUNTING
POLICIES.
NEW MARKETS INCOME FUND

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

36.Years ended December 31 1995 1994 1993G

37.Net asset value, beginning of period $ 10.190 $ 13.070 $ 10.000

38.Income from Investment Operations
1.222 .573E .486H
Net investment income

39. Net realized and unrealized gain (loss) (.583) (2.687) 3.302

40. Total from investment operations .639 (2.114) 3.788

41.Less Distributions
(.916) (.529) (.486)
From net investment income

42. In excess of net investment income -- (.057) (.062)

43. From net realized gain -- (.180) (.170)

44. Total distributions (.916) (.766) (.718)

45. Redemption fees added to paid in capital .037 -- --

46.Net asset value, end of period $ 9.950 $ 10.190 $ 13.070

47.Total returnB,C 7.97% (16.55)% 38.84%

48.Net assets, end of period (000 omitted) $ 176,499 $ 179,114 $ 286,593

49.Ratio of expenses to average net assets 1.17% 1.28%D, 1.24%A
F ,D

50.Ratio of net investment income to average net assets 9.51% 5.87% 6.29%A

51.Portfolio turnover rate 306% 409% 324%A

</TABLE>

A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
D 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.
E INCLUDES INTEREST EXPENSE OF $.008 PER SHARE.
F INCLUDES INTEREST EXPENSE OF .08% OF AVERAGE NET ASSETS.
G FROM MAY 4, 1993 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1993.
H NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
PERFORMANCE
Bond fund performance can be measured as TOTAL RETURN or YIELD. The total
returns that follow are based on historical fund results and do not reflect
the effect of taxes.
Each fund's fiscal year runs from January 1 through December 31. The tables
below show each fund's performance history compared to an index and a
measure of inflation. The charts on page compare each fund's
calendar-year performance with that of its respective index.
AVERAGE ANNUAL TOTAL RETURNS

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fiscal periods ended Past 1 Past 5 Life of
December 31, 1995 year years fund

Short-Term World Bond 7.79 % n/a 4.63 %A

Salomon Bros. World Govt. Bond 11.17 % 6.86 % n/a
Index, 1-3 Yrs. Hdgd.

Global Bond 6.66 % 5.08 % 7.55 %B

Salomon Bros. World Govt. Bond 19.04 % 11.02 % n/a
Index Unhdgd.

New Markets Income 7.97 % n/a 8.77 %C

J.P. Morgan Emg. Mkts. Bond Index 27.54 % 17.30 % n/a

J.P. Morgan Emg. Mkts. Bond Index 26.78% n/a n/a
Plus

Consumer Price Index 2.54% 2.79% n/a

</TABLE>

CUMULATIVE TOTAL RETURNS

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fiscal periods ended Past 1 Past 5 Life of
December 31, 1995 year years fund

Short-Term World Bond 7.79 % n/a 21.18 %A

Salomon Bros. World Govt. Bond 11.17 % 39.34 % n/a
Index, 1-3 Yrs. Hdgd .

Global Bond 6.66 % 28.11 % 92.68 %B

Salomon Bros. World Govt. Bond 19.04 % 68.65 % n/a
Index Unhdgd.

New Markets Income 7.97 % n/a 25.10 %C

J .P. Morgan Emg. Mkts. Bond Index 27.54% 122.03% n/a

J.P. Morgan Emg. Mkts. Bond Index 26.78% n/a n/a
Plus

Consumer Price Index 2.54% 14.72% n/a

</TABLE>

A FROM OCTOBER 4, 1991
B FROM DECEMBER 30, 1986
C FROM MAY 4, 1993
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. Yields are
calculated according to a standard that is required for all stock and bond
funds. Because this differs from other accounting methods, the quoted yield
may not equal the income actually paid to shareholders. This difference may
be significant for funds whose investments are denominated in foreign
currencies.
THE SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX, 1-3 YEARS
CURRENCY HEDGED INTO U.S. DOLLAR TERMS, is the comparative index
for Short-Term World Bond . The index is market-capitalization
weighted and currently tracks the performance of 14 world government
bond markets with fixed-rate coupons. Issues included in the index
have maturities of between one and three years.
THE SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX UNHEDGED is the
comparative index for Global Bond. The index is market-capitalization
weighted and tracks the performance of 14 world government bond markets
with fixed-rate coupons. Issues included in the index have a minimum
maturity of one year.
THE J.P. MORGAN EMERGING MARKETS BOND INDEX, the comparative index for New
Markets Income, is a market-capitalization weighted total return index that
monitors the trading market for dollar-denominated sovereign restructured
bonds. New Markets Income also compares to the J.P. MORGAN EMERGING
MARKETS BOND INDEX PLUS, an index which tracks total returns for traded
external debt instruments in the emerging markets. Included in the index
are U.S. dollar- and other external-, currency-denominated Brady bonds,
loans, Eurobonds, and local market instruments.

UNDERSTANDING PERFORMANCE
Because these funds invest in fixed-income
securities, their performance is related to
changes in interest rates. Funds that hold
short-term bonds are usually less affected by
changes in interest rates than long-term bond
funds. For that reason, long-term bond funds
typically offer higher yields and carry more risk
than short-term bond funds.
(checkmark)
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
SHORT-TERM WORLD BOND

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns 1992 1993 1994 1995

SHORT-TERM WORLD BOND 4.83 % 12.59 -5.80 7.79 %
% %

Salomon Bros. World Govt. Bond Index, 6.16 % 6.18 % 1.00 % 11.17
1-3 Yrs. Hdgd. %

</TABLE>

Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 1, Col: 2, Value: nil
Row: 2, Col: 1, Value: nil
Row: 2, Col: 2, Value: nil
Row: 3, Col: 1, Value: nil
Row: 3, Col: 2, Value: nil
Row: 4, Col: 1, Value: nil
Row: 4, Col: 2, Value: nil
Row: 5, Col: 1, Value: nil
Row: 5, Col: 2, Value: nil
Row: 6, Col: 1, Value: nil
Row: 6, Col: 2, Value: nil
Row: 7, Col: 1, Value: nil
Row: 7, Col: 2, Value: nil
Row: 8, Col: 1, Value: 4.83
Row: 8, Col: 2, Value: 6.159999999999999
Row: 9, Col: 1, Value: 12.59
Row: 9, Col: 2, Value: 6.18
Row: 10, Col: 1, Value: -5.8
Row: 10, Col: 2, Value: 1.0
Row: 11, Col: 1, Value: 7.79
Row: 11, Col: 2, Value: 11.17
(large solid box) SHORT-TERM WORLD BOND
(large hollow box) Salomon Bros. World Govt.
Bond Index, 1-3 Yrs. Hdgd.
GLOBAL BOND

<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns
1987 1988 1989 1990 1991 1992 1993 1994 1995

GLOBAL BOND
19.14 3.66 % 7.93 % 12.28 12.77 4.40 % 21.91 -16.3 6.66 %
% % % % 1 %

Salomon Bros. World Govt. Bond Index
18.41 4.37 % 4.34 % 11.97 15.82 5.52 % 13.27 2.34 % 19.04
Unhdgd.
% % % % %

</TABLE>

Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 1, Col: 2, Value: nil
Row: 2, Col: 1, Value: nil
Row: 2, Col: 2, Value: nil
Row: 3, Col: 1, Value: 19.14
Row: 3, Col: 2, Value: 18.41
Row: 4, Col: 1, Value: 3.66
Row: 4, Col: 2, Value: 4.37
Row: 5, Col: 1, Value: 7.930000000000001
Row: 5, Col: 2, Value: 4.34
Row: 6, Col: 1, Value: 12.28
Row: 6, Col: 2, Value: 11.97
Row: 7, Col: 1, Value: 12.77
Row: 7, Col: 2, Value: 15.82
Row: 8, Col: 1, Value: 4.4
Row: 8, Col: 2, Value: 5.52
Row: 9, Col: 1, Value: 21.91
Row: 9, Col: 2, Value: 13.27
Row: 10, Col: 1, Value: -16.31
Row: 10, Col: 2, Value: 2.34
Row: 11, Col: 1, Value: 6.659999999999999
Row: 11, Col: 2, Value: 19.04
(large solid box) GLOBAL BOND
(large hollow box) Salomon Bros. World Govt.
Bond Index Unhdgd .
NEW MARKETS INCOME

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns 1994 1995

NEW MARKETS INCOME -16.5 7.97 %
5 %

J.P. Morgan Emg. Mkts . Bond Index -18.6 27.54
8 % %

</TABLE>

Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 1, Col: 2, Value: nil
Row: 2, Col: 1, Value: nil
Row: 2, Col: 2, Value: nil
Row: 3, Col: 1, Value: nil
Row: 3, Col: 2, Value: nil
Row: 4, Col: 1, Value: nil
Row: 4, Col: 2, Value: nil
Row: 5, Col: 1, Value: nil
Row: 5, Col: 2, Value: nil
Row: 6, Col: 1, Value: nil
Row: 6, Col: 2, Value: nil
Row: 7, Col: 1, Value: nil
Row: 7, Col: 2, Value: nil
Row: 8, Col: 1, Value: nil
Row: 8, Col: 2, Value: nil
Row: 9, Col: 1, Value: -16.55
Row: 9, Col: 2, Value: -18.68
Row: 10, Col: 1, Value: 7.970000000000001
Row: 10, Col: 2, Value: 27.54
(large solid box) NEW MARKETS INCOME
(large hollow box) J.P. Morgan Emg. Mkts.
Bond Index
THE FUNDS IN DETAIL

CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. In technical terms, each fund is
currently a non-diversified fund of Fidelity Investment Trust, an open-end
management investment company organized as a Massachusetts business trust
on April 20, 1984.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
Fidelity will mail proxy materials in advance, including a voting card and
information about the proposals to be voted on. You are entitled to one
vote for each share you own.
FMR AND ITS AFFILIATES
The funds are managed by FMR, which handles their business affairs and,
with the assistance of foreign affiliates, chooses the funds' investments.
Affiliates may assist FMR with foreign securities:
(small solid bullet) Fidelity Management & Research (U.K.) Inc. (FMR U.K.),
in London, England, serves as a sub-adviser for all the funds.
(small solid bullet) Fidelity Management & Research Far East Inc. (FMR Far
East), in Tokyo, Japan, serves as a sub-adviser for all the funds.
(small solid bullet) Fidelity International Investment Advisors (FIIA), in
Pembroke, Bermuda, serves as a sub-adviser for all the funds.
(small solid bullet) Fidelity International Investment Advisors (U.K.)
Limited (FIIAL U.K.), in Kent, England, serves as a sub-adviser for all the
funds. Currently, FIIAL U.K. exercises discretionary management authority
over Short-Term World Bond and Global Bond in its capacity as sub-adviser.
(small solid bullet) Fidelity Investments Japan Ltd. (FIJ), in Tokyo, Japan
serves as a sub-adviser for New Markets Income.
Luc Huyghebaert is the manager of Short-Term World Bond's non-U.S.
investments, which he has managed since February 1996. He also manages
several funds for Fidelity International, Limited (FIL). He joined Fidelity
as a fixed-income analyst in 1994. Previously, Mr. Huyghebaert was a
manager at SOGEM in Moscow, and he worked as a tin and cobalt trader in
Brussels.
Charles Morrison is the manager of Short-Term World Bond's U.S.
investments, which he has managed since February 1996. He also manages
Short-Term Bond, Spartan Short-Term Bond, and Advisor Short Fixed-Income.
Previously, he managed a variety of trust portfolios. Mr. Morrison joined
Fidelity in 1987.
Ian Spreadbury is the manager of Global Bond's non-U.S. investments, which
he has managed since February 1996. He joined Fidelity in 1995 as a
director of fixed income for Fidelity International, Limited (FIL). He also
manages several funds for FIL. Previously, Mr. Spreadbury held positions as
a senior fund manager, pension underwriter, and assistant actuary for Legal
& General, Limited.
Christine Thompson is the manager of Global Bond's U.S. investments, which
she has managed since February 1996. Ms. Thompson also manages Intermediate
Bond, U.S. Bond Index, and the Target Timeline Funds. Previously, she was a
senior bond analyst. Ms. Thompson joined Fidelity in 1985.
John Carlson is manager of New Markets Income, which he has managed since
joining Fidelity in June 1995. Mr. Carlson also manages Advisor Emerging
Markets Income, Advisor Strategic Income, and Canada Emerging Markets Bond.
Previously, he was executive director of emerging markets at Lehman
Brothers International. From 1990 to 1992, Mr. Carlson was executive vice
president of capital markets for Daiwa Securities America.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
Fidelity Distributors Corporation (FDC) distributes and markets Fidelity's
funds and services. Fidelity Service Co. (FSC) performs transfer agent
servicing functions for the funds.
FMR Corp. is the ultimate parent company of FMR, FMR U.K., and FMR Far
East. Members of the Edward C. Johnson 3d family are the predominant owners
of a class of shares of common stock representing approximately 49% of the
voting power of FMR Corp. Under the Investment Company Act of 1940 (the
1940 Act), control of a company is presumed where one individual or group
of individuals owns more than 25% of the voting stock of that company;
therefore, the Johnson family may be deemed under the 1940 Act to form a
controlling group with respect to FMR Corp. Fidelity International Limited
(FIL) is the ultimate parent company of FIIA, FIIAL U.K., and FIJ. The
Johnson family group also owns, directly or indirectly, more than 25% of
the voting common stock of FIL.
To carry out the funds' transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that a fund
receives services and commission rates comparable to those of other
broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
SHORT-TERM WORLD BOND seeks as high a level of current income as is
consistent with preservation of capital. The fund focuses on short-term
debt and money market securities issued anywhere in the world. Although the
fund can invest in securities of any maturity, the fund maintains a
dollar-weighted average maturity of three years or less under normal
conditions. In determining a security's maturity for purposes of
calculating the fund's average maturity, an estimate of the average time
for its principal to be paid may be used. This can be substantially shorter
than its stated final maturity. As of December 31, 1995, the fund's
dollar-weighted average maturity was approximately 2.0 years.
GLOBAL BOND seeks high total investment return by investing principally in
debt securities issued anywhere in the world. Under normal conditions, FMR
will invest at least 65% of the fund's assets in debt securities. The fund,
however, may also invest in convertible securities, warrants, and other
securities. Although FMR emphasizes income when selecting the fund's
investments, the potential for capital appreciation is also considered.
NEW MARKETS INCOME seeks high current income and, as a secondary objective,
capital appreciation, by investing mainly in debt securities of issuers in
emerging markets. FMR normally invests at least 65% of the fund's total
assets in these securities. Countries with emerging markets include the
following:
(small solid bullet) countries that have an emerging stock market, as
defined by the International Finance Corporation,
(small solid bullet) countries with low- to middle-income economies,
according to the World Bank,
(small solid bullet) countries listed in World Bank publications as
developing.
The fund emphasizes countries with relatively low gross national product
per capita and with the potential for rapid economic growth. This strategy
tends to lead to investments in Latin America and, to a lesser extent,
Asia, Africa, and emerging European nations. FMR determines where an issuer
is located by looking at such factors as its country of organization, the
primary trading market for its securities, and the location of its assets,
personnel, sales, and earnings.
The fund may also invest a portion of its assets in common and preferred
stocks of emerging market issuers, debt securities of non-emerging market
foreign issuers, and lower-quality debt securities of U.S. issuers.
Although the fund may invest up to 35% of its total assets in these
securities, FMR does not currently anticipate that these investments will
exceed approximately 20% of the fund's total assets. Though common and
preferred stocks and convertible securities present the possibility for
significant capital appreciation over the long term, they may fluctuate
dramatically in the short term and entail a high degree of risk. For cash
management purposes, the fund will ordinarily invest a portion of its
assets in high-quality, short-term debt securities and money market
instruments, including repurchase agreements and bank deposits denominated
in U.S. or foreign currencies.
EACH FUND'S risk and reward depends on the quality and maturity of its
investments. Because Short-Term World Bond invests in higher-quality,
short-term debt securities, it has lower risk and yield potential than the
other funds. Global Bond can invest in lower-quality debt securities, and
FMR expects that its dollar-weighted average maturity will not be greater
than fifteen years under normal market conditions. New Markets Income has
even more flexibility as to the quality and maturity of its investments. In
addition, since New Markets Income invests primarily in securities of
emerging markets, which can be considered speculative, it tends to offer
higher income and total return potential, but significantly greater risk.
Lower quality, longer term investments typically offer higher yields, but
also carry more risk.
Each fund can invest in the securities of any type of issuer, including
U.S. and foreign governments, corporations, banks, and supranational
organizations. There is no limit on investments in any region, country, or
currency, although each fund normally invests in at least three different
countries.
The total return from a bond is a combination of income and price gains or
losses. While income is the most important component of bond returns over
time, Short-Term World Bond's emphasis on income does not mean that the
fund invests only in the highest-yielding bonds available, or that it can
avoid risks to principal. In selecting investments for the fund, FMR
considers a bond's income potential together with its potential for price
gains or losses. FMR focuses on assembling a portfolio of income-producing
securities that it believes will provide the best tradeoff between risk and
return within the range of securities that are eligible investments for the
funds.
Each fund's yield and share price change daily and are based on changes in
interest rates, market conditions, other economic and political news, and
on the quality and maturity of their investments. In general, bond prices
rise when interest rates fall, and vice versa. This effect is usually more
pronounced for longer-term securities. Lower-quality securities offer
higher yields, but also carry more risk. Investments in foreign securities
may involve risks in addition to those of U.S. investments, including
increased political and economic risk, as well as exposure to currency
fluctuations. FMR may use various investment techniques to hedge a portion
of the funds' risks, but there is no guarantee that these strategies will
work as intended. When you sell your shares of the funds, they may be worth
more or less than what you paid for them.
FMR normally invests each fund's assets according to its investment
strategy. When FMR considers it appropriate for defensive purposes,
however, Short-Term World Bond and Global Bond may temporarily invest
substantially in U.S. financial markets or in U.S. dollar-denominated
instruments. New Markets Income may invest substantially in money market
instruments, U.S. government securities, or investment-grade obligations of
U.S. companies.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related risks.
Any restrictions listed supplement those discussed earlier in this section.
A complete listing of each fund's limitations and more detailed information
about the funds' investments are contained in the funds' SAI. Policies and
limitations are considered at the time of purchase; the sale of instruments
is not required in the event of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques
unless it believes that they are consistent with a fund's investment
objective and policies and that doing so will help a fund achieve its goal.
Current holdings and recent investment strategies are described in each
fund's financial reports which are sent to shareholders twice a year. For a
free SAI or financial report, call 1-800-544-8888.
EQUITY SECURITIES may include common stocks, preferred stocks, convertible
securities, and warrants. Common stocks, the most familiar type, represent
an equity (ownership) interest in a corporation. Although equity securities
have a history of long-term growth in value, their prices fluctuate based
on changes in a company's financial condition and on overall market and
economic conditions. Smaller companies are especially sensitive to these
factors.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. In
general, bond prices rise when interest rates fall, and vice versa. Debt
securities have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term bonds are generally
more sensitive to interest rate changes than short-term bonds.
U.S. government securities are high-quality instruments issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the
U.S. government. Not all U.S. government securities are backed by the full
faith and credit of the United States. Some are supported only by the
credit of the agency that issued them.
Lower-quality debt securities (sometimes called "junk bonds") are
considered to have speculative characteristics and involve greater risk of
default or price changes due to changes in the issuer's creditworthiness,
or they may already be in default. The market prices of these securities
may fluctuate more than higher-quality securities and may decline
significantly in periods of general economic difficulty.
The tables on pages and provide a summary of ratings assigned to debt
holdings (not including money market instruments) in each fund's portfolio.
These figures are dollar-weighted averages of month-end portfolio holdings
during fiscal 1995, and are presented as a percentage of total security
investments. These percentages are historical and do not necessarily
indicate a fund's current or future debt holdings.
RESTRICTIONS: For Short-Term World Bond, purchase of a debt security is
consistent with the fund's debt quality policy if it is rated at or above
the stated level by Moody's or rated in the equivalent categories by any
other nationally recognized rating service, or is unrated but judged to be
of equivalent quality by FMR. The fund currently intends to limit its
investments in lower than A-quality debt securities to 35% of its total
assets and in lower than Baa-quality debt securities to 10% of its total
assets. In addition, the fund currently intends to limit its investments in
debt securities to those of Ba-quality or above. For Global Bond, purchase
of a debt security is consistent with the fund's debt quality policy if it
is rated at or above the stated level by Moody's or rated in the equivalent
categories by S&P, or is unrated but judged to be of equivalent quality by
FMR. The fund currently intends to limit its investments in lower than
Baa-quality debt securities to less than 35% of its total assets.
MONEY MARKET SECURITIES are high-quality, short-term obligations issued by
the U.S. Government, corporations, financial institutions, and other
entities. These obligations may carry fixed, variable, or floating interest
rates.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations may
involve additional risks and considerations. These include risks relating
to political or economic conditions in foreign countries, fluctuations in
foreign currencies, withholding or other taxes, operational risks,
increased regulatory burdens, and the potentially less stringent investor
protection and disclosure standards of foreign markets. Additionally,
governmental issuers of foreign securities may be unwilling to repay
principal and interest when due, and may require that the conditions for
payment be renegotiated. All of these factors can make foreign investments,
especially those in developing countries, more volatile.
FIDELITY SHORT-TERM WORLD BOND FUND
Fiscal 1995 Debt Holdings, by Rating MOODY'S STANDARD &
POOR'S

INVESTORS SERVICE, INC.
Rating Average A Rating Avera
geA
INVESTMENT GRADE

Highest quality Aaa 47.18% AAA 50.34%

High quality Aa 6.11% AA 9.30%

Upper-medium grade A 11.96% A 6.70%

Medium grade Baa 0.18% BBB 0.91%
LOWER QUALITY

Moderately speculative Ba 0.08% BB 0.15%

Speculative B 0.00% B 0.00%

Highly speculative Caa 0.00% CCC 0.00%

Poor quality Ca 0.00% CC 0.00%

Lowest quality, no interest C C

In default, in arrears -- D 0.00%

65.51% 67.40%

FIDELITY GLOBAL BOND FUND
Fiscal 1995 Debt Holdings, by Rating MOODY'S STANDARD &
POOR'S

INVESTORS SERVICE, INC.
Rating Average A Rating Avera
geA
INVESTMENT GRADE

Highest quality Aaa 66.61% AAA 65.45%

High quality Aa 8.05% AA 4.39%

Upper-medium grade A 3.60% A 2.69%

Medium grade Baa 1.38% BBB 1.33%
LOWER QUALITY

Moderately speculative Ba 0.55% BB 0.86%

Speculative B 3.26% B 0.00%

Highly speculative Caa 0.00% CCC 0.00%

Poor quality Ca 0.00% CC 0.00%

Lowest quality, no interest C C

In default, in arrears -- D 0.00%

83.45% 74.72%
A FOR SOME FOREIGN GOVERNMENT OBLIGATIONS, FMR ASSIGNS THE RATINGS OF THE
SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT.
THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED DIRECTLY OR
INDIRECTLY BY MOODY'S OR S&P AMOUNTED TO 7.57% FOR
FIDELITY SHORT-TERM WORLD BOND FUND AND 5.35% FOR FIDELITY GLOBAL BOND
FUND . THIS MAY INCLUDE SECURITIES RATED BY OTHER
NATIONALLY RECOGNIZED RATING SERVICES, AS WELL AS UNRATED SECURITIES. REFER
TO THE FUNDS' STATEMENT OF ADDITIONAL INFORMATION
FOR A MORE COMPLETE DISCUSSION OF THESE RATINGS.

FIDELITY NEW MARKETS INCOME FUND
Fiscal 1995 Debt Holdings, by Rating MOODY'S STANDARD &
POOR'S

INVESTORS SERVICE, INC.
Rating Average A Rating Avera
geA
INVESTMENT GRADE

Highest quality Aaa 0.30% AAA 0.15%

High quality Aa 0.00% AA 0.27%

Upper-medium grade A 0.27% A 0.00%

Medium grade Baa 1.11% BBB 0.74%
LOWER QUALITY

Moderately speculative Ba 8.59% BB 16.89%

Speculative B 27.65% B 9.68%

Highly speculative Caa 0.00% CCC 0.00%

Poor quality Ca 0.00% CC 0.00%

Lowest quality, no interest C C

In default, in arrears -- D 0.00%

37.92% 27.73%
A FOR SOME FOREIGN GOVERNMENT OBLIGATIONS, FMR ASSIGNS THE RATINGS OF THE
SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT.
THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED DIRECTLY OR
INDIRECTLY BY MOODY'S OR S&P AMOUNTED TO 41.13%
FOR FIDELITY NEW MARKETS INCOME FUND . THIS MAY INCLUDE SECURITIES
RATED BY OTHER NATIONALLY RECOGNIZED RATING SERVICES,
AS WELL AS UNRATED SECURITIES. FMR HAS DETERMINED THAT UNRATED SECURITIES
THAT ARE LOWER-QUALITY ACCOUNT FOR 25.36% OF
NEW MARKETS INCOME'S TOTAL SECURITY INVESTMENTS. REFER TO THE FUNDS'
STATEMENT OF ADDITIONAL INFORMATION FOR A MORE
COMPLETE DISCUSSION OF THESE RATINGS.

ASSET-BACKED AND MORTGAGE SECURITIES include interests in pools of
lower-rated debt securities, or consumer loans or mortgages, or complex
instruments such as collateralized mortgage obligations and stripped
mortgage-backed securities. The value of these securities may be
significantly affected by changes in interest rates, the market's
perception of the issuers, and the creditworthiness of the parties
involved. Some securities may have a structure that makes their reaction to
interest rates and other factors difficult to predict, making their value
highly volatile. These securities may also be subject to prepayment risk.
STRIPPED SECURITIES are the separate income or principal components of a
debt security. Their risks are similar to those of other debt securities,
although they may be more volatile and the value of certain types of
stripped securities may move in the same direction as interest rates.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security at
one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
FOREIGN REPURCHASE AGREEMENTS may be less well secured than U.S. repurchase
agreements, and may be denominated in foreign currencies. They also may
involve greater risk of loss if the counterparty defaults. Some
counterparties in these transactions may be less creditworthy than those in
U.S. markets.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, currency exchange rates, commodity prices, or other factors that
affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts,
entering into currency exchange contracts or swap agreements, and
purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with the
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of the fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
DIRECT DEBT. Loans and other direct debt instruments are interests in
amounts owed to another party by a company, government, or other borrower.
They have additional risks beyond conventional debt securities because they
may entail less legal protection for a fund, or there may be a requirement
that a fund supply additional cash to a borrower on demand.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be diffi cult to sell promptly at an acceptable
price. The sale of some illiquid securities and some other securities
may be subject to legal restrictions. Difficulty in selling securities may
result in a loss or may be costly to a fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more than
15% of its assets would be invested in illiquid securities.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect a fund's yield.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry. A fund that
is not diversified may be more sensitive to changes in the market value of
a single issuer or industry.
RESTRICTIONS: The funds are considered non-diversified. Generally, to meet
federal tax requirements at the close of each quarter, a fund does not
invest more than 25% of its total assets in any one issuer and, with
respect to 50% of total assets, does not invest more than 5% of its total
assets in any one issuer. A fund may not invest more than 25% of its total
assets in any one industry (other than the financial services industry for
Short-Term World Bond ). These limitations do not apply to U.S.
government securities.
FINANCIAL SERVICES INDUSTRY. Companies in the financial services industry
are subject to various risks related to that industry, such as government
regulation, changes in interest rates, and exposure on loans, including
loans to foreign borrowers. If a fund invests substantially in this
industry, its performance may be affected by conditions affecting the
industry.
RESTRICTIONS: Short-Term World Bond may not invest less than 25% of
its total assets in the financial services industry under normal
conditions.
BORROWING. A fund may borrow from banks or from other funds advised by FMR,
or through reverse repurchase agreements. If a fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: A fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
LENDING. Lending securities to broker-dealers and institutions,
including Fidelity Brokerage Services, Inc. (FBSI), an affiliate of
FMR, is a means of earning income. This practice could result in a loss or
a delay in recovering a fund's securities. A fund may also lend money to
other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 33% of a fund's total
assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
SHORT-TERM WORLD BOND seeks as high a level of current income as is
consistent with preservation of capital.
GLOBAL BOND seeks high total investment return by investing principally in
debt securities issued anywhere in the world.
NEW MARKETS INCOME seeks high current income. As a secondary objective, the
fund seeks capital appreciation.
EACH FUND may not invest more than 25% of its total assets in any one
industry, except that Short-Term World Bond will invest at least 25%
of its total assets in the financial services industry. Each fund may
borrow only for temporary or emergency purposes, but not in an amount
exceeding 33% of its total assets. Loans, in the aggregate, may not exceed
33% of a fund's total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its share
price or dividends; they are neither billed directly to shareholders nor
deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn may pay fees to affiliates who provides
assistance with these services. Each fund also pays OTHER
EXPENSES, which are explained on page .
FMR may, from time to time, agree to reimburse the funds for management
fees and other expenses above a specified limit. FMR retains the ability to
be repaid by a fund if expenses fall below the specified limit prior to the
end of the fiscal year. Reimbursement arrangements, which may be terminated
at any time without notice, can decrease a fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The fee is
calculated by adding a group fee rate to an individual fund fee rate, and
multiplying the result by the fund's average net assets.
UNDERSTANDING THE

MANAGEMENT FEE
The management fee FMR receives is designed
to be responsive to changes in FMR's total
assets under management. Building this
variable into the fee calculation assures
shareholders that they will pay a lower rate as
FMR's assets under management increase.
(checkmark)
The group fee rate is based on the average net assets of all the mutual
funds advised by FMR. This rate cannot rise above .37%, and it drops as
total assets under management increase.
For December 1995, the group fee rate was .1482 %. The individual
fund fee rate is .45% for Short-Term World Bond and .55% for Global
Bond and New Markets Income. The total management fee rate for fiscal 1995
for Short-Term World Bond, Global Bond, and New Markets Income
and was .60%, .70 % and .70 %, respectively.
FMR HAS SUB-ADVISORY AGREEMENTS with four affiliates: FMR U.K., FMR Far
East, FIJ (for New Markets Income only), and FIIA. FIIA in turn has a
sub-advisory agreement with FIIAL U.K. FMR U.K. focuses on issuers based in
Europe. FMR Far East focuses on issuers based in Asia and the Pacific
Basin. FIJ focuses on issuers based in Japan and elsewhere around the
world. FIIA focuses on issuers based in Hong Kong, Australia, New Zealand,
and Southeast Asia (other than Japan). FIIAL U.K. focuses on issuers based
in the United Kingdom and Europe.
The sub-advisers are compensated for providing investment research and
advice. FMR pays FMR U.K. and FMR Far East fees equal to 110% and 105%,
respectively, of the costs of providing these services. FMR pays FIJ and
FIIA 30% of its management fee associated with investments for which the
sub-adviser provided investment advice. FIIA pays FIIAL U.K. a fee equal to
110% of the cost of providing these services.
The sub-advisers may also provide investment management services. In
return, FMR pays FMR U.K., FMR Far East, FIJ, and FIIA a fee equal to 50%
of its management fee rate with respect to a fund's investments that the
sub-adviser manages on a discretionary basis. FIIA pays FIIAL U.K. a fee
equal to 110% of the cost of providing these services.
OTHER EXPENSES
While the management fee is a significant component of the funds' annual
operating costs, the funds have other expenses as well.
The funds contract with FSC to perform many transaction and accounting
functions. These services include processing shareholder transactions,
valuing each fund's investments, and handling securities loans. In fiscal
1995, Short-Term World Bond, Global Bond, and New Markets Income paid FSC
fees equal to .32%, .36%, and .31%, respectively, of average net assets.
The funds also pay other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of trustees who are
not affiliated with Fidelity. A broker-dealer may use a portion of the
commissions paid by a fund to reduce the fund's custodian or transfer agent
fees.
Each fund has adopted a Distribution and Service Plan. These plans
recognize that FMR may use its resources, including management fees, to pay
expenses associated with the sale of fund shares. This may include payments
to third parties, such as banks or broker-dealers, that provide shareholder
support services or engage in the sale of the fund's shares. It is
important to note, however, that the funds do not pay FMR any separate fees
for this service.
For fiscal 1995, the portfolio turnover rates for Short-Term World Bond,
Global Bond, and New Markets Income were 284%, 322%, and 306%,
respectively. These rates vary from year to year. High turnover rates
increase transaction costs and may increase taxable capital gains. FMR
considers these effects when evaluating the anticipated benefits of
short-term investing.
YOUR ACCOUNT

FIDELITY FACTS
Fidelity offers the broadest selection of mutual
funds in the world.
(solid bullet) Number of Fidelity mutual funds: over 210
(solid bullet) Assets in Fidelity mutual funds: over
$ 354 billion
(solid bullet) Number of shareholder accounts: over
23 million
(solid bullet) Number of investment analysts and portfolio
managers: over 200
(checkmark)
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and capital
gains from current taxes. In addition, contributions to these accounts may
be tax deductible. Retirement accounts require special applications and
typically have lower minimums.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal age and under
70 with earned income to save up to $2,000 per tax year. Individuals can
also invest in a spouse's IRA if the spouse has earned income of less than
$250.
ROLLOVER IRAS retain special tax advantages for certain distributions from
employer-sponsored retirement plans.
KEOGH OR CORPORATE PROFIT SHARING AND MONEY PURCHASE PENSION PLANS allow
self-employed individuals or small business owners (and their employees) to
make tax deductible contributions for themselves and any eligible employees
up to $30,000 per year.
SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small business owners
or those with self-employed income (and their eligible employees) with many
of the same advantages as a Keogh, but with fewer administrative
requirements.
403(B) CUSTODIAL ACCOUNTS are available to employees of most tax-exempt
institutions, including schools, hospitals, and other charitable
organizations.
401(K) PROGRAMS allow employees of corporations of all sizes to contribute
a percentage of their wages on a tax-deferred basis. These accounts need to
be established by the trustee of the plan.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS,
INSTITUTIONS, OR OTHER GROUPS
Requires a special application.
HOW TO BUY SHARES
EACH FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. Each fund's shares are sold without a sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described at right. If there is no application accompanying this
prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(small solid bullet) Mail in an application with a check, or
(small solid bullet) Open your account by exchanging from another Fidelity
fund.
IF YOU ARE INVESTING THROUGH A TAX-SHELTERED RETIREMENT PLAN, such as an
IRA, for the first time, you will need a special application. Retirement
investing also involves its own investment procedures. Call 1-800-544-8888
for more information and a retirement application.
If you buy shares by check or Fidelity Money Line(registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business days to
ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For Fidelity retirement accounts $500
TO ADD TO AN ACCOUNT $250
For Fidelity retirement accounts $250
Through automatic investment plans $100
MINIMUM BALANCE $1,000
For Fidelity retirement accounts $500
These minimums may vary for investments through Fidelity Portfolio
Advisory Services. Refer to the program materials for details.

Key Information
Phone 1#800#544#7777
S
To open an account, exchange from another Fidelity fund account with the
same
registration, including name, address, and taxpayer ID number.
S
To add to an account, exchange from another Fidelity fund account with the
same registration, including name, address, and taxpayer ID number. You can

also use Fidelity Money Line to transfer from your bank account. Call
before
your first use to verify that this service is in place on your account.
Maximum
Money Line $50,000
Mail
S
To open an account, complete and sign the application. Make your check
payable
to the complete name of the fund of your choice. Mail to the address
indicated
on the application.
S
To add to an account, make your check payable to the complete name of the
fund
of your choice. Indicate your fund account number on your check and mail to

the address printed on your account statement.
S
Exchange by mail: call 1#800#544#6666 for instructions.
In Person
S
To open an account, bring your application and check to a Fidelity Investor

Center. Call 1#800#544#9797 for the center nearest you.
S
To add to an account, bring your check to a Fidelity Investor Center. Call
1#800#544#9797 for the center nearest you.
Wire
Not available for retirement accounts.
S
To open an account, call 1#800#544#7777 to set up your account and to
arrange
a wire transaction. Wire within 24 hours to the wire address below. Specify

the complete name of the fund and include your new account number and your
name.
S
To add to an account, wire to the wire address below. Specify the complete
name of the fund and include your account number and your name.
S
Wire address: Bankers Trust Company, Bank Routing #021001033, Account #
00163053.
Automatically
New accounts cannot be opened with these services.
S
Use Fidelity Automatic Account Builder or Direct Deposit to automatically
purchase
more shares. Sign up for these services when opening your account, or call
1#800#544#6666.
S
Use Directed Dividends or Fidelity Automatic Exchange Service to
automatically
send money from one Fidelity fund into another. Call 1#800#544#6666 for
instructions.

TDD - Service for the Deaf and Hearing#Impaired: 1#800#544#0118
(null)
How to Sell Shares
You can arrange to take money out of your fund account at any time by
selling
(redeeming) some or all of your shares. Your shares will be sold at the
next
share price calculated after your order is received and accepted. Share
price
is normally calculated at 4 p.m. Eastern time.
To sell shares in a non#retirement account,
you may use any of the methods described on these two pages.
To sell shares in a Fidelity retirement account,
your request must be made in writing, except for exchanges to other
Fidelity
funds, which can be requested by phone or in writing. Call 1#800#544#6666
for
a retirement distribution form.
If you are selling some but not all of your shares,
leave at least $1,000 worth of shares in the account to keep it open ($500

for retirement accounts).
To sell shares by bank wire or Fidelity Money Line,
you will need to sign up for these services in advance.
Certain requests must include a signature guarantee.
It is designed to protect you and Fidelity from fraud. Your request must
be
made in writing and include a signature guarantee if any of the following
situations
apply:
S
You wish to redeem more than $100,000 worth of shares,
S
Your account registration has changed within the last 30 days,
S
The check is being mailed to a different address than the one on your
account
(record address),
S
The check is being made payable to someone other than the account owner, or
S
The redemption proceeds are being transferred to a Fidelity account with a
different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including
Fidelity Investor Centers), dealer, credit union (if authorized under state

law), securities exchange or association, clearing agency, or savings
association.
A notary public cannot provide a signature guarantee.
Selling Shares in Writing
Write a "letter of instruction" with:
S
Your name,
S
The fund's name,
S
Your fund account number,
S
The dollar amount or number of shares to be redeemed, and
S
Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address.
Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266#0602
Checkwriting
If you have a checkbook for your account in Short#Term World Bond, you may
write an unlimited number of checks. Do not, however, try to close out your

account by check.
Key Information
If you sell shares of New Markets Income after holding them less than 180
days,
the fund will deduct a redemption fee equal to 1.00% of the value of those
shares.
Phone 1#800#544#7777
All account types except retirement
S
Maximum check request: $100,000.
S
For Money Line transfers to your bank account; minimum: $10; maximum:
$100,000.
All account types
S
You may exchange to other Fidelity funds if both accounts are registered
with
the same name(s), address, and taxpayer ID number.
Mail or in Person
Individual, Joint Tenant, Sole Proprietorship, UGMA, UTMA
S
The letter of instruction must be signed by all persons required to sign
for
transactions, exactly as their names appear on the account.
Retirement account
S
The account owner should complete a retirement distribution form. Call
1#800#544#6666
to request one.
Trust
S
The trustee must sign the letter indicating capacity as trustee. If the
trustee's
name is not in the account registration, provide a copy of the trust
document
certified within the last 60 days.
Business or Organization
S
At least one person authorized by corporate resolution to act on the
account
must sign the letter.
S
Include a corporate resolution with corporate seal or a signature
guarantee.
Executor, Administrator, Conservator, Guardian
S
Call 1#800#544#6666 for instructions.
Wire
All account types except retirement
S
You must sign up for the wire feature before using it. To verify that it is

in place, call 1#800#544#6666. Minimum wire: $5,000.
S
Your wire redemption request must be received by Fidelity before 4 p.m.
Eastern
time for money to be wired on the next business day.
Check
All account types except retirement
S
Minimum check: $500.
S
All account owners must sign a signature card to receive a checkbook.

TDD - Service for the Deaf and Hearing#Impaired: 1#800#544#0118
YOUR ACCOUNT

INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365 days
a year. Whenever you call, you can speak with someone equipped to provide
the information or service you need.
STATEMENTS AND REPORTS that Fidelity sends to you include the following:
(small solid bullet) Confirmation statements (after every transaction,
except reinvestments, that affects your account balance or your account
registration)
(small solid bullet) Account statements (quarterly)
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in the fund. Call
1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing.
Note that exchanges out of a fund are limited to four per calendar year,
and that they may have tax consequences for you. For details on policies
and restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see page
.
SYSTEMATIC WITHDRAWAL PLANS let you set up periodic redemptions from your
account.
FIDELITY MONEY LINE(registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.

24-HOUR SERVICE
ACCOUNT ASSISTANCE 1-800-544-6666
ACCOUNT BALANCES 1-800-544-7544
ACCOUNT TRANSACTIONS 1-800-544-7777
PRODUCT INFORMATION 1-800-544-8888
QUOTES 1-800-544-8544
RETIREMENT ACCOUNT ASSISTANCE
1-800-544-4774
AUTOMATED SERVICE
(checkmark)
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against
loss in a declining market, they can be an excellent way to invest for
retirement, a home, educational expenses, and other long-term financial
goals. Certain restrictions apply for retirement accounts. Call
1-800-544-6666 for more information.
REGULAR INVESTMENT PLANS

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

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

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DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA

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

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FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND

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

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

UNDERSTANDING DISTRIBUTIONS
As a fund shareholder, you are entitled to your
share of the fund's net income and gains on its
investments. The fund passes these earnings
along to its investors as DISTRIBUTIONS.
Each fund earns dividends from stocks and
interest from bond, money market and other
investments. These are passed along as
DIVIDEND DISTRIBUTIONS . A fund realizes
capital gains whenever it sells securities for a
higher price than it paid for them. These are
passed along as CAPITAL GAIN DISTRIBUTIONS.
(checkmark)
TAXES
As with any investment, you should consider how your investment in a fund
will be taxed. If your account is not a tax-deferred retirement account,
you should be aware of these tax implications.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax,
and may also be subject to state or local taxes. If you live outside the
United States, your distributions could also be taxed by the country in
which you reside. Your distributions are taxable when they are paid,
whether you take them in cash or reinvest them. However, distributions
declared in December and paid in January are taxable as if they were paid
on December 31.
For federal tax purposes, each fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions
are taxed as long-term capital gains. Every January, Fidelity will send you
and the IRS a statement showing the taxable distributions paid to you in
the previous year.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other
Fidelity funds - are subject to capital gains tax. A capital gain or loss
is the difference between the cost of your shares and the price you receive
when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a fund deducts a
capital gain distribution from its NAV, you will pay the full price
for the shares and then receive a portion of the price back in the form of
a taxable distribution.
CURRENCY CONSIDERATIONS. If a fund's dividends exceed its taxable income in
any year, which is sometimes the result of currency-related losses, all or
a portion of the fund's dividends may be treated as a return of capital to
shareholders for tax purposes. To minimize the risk of a return of
capital, the funds may adjust their dividends to take currency fluctuations
into account, which may cause the dividends to vary. Any return of
capital will reduce the cost basis of your shares, which will result in a
higher reported capital gain or a lower reported capital loss when you sell
your shares. The statement you receive in January will specify if any
distributions included a return of capital.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on a fund and
its investments and these taxes generally will reduce the fund's
distributions. However, an offsetting tax credit or deduction may be
available to you. If so, your tax statement will show more taxable income
or capital gains than were actually distributed by the fund, but will also
show the amount of the available offsetting credit or deduction.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, a fund may
have to limit its investment activity in some types of instruments.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates each fund's NAV as of the close of
business of the NYSE, normally 4 p.m. Eastern time.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
Each fund's assets are valued primarily on the basis of market quotations.
Foreign securities are valued on the basis of quotations from the primary
market in which they are traded, and are translated from the local currency
into U.S. dollars using current exchange rates. If quotations are not
readily available, or if the values have been materially affected by events
occurring after the closing of a foreign market, assets are valued by a
method that the Board of Trustees believes accurately reflects fair value.
EACH FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity may only be
liable for losses resulting from unauthorized transactions if it does not
follow reasonable procedures designed to verify the identity of the caller.
Fidelity will request personalized security codes or other information, and
may also record calls. You should verify the accuracy of your confirmation
statements immediately after you receive them. If you do not want the
ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they
would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(small solid bullet) All of your purchases must be made in U.S. dollars and
checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check, each
check must have a value of at least $50.
(small solid bullet) Each fund reserves the right to limit the number of
checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will be
cancelled and you could be liable for any losses or fees a fund or its
transfer agent has incurred.
(small solid bullet) You begin to earn dividends as of the first business
day following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUNDS THROUGH A BROKER, who may charge
you a fee for this service. If you invest through a broker or other
institution, read its program materials for any additional service features
or fees that may apply.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
FDC may enter confirmed purchase orders on behalf of customers by phone,
with payment to follow no later than the time when a fund is priced on the
following business day. If payment is not received by that time, the
financial institution could be held liable for resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(small solid bullet) Normally, redemption proceeds will be mailed to you on
the next business day, but if making immediate payment could adversely
affect a fund, it may take up to seven days to pay you.
(small solid bullet) Shares will earn dividends through the date of
redemption; however, shares redeemed on a Friday or prior to a holiday will
continue to earn dividends until the next business day.
(small solid bullet) Fidelity Money Line redemptions generally will be
credited to your bank account on the second or third business day after
your phone call.
(small solid bullet) Each fund may hold payment on redemptions until it is
reasonably satisfied that investments made by check or Fidelity Money Line
have been collected, which can take up to seven business days.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays), when
trading on the NYSE is restricted, or as permitted by the SEC.
(small solid bullet) If you sell shares by writing a check and the amount
of the check is greater than the value of your account, your check will be
returned to you and you may be subject to additional charges.
THE REDEMPTION FEE for New Markets Income, if applicable, will be deducted
from the amount of your redemption. This fee is paid to the fund rather
than FMR, and it does not apply to shares that were acquired through
reinvestment of distributions. If shares were not all held for the same
length of time, those shares you held longest will be redeemed first for
purposes of determining whether the fee applies.
FIDELITY RESERVES THE RIGHT TO DEDUCT AN ANNUAL MAINTENANCE FEE of $12.00
from accounts with a value of less than $2,500, subject to an annual
maximum charge of $60.00 per shareholder. It is expected that accounts will
be valued on the second Friday in November of each year. Accounts opened
after September 30 will not be subject to the fee for that year. The fee,
which is payable to the transfer agent, is designed to offset in part the
relatively higher costs of servicing smaller accounts. The fee will not be
deducted from retirement accounts (except non-prototype retirement
accounts) , accounts using regular investment plans, or if total assets
in Fidelity funds exceed $50,000. Eligibility for the $50,000 waiver is
determined by aggregating Fidelity mutual fund accounts maintained by FSC
or FBSI which are registered under the same social security number or which
list the same social security number for the custodian of a Uniform
Gifts/Transfers to Minors Act account.
IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to qualified
recipients who support the sale of shares of the funds without
reimbursement from the funds. Qualified recipients are securities dealers
who have sold fund shares or others, including banks and other financial
institutions, under special arrangements in connection with FDC's sales
activities. In some instances, these incentives may be offered only to
certain institutions whose representatives provide services in connection
with the sale or expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of a fund for
shares of other Fidelity funds. However, you should note the following:
(small solid bullet) The fund you are exchanging into must be registered
for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification number.
(small solid bullet) Before exchanging into a fund, read its prospectus.
(small solid bullet) If you exchange into a fund with a sales charge, you
pay the percentage-point difference between that fund's sales charge and
any sales charge you have previously paid in connection with the shares you
are exchanging. For example, if you had already paid a sales charge of 2%
on your shares and you exchange them into a fund with a 3% sales charge,
you would pay an additional 1% sales charge.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Because excessive trading can hurt fund performance
and shareholders, each fund reserves the right to temporarily or
permanently terminate the exchange privilege of any investor who makes more
than four exchanges out of the fund per calendar year. Accounts under
common ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(small solid bullet) The exchange limit may be modified for accounts in
certain institutional retirement plans to conform to plan exchange limits
and Department of Labor regulations. See your plan materials for further
information.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would be
unable to invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
(small solid bullet) Your exchanges may be restricted or refused if a fund
receives or anticipates simultaneous orders affecting significant portions
of the fund's assets. In particular, a pattern of exchanges that coincides
with a "market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.

This prospectus is printed on recycled paper using soy-based inks.
FIDELITY'S INTERNATIONAL BOND FUNDS
FIDELITY SHORT-TERM WORLD BOND FUND
FIDELITY GLOBAL BOND FUND
FIDELITY NEW MARKETS INCOME FUND
FUNDS OF FIDELITY INVESTMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 26, 1996
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated February 26, 1996). Please retain this
document for future reference. The funds' financial statements and
financial highlights, included in the Annual Report for the fiscal year
ended December 31, 1995 are incorporated herein by reference. To obtain an
additional copy of the Prospectus or the Annual Report, please call
Fidelity Distributors Corporation at 1-800-544-8888.

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TABLE OF CONTENTS PAGE

Investment Policies and Limitations

Special Considerations Affecting Europe

Special Considerations Affecting Japan, the Pacific Basin, and Southeast Asia

Special Considerations Affecting Canada

Special Considerations Affecting Latin America

Special Considerations Affecting Africa

Portfolio Transactions

Valuation of Portfolio Securities

Performance

Additional Purchase and Redemption Information

Distributions and Taxes

FMR

Trustees and Officers

Management Contracts

Distribution and Service Plans

Contracts with FMR Affiliates

Description of the Trust

Financial Statements

Appendix

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INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
Fidelity Management & Research (Far East) Inc. (FMR Far East)
Fidelity International Investment Advisors (FIIA)
Fidelity International Investment Advisors (U.K.) Limited (FIIAL U.K.)
Fidelity Investments Japan Ltd. (FIJ) (New Markets Income only)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
Fidelity Service Co. (FSC)
ITL-ptb-296
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in values,
net assets, or other circumstances will not be considered when determining
whether the investment complies with the fund's investment policies and
limitations.
The fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of the fund.
However, except for the fundamental investment limitations listed below,
the investment policies and limitations described in this Statement of
Additional Information are not fundamental and may be changed without
shareholder approval.
INVESTMENT LIMITATIONS OF FIDELITY SHORT-TERM WORLD BOND FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) sell securities short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short, and
provided that transactions in futures contracts and options are not deemed
to constitute selling securities short;
(3) purchase securities on margin, except that the fund may obtain such
short-term credits as are necessary for the clearance of transactions, and
provided that margin payments in connection with futures contracts and
options on futures contracts shall not constitute purchasing securities on
margin;
(4) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(5) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(6) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry, except that the fund will
invest more than 25% of its total assets in the financial services
industry;
(7) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(8) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(9) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties (but this limit
does not apply to purchases of debt securities or to repurchase
agreements).
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(ii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (4)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iii) The fund does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(iv) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(v) The fund does not currently intend to lend assets other than securities
to other parties, except by (a) lending money (up to 7.5% of the fund's net
assets) to a registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) acquiring loans, loan
participations, or other forms of direct debt instruments and, in
connection therewith, assuming any associated unfunded commitments of the
sellers. (This limitation does not apply to purchases of debt securities or
to repurchase agreements.)
(vi) The fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(vii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(viii) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
For purposes of limitation (vii), pass-through entities and other special
purpose vehicles or pools of financial assets, such as issuers of
asset-backed securities or investment companies, are not considered
"business enterprises."
INVESTMENT LIMITATIONS OF FIDELITY GLOBAL BOND FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940 (1940 Act);
(2) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of the value of its total assets (including the amount
borrowed), less liabilities (other than borrowings). Any borrowings that
come to exceed 33 1/3% of the fund's total assets by reason of a decline in
net assets will be reduced within three business days to the extent
necessary to comply with the 33 1/3% limitation;
(3) underwrite securities issued by others (except to the extent that the
fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities);
(4) purchase the securities of any issuer (other than obligations issued or
guaranteed by the government of the United States or its agencies or
instrumentalities, or by foreign governments or their political
subdivisions, or by supranational organizations) if, as a result, more than
25% of the fund's total assets (taken at current value) would be invested
in the securities of issuers having their principal business activities in
the same industry;
(5) purchase or sell real estate (but this shall not prevent the fund from
investing in marketable securities issued by companies such as real estate
investment trusts which deal in real estate or interests therein and
participation interests in pools of real estate mortgage loans);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
Investment limitation (2) is construed in conformity with the 1940 Act,
and, accordingly, "three business days" means three days exclusive of
Sundays and holidays.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (2)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(vii) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(x) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of the fund's net assets. Included
in that amount, but not to exceed 2% of net assets, are warrants whose
underlying securities are not traded on principal domestic or foreign
exchanges. Warrants acquired by the fund in units or attached to securities
are not subject to these restrictions.
(xi) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
For purposes of limitation (ix), pass-through entities and other special
purpose vehicles or pools of financial assets, such as issuers of
asset-backed securities or investment companies, are not considered
"business enterprises."
INVESTMENT LIMITATIONS OF FIDELITY NEW MARKETS INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (2)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(vii) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements).
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(x) The fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of the fund's net assets. Included
in that amount, but not to exceed 2% of net assets, are warrants whose
underlying securities are not traded on principal domestic or foreign
exchanges. Warrants acquired by the fund in units or attached to securities
are not subject to these restrictions.
(xi) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
For purposes of limitation (ix), pass-through entities and other special
purpose vehicles or pools of financial assets, such as issuers of
asset-backed securities or investment companies, are not considered
"business enterprises."
For the funds' limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions" on page
.
Each fund's investments must be consistent with its investment objective
and policies. Accordingly, not all of the security types and investment
techniques which follow are eligible investments for each of the funds.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the fund under the Investment Company Act of 1940. These
transactions may include repurchase agreements with custodian banks;
short-term obligations of, and repurchase agreements with, the 50 largest
U.S. banks (measured by deposits); municipal securities; U.S. government
securities with affiliated financial institutions that are primary dealers
in these securities; short-term currency transactions; and short-term
borrowings. In accordance with exemptive orders issued by the Securities
and Exchange Commission (SEC), the Board of Trustees has established and
periodically reviews procedures applicable to transactions involving
affiliated financial institutions.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security. Typically, no
interest accrues to the purchaser until the security is delivered. The
funds may receive fees for entering into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, each fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the fund's other investments. If a fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, the fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a delayed-delivery
basis, the fund does not participate in further gains or losses with
respect to the security. If the other party to a delayed-delivery
transaction fails to deliver or pay for the securities, the fund could miss
a favorable price or yield opportunity, or could suffer a loss.
Each fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations may
involve significant risks in addition to the risks inherent in U.S.
investments. The value of securities denominated in foreign currencies and
of dividends and interest paid with respect to such securities will
fluctuate based on the relative strength of the U.S. dollar.
Foreign investments involve a risk of local political, economic, or social
instability, military action or unrest, or adverse diplomatic developments,
and may be affected by actions of foreign governments adverse to the
interests of U.S. investors. Such actions may include the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention. There
is no assurance that FMR will be able to anticipate these potential events
or counter their effects. These risks are magnified for investments in
developing countries, which may have relatively unstable governments,
economies based on only a few industries, and securities markets that trade
a small number of securities.
Economies of particular countries or areas of the world may differ
favorably or unfavorably from the economy of the United States. Foreign
markets may offer less protection to investors than U.S. markets. It is
anticipated that in most cases the best available market for foreign
securities will be on an exchange or in over-the-counter markets located
outside of the United States. Foreign stock markets, while growing in
volume and sophistication, are generally not as developed as those in the
United States, and securities of some foreign issuers (particularly those
located in developing countries) may be less liquid and more volatile than
securities of comparable U.S. issuers. Foreign security trading practices,
including those involving securities settlement where fund assets may be
released prior to receipt of payment, may result in increased risk in the
event of a failed trade or the insolvency of a foreign broker-dealer, and
may involve substantial delays. In addition, the costs of foreign
investing, including withholding taxes, brokerage commissions and custodial
costs, are generally higher than for U.S. investors. In general, there is
less overall governmental supervision and regulation of securities
exchanges, brokers, and listed companies than in the United States. It may
also be difficult to enforce legal rights in foreign countries. Foreign
issuers are generally not bound by uniform accounting, auditing, and
financial reporting requirements and standards of practice comparable to
those applicable to U.S. issuers.
Some foreign securities impose restrictions on transfer within the United
States or to U.S. persons. Although securities subject to such transfer
restrictions may be marketable abroad, they may be less liquid than foreign
securities of the same class that are not subject to such restrictions.
American Depository Receipts (ADR's) as well as other "hybrid" forms of
ADRs including European Depository Receipts (EDRs) and Global Depository
Receipts (GDRs), are certificates evidencing ownership of shares of a
foreign issuer. These certificates are issued by depository banks and
generally trade on an established market in the United States or elsewhere.
The underlying shares are held in trust by a custodian bank or similar
financial institution in the issuer's home country. The depository bank may
not have physical custody of the underlying securities at all times and may
charge fees for various services, including forwarding dividends and
interest and corporate actions. ADRs are an alternative to directly
purchasing the underlying foreign securities in their national markets and
currencies. However, ADRs continue to be subject to many of the risks
associated with investing directly in foreign securities. These risks
include foreign exchange risk as well as the political and economic risks
of the underlying issuer's country.
Currently, the countries not considered to have emerging market economies
are as follows: Australia, Austria, Belgium, Canada, Denmark, Finland,
France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand,
Norway, Spain, Sweden, Switzerland, the United Kingdom, and the United
States.
The risks of international investing may be intensified in the case of
investments in emerging markets or countries with limited or developing
capital markets. Security prices in emerging markets can be significantly
more volatile than in the more developed nations of the world, reflecting
the greater uncertainties of investing in less established markets and
economies. In particular, countries with emerging markets may have
relatively unstable governments, present the risk of nationalization of
businesses, restrictions on foreign ownership, or prohibitions of
repatriation of assets, and may have less protection of property rights
than more developed countries. The economies of countries with emerging
markets may be predominantly based on only a few industries, may be highly
vulnerable to changes in local or global trade conditions, and may suffer
from extreme and volatile debt burdens or inflation rates. Local securities
markets may trade a small number of securities and may be unable to respond
effectively to increases in trading volume, potentially making prompt
liquidation of substantial holdings difficult or impossible at times.
Securities of issuers located in countries with emerging markets may have
limited marketability and may be subject to more abrupt or erratic price
movements.
FOREIGN CURRENCY TRANSACTIONS. The funds may conduct foreign currency
transactions on a spot (i.e., cash) basis or by entering into forward
contracts to purchase or sell foreign currencies at a future date and
price. The funds will convert currency on a spot basis from time to time,
and investors should be aware of the costs of currency conversion. Although
foreign exchange dealers generally do not charge a fee for conversion, they
do realize a profit based on the difference between the prices at which
they are buying and selling various currencies. Thus, a dealer may offer to
sell a foreign currency to the fund at one rate, while offering a lesser
rate of exchange should the fund desire to resell that currency to the
dealer. Forward contracts are generally traded in an interbank market
conducted directly between currency traders (usually large commercial
banks) and their customers. The parties to a forward contract may agree to
offset or terminate the contract before its maturity, or may hold the
contract to maturity and complete the contemplated currency exchange.
Each fund may use currency forward contracts for any purpose consistent
with its investment objective. The following discussion summarizes the
principal currency management strategies involving forward contracts that
could be used by each fund. The funds may also use swap agreements, indexed
securities, and options and futures contracts relating to foreign
currencies for the same purposes.
When a fund agrees to buy or sell a security denominated in a foreign
currency, it may desire to "lock in" the U.S. dollar price of the security.
By entering into a forward contract for the purchase or sale, for a fixed
amount of U.S. dollars, of the amount of foreign currency involved in the
underlying security transaction, the fund will be able to protect itself
against an adverse change in foreign currency values between the date the
security is purchased or sold and the date on which payment is made or
received. This technique is sometimes referred to as a "settlement hedge"
or "transaction hedge." The funds may also enter into forward contracts to
purchase or sell a foreign currency in anticipation of future purchases or
sales of securities denominated in foreign currency, even if the specific
investments have not yet been selected by FMR.
The funds may also use forward contracts to hedge against a decline in the
value of existing investments denominated in foreign currency. For example,
if a fund owned securities denominated in pounds sterling, it could enter
into a forward contract to sell pounds sterling in return for U.S. dollars
to hedge against possible declines in the pound's value. Such a hedge,
sometimes referred to as a "position hedge," would tend to offset both
positive and negative currency fluctuations, but would not offset changes
in security values caused by other factors. A fund could also hedge the
position by selling another currency expected to perform similarly to the
pound sterling - for example, by entering into a forward contract to sell
Deutschemarks or European Currency Units in return for U.S. dollars. This
type of hedge, sometimes referred to as a "proxy hedge," could offer
advantages in terms of cost, yield, or efficiency, but generally would not
hedge currency exposure as effectively as a simple hedge into U.S. dollars.
Proxy hedges may result in losses if the currency used to hedge does not
perform similarly to the currency in which the hedged securities are
denominated.
Each fund may enter into forward contracts to shift its investment exposure
from one currency into another. This may include shifting exposure from
U.S. dollars to a foreign currency, or from one foreign currency to another
foreign currency. For example, if a fund held investments denominated in
Deutschemarks, the fund could enter into forward contracts to sell
Deutschemarks and purchase Swiss Francs. This type of strategy, sometimes
known as a "cross-hedge," will tend to reduce or eliminate exposure to the
currency that is sold, and increase exposure to the currency that is
purchased, much as if the fund had sold a security denominated in one
currency and purchased an equivalent security denominated in another.
Cross-hedges protect against losses resulting from a decline in the hedged
currency, but will cause the fund to assume the risk of fluctuations in the
value of the currency it purchases.
Under certain conditions, SEC guidelines require mutual funds to set aside
appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, the funds will
segregate assets to cover currency forward contracts, if any, whose purpose
is essentially speculative. The funds will not segregate assets to cover
forward contracts entered into for hedging purposes, including settlement
hedges, position hedges, and proxy hedges.
Successful use of currency management strategies will depend on FMR's skill
in analyzing and predicting currency values. Currency management strategies
may substantially change a fund's investment exposure to changes in
currency exchange rates, and could result in losses to the fund if
currencies do not perform as FMR anticipates. For example, if a currency's
value rose at a time when FMR had hedged a fund by selling that currency in
exchange for dollars, the fund would be unable to participate in the
currency's appreciation. If FMR hedges currency exposure through proxy
hedges, a fund could realize currency losses from the hedge and the
security position at the same time if the two currencies do not move in
tandem. Similarly, if FMR increases a fund's exposure to a foreign
currency, and that currency's value declines, the fund will realize a loss.
There is no assurance that FMR's use of currency management strategies will
be advantageous to the funds or that it will hedge at an appropriate time.
FOREIGN REPURCHASE AGREEMENTS. Foreign repurchase agreements may include
agreements to purchase and sell foreign securities in exchange for fixed
U.S. dollar amounts, or in exchange for specified amounts of foreign
currency. Unlike typical U.S. repurchase agreements, foreign repurchase
agreements may not be fully collateralized at all times. The value of a
security purchased by a fund may be more or less than the price at which
the counterparty has agreed to repurchase the security. In the event of
default by the counterparty, the fund may suffer a loss if the value of the
security purchased is less than the agreed-upon repurchase price, or if the
fund is unable to successfully assert a claim to the collateral under
foreign laws. As a result, foreign repurchase agreements may involve higher
credit risks than repurchase agreements in U.S. markets, as well as risks
associated with currency fluctuations. In addition, as with other emerging
market investments, repurchase agreements with counterparties located in
emerging markets or relating to emerging markets may involve issuers or
counterparties with lower credit ratings than typical U.S. repurchase
agreements.
FUNDS' RIGHTS AS A SHAREHOLDER. The funds do not intend to direct or
administer the day-to-day operations of any company. Each fund, however,
may exercise its rights as a shareholder and may communicate its views on
important matters of policy to management, the Board of Directors, and
shareholders of a company when FMR determines that such matters could have
a significant effect on the value of the fund's investment in the company.
The activities that a fund may engage in, either individually or in
conjunction with others, may include, among others, supporting or opposing
proposed changes in a company's corporate structure or business activities;
seeking changes in a company's directors or management; seeking changes in
a company's direction or policies; seeking the sale or reorganization of
the company or a portion of its assets; or supporting or opposing third
party takeover efforts. This area of corporate activity is increasingly
prone to litigation and it is possible that a fund could be involved in
lawsuits related to such activities. FMR will monitor such activities with
a view to mitigating, to the extent possible, the risk of litigation
against a fund and the risk of actual liability if a fund is involved in
litigation. No guarantee can be made, however, that litigation against a
fund will not be undertaken or liabilities incurred.
FUTURES AND OPTIONS. The following sections pertain to futures and options:
Asset Coverage for Futures and Options Positions, Combined Positions,
Correlation of Price Changes, Futures Contracts, Futures Margin Payments,
Limitations on Futures and Options Transactions, Liquidity of Options and
Futures Contracts, Options and Futures Relating to Foreign Currencies, OTC
Options, Purchasing Put and Call Options, and Writing Put and Call Options.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The funds will comply
with guidelines established by the Securities and Exchange Commission with
respect to coverage of options and futures strategies by mutual funds, and
if the guidelines so require will set aside appropriate liquid assets in a
segregated custodial account in the amount prescribed. Securities held in a
segregated account cannot be sold while the futures or option strategy is
outstanding, unless they are replaced with other suitable assets. As a
result, there is a possibility that segregation of a large percentage of a
fund's assets could impede portfolio management or the fund's ability to
meet redemption requests or other current obligations.
COMBINED POSITIONS. A fund may purchase and write options in combination
with each other, or in combination with futures or forward contracts, to
adjust the risk and return characteristics of the overall position. For
example, a fund may purchase a put option and write a call option on the
same underlying instrument, in order to construct a combined position whose
risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at
one strike price and buying a call option at a lower price, in order to
reduce the risk of the written call option in the event of a substantial
price increase. Because combined options positions involve multiple trades,
they result in higher transaction costs and may be more difficult to open
and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match a fund's current or
anticipated investments exactly. The funds may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which they typically
invest, which involves a risk that the options or futures position will not
track the performance of a fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. A fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in a fund's options or futures positions are poorly correlated with
its other investments, the positions may fail to produce anticipated gains
or result in losses that are not offset by gains in other investments.
FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees to
purchase a specified underlying instrument at a specified future date. When
a fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the fund enters into the contract.
Futures can be held until their delivery dates, or can be closed out before
then if a liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase a fund's exposure to positive and negative
price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When a fund sells a futures
contract, by contrast, the value of its futures position will tend to move
in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of a fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of a fund, the fund may be
entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each fund has filed a
notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets. The funds intend to comply with Rule 4.5 under the
Commodity Exchange Act, which limits the extent to which the funds can
commit assets to initial margin deposits and option premiums.
In addition, each fund will not: (a) sell futures contracts, purchase put
options, or write call options if, as a result, more than 25% of the fund's
total assets would be hedged with futures and options under normal
conditions; (b) purchase futures contracts or write put options if, as a
result, the fund's total obligations upon settlement or exercise of
purchased futures contracts and written put options would exceed 25% of its
total assets; or (c) purchase call options if, as a result, the current
value of option premiums for call options purchased by the fund would
exceed 5% of the fund's total assets. These limitations do not apply to
options attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
The above limitations on the funds' investments in futures contracts and
options, and the funds' policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, may be
changed as regulatory agencies permit.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular options or futures contract
at any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for a fund to
enter into new positions or close out existing positions. If the secondary
market for a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable positions,
and potentially could require a fund to continue to hold a position until
delivery or expiration regardless of changes in its value. As a result, a
fund's access to other assets held to cover its options or futures
positions could also be impaired.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally
is purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the
right to sell the underlying currency.
The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above. The
funds may purchase and sell currency futures and may purchase and write
currency options to increase or decrease their exposure to different
foreign currencies. A fund may also purchase and write currency options in
conjunction with each other or with currency futures or forward contracts.
Currency futures and options values can be expected to correlate with
exchange rates, but may not reflect other factors that affect the value of
a fund's investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not protect a
fund against a price decline resulting from deterioration in the issuer's
creditworthiness. Because the value of a fund's foreign-denominated
investments changes in response to many factors other than exchange rates,
it may not be possible to match the amount of currency options and futures
to the value of the fund's investments exactly over time.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter (OTC) options (options not
traded on exchanges) generally are established through negotiation with the
other party to the option contract. While this type of arrangement allows
the funds greater flexibility to tailor an option to its needs, OTC options
generally involve greater credit risk than exchange-traded options, which
are guaranteed by the clearing organization of the exchanges where they are
traded.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a fund obtains
the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the fund pays
the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. The fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the fund will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. A fund may also terminate a put option position by closing it out in
the secondary market at its current price, if a liquid secondary market
exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When a fund writes a put option, it takes the
opposite side of the transaction from the option's purchaser. In return for
receipt of the premium, the fund assumes the obligation to pay the strike
price for the option's underlying instrument if the other party to the
option chooses to exercise it. When writing an option on a futures
contract, the fund will be required to make margin payments to an FCM as
described above for futures contracts. A fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option the fund has written, however, the
fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates a fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of a fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of a fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment).
Investments currently considered by a fund to be illiquid include
repurchase agreements not entitling the holder to payment of principal and
interest within seven days, non-government stripped fixed-rate
mortgage-backed securities, and over-the-counter options. Also, FMR may
determine some restricted securities, government-stripped fixed-rate
mortgage-backed securities, loans and other direct debt instruments,
emerging market securities, and swap agreements to be illiquid. However,
with respect to over-the-counter options a fund writes, all or a portion of
the value of the underlying instrument may be illiquid depending on the
assets held to cover the option and the nature and terms of any agreement
the fund may have to close out the option before expiration.
In the absence of market quotations, illiquid investments are priced at
fair value as determined in good faith by a committee appointed by the
Board of Trustees. If through a change in values, net assets, or other
circumstances, a fund were in a position where more than 15% of its net
assets was invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
INDEXED SECURITIES. Each fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, currencies,
precious metals or other commodities, or other financial indicators.
Indexed securities typically, but not always, are debt securities or
deposits whose value at maturity or coupon rate is determined by reference
to a specific instrument or statistic. Gold-indexed securities, for
example, typically provide for a maturity value that depends on the price
of gold, resulting in a security whose price tends to rise and fall
together with gold prices. Currency-indexed securities typically are
short-term to intermediate-term debt securities whose maturity values or
interest rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed
securities may be positively or negatively indexed; that is, their maturity
value may increase when the specified currency value increases, resulting
in a security that performs similarly to a foreign-denominated instrument,
or their maturity value may decline when foreign currencies increase,
resulting in a security whose price characteristics are similar to a put on
the underlying currency. Currency-indexed securities may also have prices
that depend on the values of a number of different foreign currencies
relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they
are indexed, and may also be influenced by interest rate changes in the
United States and abroad. At the same time, indexed securities are subject
to the credit risks associated with the issuer of the security, and their
values may decline substantially if the issuer's creditworthiness
deteriorates. Recent issuers of indexed securities have included banks,
corporations, and certain U.S. government agencies. Indexed securities may
be more volatile than the underlying instruments.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive order
issued by the SEC, each fund has received permission to lend money to, and
borrow money from, other funds advised by FMR or its affiliates. Interfund
loans and borrowings normally extend overnight, but can have a maximum
duration of seven days. Loans may be called on one day's notice. A fund
will lend through the program only when the returns are higher than those
available from other short-term instruments (such as repurchase
agreements), and will borrow through the program only when the costs are
equal to or lower than the cost of bank loans. A fund may have to borrow
from a bank at a higher interest rate if an interfund loan is called or not
renewed. Any delay in repayment to a lending fund could result in a lost
investment opportunity or additional borrowing costs.
ISSUER LOCATION. FMR determines where an issuer is located by looking at
such factors as its country of organization, the primary trading market for
its securities, and the location of its assets, personnel, sales, and
earnings. The issuer of a security is located in a particular country if:
1) the security is issued or guaranteed by the government of the country;
or 2) the issuer is organized under the laws of the country, derives at
least 50% of its revenues or profits from goods sold, investments made or
services performed in the country, or has at least 50% of its assets
located in the country.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other borrower
to lenders or lending syndicates (loans and loan participations), to
suppliers of goods or services (trade claims or other receivables), or to
other parties. Direct debt instruments are subject to each fund's policies
regarding the quality of debt securities.
Purchasers of loans and other forms of direct indebtedness depend primarily
upon the creditworthiness of the borrower for payment of principal and
interest. Direct debt instruments may not be rated by any nationally
recognized rating service. If a fund does not receive scheduled interest or
principal payments on such indebtedness, the fund's share price and yield
could be adversely affected. Loans that are fully secured offer a fund more
protections than an unsecured loan in the event of non-payment of scheduled
interest or principal. However, there is no assurance that the liquidation
of collateral from a secured loan would satisfy the borrower's obligation,
or that the collateral could be liquidated. Indebtedness of borrowers whose
creditworthiness is poor involves substantially greater risks and may be
highly speculative. Borrowers that are in bankruptcy or restructuring may
never pay off their indebtedness, or may pay only a small fraction of the
amount owed. Direct indebtedness of developing countries also involves a
risk that the governmental entities responsible for the repayment of the
debt may be unable, or unwilling, to pay interest and repay principal when
due.
Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks to a fund.
For example, if a loan is foreclosed, the fund could become part owner of
any collateral, and would bear the costs and liabilities associated with
owning and disposing of the collateral. In addition, it is conceivable that
under emerging legal theories of lender liability, the fund could be held
liable as a co-lender. Direct debt instruments may also involve a risk of
insolvency of the lending bank or other intermediary. Direct debt
instruments that are not in the form of securities may offer less legal
protection to a fund in the event of fraud or misrepresentation. In the
absence of definitive regulatory guidance, each fund relies on FMR's
research in an attempt to avoid situations where fraud or misrepresentation
could adversely affect the fund.
A loan is often administered by a bank or other financial institution that
acts as agent for all holders. The agent administers the terms of the loan,
as specified in the loan agreement. Unless, under the terms of the loan or
other indebtedness, each fund has direct recourse against the borrower, it
may have to rely on the agent to apply appropriate credit remedies against
a borrower. If assets held by the agent for the benefit of a fund were
determined to be subject to the claims of the agent's general creditors,
the fund might incur certain costs and delays in realizing payment on the
loan or loan participation and could suffer a loss of principal or
interest.
Direct indebtedness purchased by each fund may include letters of credit,
revolving credit facilities, or other standby financing commitments
obligating the fund to pay additional cash on demand. These commitments may
have the effect of requiring the fund to increase its investment in a
borrower at a time when it would not otherwise have done so, even if the
borrower's condition makes it unlikely that the amount will ever be repaid.
Each fund will set aside appropriate liquid assets in a segregated
custodial account to cover its potential obligations under standby
financing commitments.
Each fund limits the amount of total assets that it will invest in any one
issuer or in issuers within the same industry (see limitations (i) and (6)
for Short-Term World Bond, and (i) and (4) for Global Bond and New Markets
Income. For purposes of these limitations, each fund generally will treat
the borrower as the "issuer" of indebtedness held by the fund. In the case
of loan participations where a bank or other lending institution serves as
financial intermediary between each fund and the borrower, if the
participation does not shift to the fund the direct debtor-creditor
relationship with the borrower, SEC interpretations require the fund, in
appropriate circumstances, to treat both the lending bank or other lending
institution and the borrower as "issuers" for these purposes. Treating a
financial intermediary as an issuer of indebtedness may restrict a fund's
ability to invest in indebtedness related to a single financial
intermediary, or a group of intermediaries engaged in the same industry,
even if the underlying borrowers represent many different companies and
industries.
LOWER-QUALITY DEBT SECURITIES. While the market for high-yield corporate
debt securities has been in existence for many years and has weathered
previous economic downturns, the 1980s brought a dramatic increase in the
use of such securities to fund highly leveraged corporate acquisitions and
restructurings. Past experience may not provide an accurate indication of
the future performance of the high-yield bond market, especially during
periods of economic recession.
The market for lower-quality debt securities may be thinner and less active
than that for higher-quality debt securities, which can adversely affect
the prices at which the former are sold. If market quotations are not
available, lower-quality debt securities will be valued in accordance with
procedures established by the Board of Trustees, including the use of
outside pricing services. Judgment plays a greater role in valuing
high-yield corporate debt securities than is the case for securities for
which more external sources for quotations and last-sale information are
available. Adverse publicity and changing investor perceptions may affect
the ability of outside pricing services to value lower-quality debt
securities and a fund's ability to dispose of these securities.
Since the risk of default is higher for lower-quality debt securities,
FMR's research and credit analysis are an especially important part of
managing securities of this type held by a fund. In considering investments
for the fund, FMR will attempt to identify those issuers of high-yielding
securities whose financial condition is adequate to meet future
obligations, has improved, or is expected to improve in the future. FMR's
analysis focuses on relative values based on such factors as interest or
dividend coverage, asset coverage, earnings prospects, and the experience
and managerial strength of the issuer.
Each fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security holder
to seek to protect the interests of security holders if it determines this
to be in the best interest of the fund's shareholders.
MORTGAGE-BACKED SECURITIES. The funds may purchase mortgage-backed
securities issued by government and non-government entities such as banks,
mortgage lenders, or other financial institutions. A mortgage-backed
security is an obligation of the issuer backed by a mortgage or pool of
mortgages or a direct interest in an underlying pool of mortgages. Some
mortgage-backed securities, such as collateralized mortgage obligations or
CMOs, make payments of both principal and interest at a variety of
intervals; others make semiannual interest payments at a predetermined rate
and repay principal at maturity (like a typical bond). Mortgage-backed
securities are based on different types of mortgages including those on
commercial real estate or residential properties. Other types of
mortgage-backed securities will likely be developed in the future, and the
funds may invest in them if FMR determines they are consistent with the
funds' investment objective and policies.
The value of mortgage-backed securities may change due to shifts in the
market's perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities market as a whole. Non-government
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
government issues. Mortgage-backed securities are subject to prepayment
risk. Prepayment, which occurs when unscheduled or early payments are made
on the underlying mortgages, may shorten the effective maturities of these
securities and may lower their total returns.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to sell that security back to the
original seller at an agreed-upon price. The resale price reflects the
purchase price plus an agreed-upon incremental amount which is unrelated to
the coupon rate or maturity of the purchased security. To protect the fund
from the risk that the original seller will not fulfill its obligation, the
securities are held in an account of the fund at a bank, marked-to-market
daily, and maintained at a value at least equal to the sale price plus the
accrued incremental amount. While it does not presently appear possible to
eliminate all risks from these transactions (particularly the possibility
that the value of the underlying security will be less than the resale
price, as well as delays and costs to a fund in connection with bankruptcy
proceedings), it is each fund's current policy to engage in repurchase
agreement transactions with parties whose creditworthiness has been
reviewed and found satisfactory by FMR.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a fund may be obligated to pay all or part of the
registration expense and a considerable period may elapse between the time
it decides to seek registration and the time it may be permitted to sell a
security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, a fund might obtain a
less favorable price than prevailed when it decided to seek registration of
the security.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement. A
fund will enter into reverse repurchase agreements only with parties whose
creditworthiness has been found satisfactory by FMR. Such transactions may
increase fluctuations in the market value of the fund's assets and may be
viewed as a form of leverage.
SECURITIES LENDING. A fund may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange and
a subsidiary of FMR Corp.
Securities lending allows a fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there may be
delays in the recovery of loaned securities, or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be
made only to parties deemed by FMR to be of good standing. Furthermore,
they will only be made if, in FMR's judgment, the consideration to be
earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC Staff that a fund
may engage in loan transactions only under the following conditions: (1)
the fund must receive 100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or notes) from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of
the collateral; (3) after giving notice, the fund must be able to terminate
the loan at any time; (4) the fund must receive reasonable interest on the
loan or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest, or other distributions on the securities loaned and to
any increase in market value; (5) the fund may pay only reasonable
custodian fees in connection with the loan; and (6) the Board of Trustees
must be able to vote proxies on the securities loaned, either by
terminating the loan or by entering into an alternative arrangement with
the borrower.
Cash received through loan transactions may be invested in any security in
which a fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
SOVEREIGN DEBT OBLIGATIONS. Each fund may purchase sovereign debt
instruments issued or guaranteed by foreign governments or their agencies,
including debt of Latin American nations or other developing countries.
Sovereign debt may be in the form of conventional securities or other types
of debt instruments such as loans or loan participations. sovereign debt of
developing countries may involve a high degree of risk, and my be in
default or present the risk of default. Governmental entities responsible
for repayment of the debt may be unable or unwilling to repay principal and
interest when due, and may require renegotiation or rescheduling of debt
payments. In addition, prospects for repayment of principal and interest
may depend on political as well as economic factors.
STRIPPED MORTGAGE-BACKED SECURITIES are created when a U.S. government
agency or a financial institution separates the interest and principal
components of a mortgage-backed security and sells them as individual
securities. The holder of the "principal-only" security (PO) receives the
principal payments made by the underlying mortgage-backed security, while
the holder of the "interest-only" security (IO) receives interest payments
from the same underlying security.
The prices of stripped mortgage-backed securities may be particularly
affected by changes in interest rates. As interest rates fall, prepayment
rates tend to increase, which tends to reduce prices of IOs and increase
prices of POs. Rising interest rates can have the opposite effect.
SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of different types of
investments or market factors. Depending on their structure, swap
agreements may increase or decrease a fund's exposure to long- or
short-term interest rates (in the United States or abroad), foreign
currency values, mortgage securities, corporate borrowing rates, or other
factors such as security prices or inflation rates. Swap agreements can
take many different forms and are known by a variety of names. A fund is
not limited to any particular form of swap agreement if FMR determines it
is consistent with the fund's investment objective and policies.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains the
right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines elements
of buying a cap and selling a floor.
Swap agreements will tend to shift a fund's investment exposure from one
type of investment to another. For example, if the fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease the fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and interest rates. For example,
if the fund agreed to pay fixed rates in exchange for floating rates while
holding fixed-rate bonds, the swap would tend to decrease the fund's
exposure to long-term interest rates. Caps and floors have an effect
similar to buying or writing options. Depending on how they are used, swap
agreements may increase or decrease the overall volatility of a fund's
investments and its share price and yield.
The most significant factor in the performance of swap agreements is the
change in the specific interest rate, currency, or other factors that
determine the amounts of payments due to and from a fund. If a swap
agreement calls for payments by the fund, the fund must be prepared to make
such payments when due. In addition, if the counterparty's creditworthiness
declined, the value of a swap agreement would be likely to decline,
potentially resulting in losses. Each fund expects to be able to eliminate
its exposure under swap agreements either by assignment or other
disposition, or by entering into an offsetting swap agreement with the same
party or a similarly creditworthy party.
Each fund will maintain appropriate liquid assets in a segregated custodial
account to cover its current obligations under swap agreements. If a fund
enters into a swap agreement on a net basis, it will segregate assets with
a daily value at least equal to the excess, if any, of the fund's accrued
obligations under the swap agreement over the accrued amount the fund is
entitled to receive under the agreement. If a fund enters into a swap
agreement on other than a net basis, it will segregate assets with a value
equal to the full amount of the fund's accrued obligations under the
agreement.
VARIABLE OR FLOATING RATE OBLIGATIONS bear variable or floating interest
rates and carry rights that permit holders to demand payment of the unpaid
principal balance plus accrued interest from the issuers or certain
financial intermediaries. Floating rate instruments have interest rates
that change whenever there is a change in a designated base rate while
variable rate instruments provide for a specified periodic adjustment in
the interest rate. These formulas are designed to result in a market value
for the instrument that approximates its par value.
WARRANTS. Warrants are securities that give a fund the right to purchase
equity securities from the issuer at a specific price (the strike price)
for a limited period of time. The strike price of warrants typically is
much lower than the current market price of the underlying securities, yet
they are subject to similar price fluctuations. As a result, warrants may
be more volatile investments than the underlying securities and may offer
greater potential for capital appreciation as well as capital loss.
Warrants do not entitle a holder to dividends or voting rights with respect
to the underlying securities and do not represent any rights in the assets
of the issuing company. Also, the value of the warrant does not necessarily
change with the value of the underlying securities and a warrant ceases to
have value if it is not exercised prior to expiration date. These factors
can make warrants more speculative than other types of investments.
ZERO COUPON BONDS. Zero coupon bonds do not make interest payments;
instead, they are sold at a deep discount from their face value and are
redeemed at face value when they mature. Because zero coupon bonds do not
pay current income, their prices can be very volatile when interest rates
change. In calculating its dividends, a fund takes into account as income a
portion of the difference between a zero coupon bond's purchase price and
its face value.
A broker-dealer creates a DERIVATIVE ZERO by separating the interest and
principal components of a U.S. Treasury security and selling them as two
individual securities. CATS (Certificates of Accrual on Treasury
Securities), TIGRs (Treasury Investment Growth Receipts), and TRs (Treasury
Receipts) are examples of derivative zeros.
The Federal Reserve Bank creates STRIPS (Separate Trading of Registered
Interest and Principal of Securities) by separating the interest and
principal components of an outstanding U.S. Treasury bond and selling them
as individual securities. Bonds issued by the Resolution Funding
Corporation (REFCORP) and the Financing Corporation (FICO) can also be
separated in this fashion. ORIGINAL ISSUE ZEROS are zero coupon securities
originally issued by the U.S. government, a government agency, or a
corporation in zero coupon form.
SPECIAL CONSIDERATIONS AFFECTING EUROPE
New developments surrounding the creation of a unified common market in
Europe have helped to reduce physical and economic barriers promoting the
free flow of goods and services throughout Western Europe. These new
developments could make this new unified market one of the largest in the
world. However, in 1993 Europe's economies began to slow and subsequently
slid into recession as tight monetary conditions and a lack of progress
toward inflation convergence and budgetary consolidation in many countries
weakened consumer and business confidence. More generally, the turbulence
in foreign exchange markets since the middle of 1992 and escalating
tensions over trade contributed to increased uncertainty in many countries.
The U.S. dollar continued on its downward track with respect to both the
German mark and many other of Europe's currencies such as the Italian lira,
the Spanish peseta and the Swedish krona which have been affected by
political uncertainties and fiscal problems.
Subsequently, Europe's economies began to improve in 1995 as continued
growth in the United States and the Southeast Asian countries provided the
foundation for an export-led recovery. This recovery was aided by a sharp
rebound of the U.S. dollar after reaching postwar lows in the spring of
1995.
The Eastern European countries, after several years of declining output,
have generally shown dramatic growth in 1994 and 1995. Despite formidable
obstacles and major differences among countries and regions, many nations
are making substantial progress in their efforts to become market-oriented
economies. However, these economies are becoming increasingly disparate and
the experience of countries in the region varies markedly. Those nations
making the most successful transitions include Poland, the Czech Republic,
and Hungary, while some of the former Soviet republics continue to suffer
from the consequences of the break-up of the Union and have not made much
progress in implementing effective market oriented reforms. Key aspects of
the reform and stabilization efforts have not yet been fully implemented,
and there remain risks of policy slippage. In the Russian Federation and
most other countries of the former Soviet Union, economic conditions are of
particular concern because of economic instability due to political unrest
and armed conflicts in many regions.
Notwithstanding the continued economic difficulties in many countries,
recent positive developments offer hope for a cooperative growth strategy
in the near term, which could also permit a strengthening of global
economic performance over the medium term. Many developing countries are
reaping the fruits of sustained reform and stabilization efforts. Efforts
to enhance assistance to countries affected by the transition to
market-based trading systems occurring in central Europe and the former
Soviet Union, and to low-income countries to support strengthened
stabilization and restructuring efforts, are moving forward. In Europe,
exchange market tensions have eased, interest rates have been falling and
may continue to do so as evidence accumulates of the waning of inflationary
pressures.
The European Community (EC) consists of Belgium, Denmark, France, Germany,
Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, and the
United Kingdom (the member states). In 1986, the member states of the EC
signed the "Single European Act", an agreement committing these countries
to the establishment of a market among themselves, unimpeded by internal
barriers or hindrances to the free movement of goods, persons, services, or
capital. To meet this goal, a series of directives have been issued to the
member states. Compliance with these directives is designed to eliminate
three principal categories of barriers: (1) physical frontiers, such as
customs posts and border controls; (2) technical barriers (which include
restrictions operating within national territories) such as regulations and
norms for goods and services (product standards); discrimination against
foreign bids (bids by other EC members) on public purchases; or
restrictions on foreign requests to establish subsidiaries; and (3) fiscal
frontiers, notably the need to levy value-added taxes, tariffs, or excises
on goods or services imported from other EC states.
The ultimate goal of this project is to achieve a large unified domestic
European market in which available resources would be more efficiently
allocated through the elimination of the above-mentioned barriers and the
added costs associated with those barriers. Elimination of these barriers
would simplify product distribution networks, allow economies of scale to
be more readily achieved, and free the flow of capital and other resources.
The Maastricht Treaty on economic and monetary union (EMU) attempts to
provide its members with a stable monetary framework consistent with the
EC's broad economic goals. But until the EMU takes effect, which is
intended to occur between 1997 and 1999, the community will face the need
to reinforce monetary cooperation in order to reduce the risk of a
recurrence of tensions between domestic and external policy objectives.
The total European market, as represented by both EC and non-EC countries,
consists of over 370 million consumers, making it larger currently than
either the United States or Japanese markets. European businesses compete
nationally and internationally in a wide range of industries including:
telecommunications and information services, roads and transportation,
building materials, food and beverages, broadcast and media, financial
services, electronics, and textiles. Actual and anticipated actions on the
part of member states to conform to the unified Europe directives have
prompted interest and activity not only by European firms, but also by
foreign entities anxious to establish a presence in Europe that will result
from these changes. Indications of the effect of this response to a unified
Europe can be seen in the areas of mergers and acquisitions, corporate
expansion and development, GNP growth, and national stock market activity.
The early experience of the former centrally planned economies has already
demonstrated the crucially important link between structural reforms,
macroeconomic stabilization, and successful economic transformation. Among
the central European countries, the Czech Republic, Hungary, and Poland
have made the greatest progress in structural reform; inflationary
pressures there have abated following price liberalization, and output has
begun to recover. These achievements will be difficult to sustain, however,
in the absence of strong efforts to contain the large fiscal deficits that
have accompanied the considerable losses of output and tax revenue since
the start of the reform process.
In the Baltic countries there are encouraging signs that reforms are taking
hold and are being supported by strong stabilization efforts. In most other
countries of the former Soviet Union, in contrast, inadequate stabilization
efforts now threaten to lead to hyper-inflation, which could derail the
reform process. Inflation, which had abated following the immediate impact
of price liberalization in early 1992, surged to extremely high levels in
late 1992 and early 1993. The main reason for this development has been
excessive credit expansion to the government and to state enterprises. The
transformation process is being seriously hampered by the widespread
subsidization of inefficient enterprises and the resulting misallocation of
resources. The lack of effective economic and monetary cooperation among
the countries of the former Soviet Union exacerbates other problems by
severely constraining trade flows and impeding inflation control. Partly as
a result of these difficulties, some countries have decided that the
introduction of separate currencies offers the best scope for avoiding
hyper-inflation and for improving economic conditions. This development can
facilitate the implementation of stronger stabilization programs. Economic
conditions in the former Soviet Union have continued to deteriorate. Real
GDP in Russia fell 11.9 percent in 1993, after an 18 percent decline in
1992. In many other countries of the region, output losses have been even
larger. These declines reflect the adjustment difficulties during the early
stages of the transition, high rates of inflation, the compression of
imports, disruption in trade among the countries of the former Soviet
Union, and uncertainties about the reform process itself. Large-scale
subsidies are delaying industrial restructuring and are exacerbating the
fiscal situation. A reversal of these adverse factors is not anticipated in
the near term and output is expected to decline further in most of these
countries.
Economic conditions appear to have improved for some of the transition
economies of central Europe during the past year. Following three
successive years of output declines, there has been a turnaround in the
former Czech and Slovak Federal Republic, Hungary and Poland: growth in
private sector activity and strong exports, especially to Western Europe,
now appear to have contained the fall in output. Most central European
countries in transition have achieved positive real growth in 1994 and
early 1995 as market reform has deepened. The strength of the projected
output gains will depend crucially on the ability of the reforming
countries to contain fiscal deficits and inflation and on their continued
access to, and success in, export markets. A number of their governments,
including those of Hungary, and Poland, are currently implementing or
considering reforms directed at political and economic liberalization,
including efforts to foster multi-party political systems, decentralize
economic planning, and move toward free market economies. At present, no
Eastern European country has developed stock markets but Poland, Hungary
and the Czech Republic have small securities markets in operation. Ethnic
and civil conflict continued to rate throughout the former Yugoslavia. The
outcome is uncertain.
Both the EC and Japan, among others, have made overtures to establish
trading arrangements and assist in the economic development of the Eastern
European nations. In the rest of Europe, monetary policy and financial
market developments have been dominated by the currency turmoil that began
in September 1992. At the same time, conditions are improving for
significant reductions of official interest rates in Europe, which should
help to contain recessionary forces and provide support to the overall
economic recovery in the region by early 1996. With the passage of the
General Agreement on Trade and Tariffs (GATT) earlier this year, Europe has
taken a step forward to resist protectionist pressures. Interest rates
continue to decline, but some countries' tight monetary conditions remain
an obstacle to stronger growth and a threat to exchange market stability.
However, in the long-term, economic unification of Europe could prove to be
an engine for domestic and international growth.
The conditions that have given rise to these developments are changeable,
and there is no assurance that reforms will continue or that their goals
will be achieved.
REAL GDP ANNUAL RATE OF GROWTH
199 4
Denmark 4.4%

France 2.9

Germany 2.9

Italy 2.2

Netherlands 2.5

Spain 2.0

Switzerland 1.2

United Kingdom 3.8

Source: World Economic Outlook, October 1995
(Figures are quoted based on each country's domestic currency.)
NATIONAL INDICES (WITHOUT DIVIDENDS) DECEMBER 1995
GROWTH IN U.S. DOLLARS
EUROPE
6 months 12 months 5 years

Greece -2.98% 10.20% -5.84%

Portugal -5.03 -2.50 0.46

Turkey -34.78 -5.90 -11.98

Source: Randal Helms
SPECIAL CONSIDERATIONS AFFECTING JAPAN, THE PACIFIC BASIN, AND SOUTHEAST
ASIA
Many Asian countries may be subject to a greater degree of social,
political and economic instability than is the case in the United States
and Western European countries. Such instability may result from (i)
authoritarian governments or military involvement in political and economic
decision-making; (ii) popular unrest associated with demands for improved
political, economic, and social conditions; (iii) internal insurgencies;
(iv) hostile relations with neighboring countries; and (v) ethnic,
religious, and racial disaffection.
The economies of most of the Asian countries continue to depend heavily
upon international trade and are accordingly affected by protective trade
barriers and the economic conditions of their trading partners,
principally, the United States, Japan, China and the European Community.
The enactment by the United States or other principal trading partners of
projectionist trade legislation, reduction of foreign investment in the
local economies, and general declines in the international securities
markets could have significant adverse effects upon the securities markets
of the Asian countries.
The success of market reforms, a surge in infrastructure spending have
fueled rapid growth in many developing countries in Asia. Rapidly rising
household incomes have fostered large middle classes and new waves of
consumer spending. Increases in infrastructure spending and consumer
spending have made domestic demand the growth engine for these countries.
Thus their growth now depends less upon exports to OECD countries. While
exports may no longer be the sole source of growth for developing
economies, improved competitiveness in exports markets has contributed to
growth in many of these nations. The increased productivity of many Asian
countries has enabled them to achieve, or continue, their status as top
exporters while improving their national living standards.
Thailand has one of the fastest-growing stock markets in the world. The
manufacturing sector is becoming increasingly sophisticated and is
benefiting from export-oriented investing. The manufacturing and service
sectors continue to account for the bulk of Thailand's economic growth. The
agricultural sector continues to become less important. The government has
followed fairly sound fiscal and monetary policies, aided by increased tax
receipts from a fast moving economy. The government also continues to move
ahead with new projects - especially telecommunications, roads and port
facilities - needed to refurbish the country's overtaxed infrastructure.
The country enjoys an able bureaucracy, which has maintained economic
policy during the country's many coups. In recent years, the risk of a coup
has diminished, but corruption remains widespread.
In terms of GDP, industrial standards and level of education, South Korea
is second only to Japan in Asia. It enjoys the benefits of a diversified
economy with well-developed sectors in electronics, automobiles, textiles
and shoe manufacture, steel and shipbuilding among others. The driving
force behind the economy's dynamic growth has been the planned development
of an export-oriented economy in a vigorously entrepreneurial society. Real
GDP grew about 8.3% in 1994. Both Koreas joined the United Nations
separately in late 1991, creating another forum for negotiation and joint
cooperation. Reunification of North Korea and South Korea could have a
detrimental effect on the economy of South Korea.
Indonesia is a mixed economy with many socialist institutions and central
planning but with a recent emphasis on deregulation and private enterprise.
Like Thailand, Indonesia has extensive natural wealth yet with a large and
rapidly increasing population. Dependent on oil exports during the 1980s,
its manufactured products now predominate, contributing 21% of GDP.
Indonesia's development is progressing smoothly, and it has become the
world's 12 largest economy.
Malaysia has one of the fastest-growing economies in the Asian-Pacific
region. Malaysia has become the world's third-largest producer of
semiconductor devices (after the U.S. and Japan) and the world's largest
exporter of semiconductor devices. More remarkable is the country's ability
to achieve rapid economic growth with relative price stability as the
government followed prudent fiscal/monetary policies. Malaysia's high
export dependence level leaves it vulnerable to a recession in the
Organization for Economic Cooperation and Development countries or a fall
in world commodity prices.
Singapore has an open entrepreneurial economy with strong service and
manufacturing sectors and excellent international trading links derived
from its history. During the 1970s and the early 1980s the economy expanded
rapidly, achieving an average annual growth rate of 9%. Per capita GDP is
among the highest in Asia. Singapore holds a position as a major oil
refining and services center.
Japan currently has the second-largest GDP in the world. The Japanese
economy has grown substantially over the last three decades. Its growth
rate averaged over 5% in the 1970s and 1980s. However in 1994, the growth
rate in Japan slowed to 0.6% and their budget showed a deficit of 7.8% of
GDP. Despite small rallies and market gains Japan has been plagued with
economic sluggishness. Economic conditions have weakened considerably in
Japan since October 1992. The boom in Japan's equity and property markets
during the expansion of the late 1980's supported high rates of investment
and consumer spending on durable goods, but both of these components of
demand have now retreated sharply following the decline in asset prices. It
is suffering through its worst recession in two decades. Profits have
fallen sharply, unemployment has reached a historical high of 3.2% and
consumer confidence is low. The banking sector continues to suffer from
non-performing loans. Nine discount rate cuts since its 6% peak in 1991, a
succession of fiscal stimulus packages, support plans for the debt-burdened
financial system and spending for reconstruction following the Kobe
earthquake should help to contain the recessionary forces, but substantial
uncertainties remain. The general government position has deteriorated as a
result of weakening economic growth, as well as stimulative measures taken
recently to support economic activity and to restore financial stability.
In addition to a cyclical downturn, Japan is suffering through structural
adjustments. Like the Europeans, the Japanese have seen a deterioration of
their competitiveness due to high wages, a strong currency and structural
rigidities. Japan has also become a mature industrial economy and, as a
result, will see its long-term growth rate slow down over the next ten
years. Finally, Japan is reforming its political process and deregulating
its economy. This has brought about turmoil, uncertainty and a crisis of
confidence.
Japan is heavily dependent upon international trade and, accordingly, has
been and may continue to be adversely affected by trade barriers and other
protectionist or retaliatory measures of, as well as economic conditions in
the U.S. and other countries with which they trade. Industry, the most
important sector of the economy is heavily dependent on imported raw
materials and fuels. Japan's major industries are in the engineering,
electrical, textile, chemical, automobile, fishing, and telecommunication
fields. Japan imports iron ore, copper, and many forest products. Only 19%
of its land is suitable for cultivation. Japan's agricultural economy is
subsidized and protected. It is about 50% self-sufficient in food
production. Even though Japan produces a minute rice surplus, it is
dependent upon large imports of wheat, sorghum and soybeans from other
countries. Japan's high volume of exports such as automobiles, machine
tools and semiconductors have caused trade tensions with other countries,
particularly the United States. Some trading agreements between the
countries have reduced the friction caused by the current trade imbalance.
A record high value of the yen in first half of 1995 threatened to derail
Japan's recovery from a long economic downturn, mainly because it made
Japanese products more expensive overseas and eroded the value of foreign
earnings when repatriated to Japan. However, the recent ease of the yen has
created expectations that Japanese earnings will improve for the fiscal
year ending March 1996.
Australia has a prosperous Western-style capitalist economy, with a per
capita GDP comparable to levels in industrialized Western European
countries. Economic growth accelerated markedly in 1994 as robust domestic
spending boosted activity. It is rich in natural resources and is the
world's largest exporter of beef and wool, second-largest for mutton, and
it is among the top wheat exporters. Australia is also a major exporter of
minerals, metals and fossil fuels. Due to the nature of its exports, a
downturn in world commodity prices can have a big impact on its economy.
EMERGING MARKETS: ASIA
MARKET CAPITALIZATION (ESTIMATES) IN U.S. DOLLARS
DECEMBER 1995
Billions:

India $132,466

Indonesia 69,970

Korea 184,085

Malaysia n/a

Pakistan 9,830

Philippines 53,633

Sri Lanka 1,937

Taiwan 179,421

Thailand 135,755

Source: Morgan Stanley Capital International (MSCI)
NATIONAL INDICES (WITHOUT DIVIDENDS) DECEMBER 1995
GROWTH IN U.S. DOLLARS
ASIA
6 months 12 months 5 years

India -16.29% -31.90% n/a

Indonesia -0.45 7.49 -3.61%

Korea -1.42 -4.63 4.52

Malaysia -5.66 3.96 15.29

Pakistan -19.38 -38.27 n/a

Philippines -13.37 -15.43 36.29

Sri Lanka -14.36 -32.66 n/a

Taiwan -9.05 -30.24 -5.11

Thailand -8.68 -5.66 20.62

Source: MSCI
ASIAN STOCK MARKET RETURNS (WITHOUT DIVIDENDS)
DECEMBER 199 5
Stock market returns

(Local currency %)

12 months to December 31, 1995

China n/a

Hong Kong 18.15%

India -23.70

Indonesia 11.81

Japan 3.41

Korea -6.17

Malaysia 3.39

Philippines -9.09

Singapore 1.90

Taiwan -27.59

Thailand -5.34

Source: MSCI
REAL GDP ANNUAL RATE OF GROWTH 199 4
China 11.5%

Hong Kong 5.7

India 4.9

Indonesia 7.3

Japan 0.5

Korea 8.4

Malaysia 8.7

Philippines 4.3

Singapore n/a

Taiwan 6.5

Thailand 8.5

Source: World Economic Outlook , October 1995
SPECIAL CONSIDERATIONS AFFECTING CANADA
Canada occupies the northern part of North America and is the
second-largest country in the world (3.97 million square miles in area)
extending from the Atlantic Ocean to the Pacific. The companies in which
the fund may invest may include those involved in the energy industry,
industrial materials (chemicals, base metals, timber, and paper), and
agricultural materials (grain cereals). The securities of companies in the
energy industry are subject to changes in value and dividend yield which
depend, to a large extent, on the price and supply of energy fuels. Rapid
price and supply fluctuations may be caused by events relating to
international politics, energy conservation, and the success of exploration
projects. Canada is one of the world's leading industrial countries, as
well as a major exporter of agricultural products. Canada is rich in
natural resources such as zinc, uranium, nickel, gold, silver, aluminum,
iron, and copper. Forest covers over 44% of its land area, making Canada a
leading world producer of newsprint. The economy of Canada is strongly
influenced by the activities of companies and industries involved in the
production and processing of natural resources. Canada is a major producer
of hydroelectricity, oil, and gas. The business activities of companies in
the energy field may include the production, generation, transmission,
marketing, control, or measurement of energy or energy fuels. Economic
prospects are changing due to recent government attempts to reduce
restrictions against foreign investment.
Canadian securities are not considered by FMR to have the same level of
risk as other nation's securities. Canadian and U.S. companies are
generally subject to similar auditing and accounting procedures, and
similar government supervision and regulation. Canadian markets are more
liquid than many other foreign markets and share similar characteristics
with U.S. markets. The political system is more stable than in some other
foreign countries, and the Canadian dollar is generally less volatile
relative to the U.S. dollar.
Many factors affect and could have an adverse impact on the financial
condition of Canada, including social, environmental, and economic
conditions; factors which are not within the control of Canada. In Canada,
where recovery is not yet as firmly established as in the United States,
interest rates have been coming down after a sharp rise associated with
exchange market developments in the fall of 1992. In light of the cyclical
situation, there should be room for a further easing of interest rates
without jeopardizing the progress made toward price stability. Continued
perseverance in reducing the structural budget deficit also is required.
FMR is unable to predict what effect, if any, such factors would have on
instruments held in the fund's portfolio.
The U.S. - Canada Free Trade Agreement which became effective in January
1989, will be phased in over a period of 10 years. This agreement will
remove tariffs on U.S. technology and Canadian agricultural products in
addition to removing trade barriers affecting other important sectors of
each country's economy. Canada, the U.S. and Mexico have implemented the
North American Free Trade Agreement which was entered into in 1994. This
cooperation is expected to lead to increased trade and to reduce barriers.
The majority of new equity issues or initial public offerings in Canada are
through underwritten offerings. The funds may elect to participate in these
issues.
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICA
Latin America is a region rich in natural resources such as oil, copper,
tin, silver, iron ore, forestry, fishing, livestock, and agriculture. The
region has a large population (over 300 million) representing a large
domestic market. The region has been transitional over the last five years
from the stagnant 1980s which were characterized by poor economic policies,
higher international interest rates, and limited access to new foreign
capital.
High inflation and low economic growth have given way to stable manageable
inflation rates and higher economic growth. Changes in political
leadership, the implementation of market-oriented economic policies, such
as privatization, trade reform and monetary reform have been among the
recent steps taken to modernize the Latin American economies and to
regenerate growth in the region. Various trade agreements have also been
formed within the region such as the Andean Pact, Mercosur and the North
America Free Trade Agreement (NAFTA). The largest of these is NAFTA, which
was implemented on January 1, 1994.
Latin American equity markets can be extremely volatile and in the past
have shown little correlation with the U.S. market. Currencies are
typically weak, but most are now relatively free floating, and it is not
unusual for the currencies to undergo wide fluctuations in value over short
periods of time due to changes in the market.
Mexico's economy has been transformed significantly over the last 6-7
years. In the past few years the government has sold the telephone company,
the major steel companies, the banks and many others. The major state
ownership remaining is in the oil sector and the electricity sector. The
U.S. is Mexico's major trading partner, accounting for two-thirds of its
exports and imports. The government, in consultation with international
economic agencies, is implementing programs to stabilize the economy and
foster growth. For example, Mexico, the U.S. and Canada implemented the
North American Free Trade Agreement. This cooperation is expected to lead
to increased trade and reduced barriers.
In the early 1980s Mexico experienced a foreign debt crisis. By 1987,
foreign debt had reached prohibitive levels, accounting for 90 to 95
percent of GDP, thus draining Mexico of all its resources. By the end of
1994, a large current account deficit, fueled in part by expansionary
policy, and the burden of its large national debt forced the Mexican
government to devalue the peso, triggering a severe crisis of confidence.
Both the crisis and the measures taken to stabilize the economy since, have
led to severely reduced domestic demand, which has been only partially
offset by positive trade-related activity.
Brazil entered the 1990s with declining real growth, runaway inflation, an
unserviceable foreign debt of $122 billion, and a lack of policy direction.
Over the past two years, Brazil was able to stabilize its domestic economy
through a relentless process of balancing the government budget, the
privatization of state enterprises, deregulation and reduction of red tape
and introducing greater competition in the domestic business environment.
Inflation has been reduced to about 3% a month from 50% a month since mid
1994. A major long-run strength is Brazil's natural resources. Iron ore,
bauxite, tin, gold, and forestry products make up some of Brazil's basic
natural resource base, which includes some of the largest mineral reserves
in the world. In terms of population, Brazil is the sixth-largest in the
world with about 155 million people and represents a huge domestic market.
Chile, like Brazil, is endowed with considerable mineral resources, in
particular copper. Economic reform has been ongoing in Chile for at least
15 years, but political democracy has only recently returned to Chile.
Privatization of the public sector beginning in the early 1980s has
bolstered the equity market. A well organized pension system has created a
long-term domestic investor base.
Argentina is strong in wheat production and other foodstuffs and livestock
ranching. A well-educated and skilled population boasts one of the highest
literacy rates in the region. The country has been ravaged by decades of
extremely high inflation and political instability. Thanks to structural
reforms, the revitalized Argentine economy has been among the top three
fastest growing economies in the world over the last three years. The newly
created Argentine economic institutions have integrated the country with
the rest of the world, leaving the state to concentrate on its essential
functions. Privatization is ongoing and should reduce the amount of
external debt outstanding. The markets for labor, capital and goods and
services have been de-regulated. Nearly all non-tariff barriers and export
taxes have been eliminated, the tariff structure simplified and tariffs
sharply reduced.
Venezuela has substantial oil reserves. External debt is being
renegotiated, and the government is implementing economic reform in order
to reduce the size of the public sector. Internal gasoline prices, which
are one-third those of international prices, are being increased in order
to reduce subsidies. Plans for privatization and exchange and interest rate
liberalization are examples of recently introduced reforms.
EMERGING MARKETS: LATIN AMERICA
MARKET CAPITALIZATION IN U.S. DOLLARS
(ESTIMATED) DECEMBER 1994
Billions:

Argentina $37,909

Brazil 148,910

Chile 72,969

Colombia 10,134

Mexico 97,384

Peru 10,847

Venezuela 4,001

Source: MSCI
NATIONAL INDICES (WITHOUT DIVIDENDS) DECEMBER 199 5
GROWTH IN U.S. DOLLARS
LATIN AMERICA
6 months 12 months 5 years

Argentina 16.51% 8.66% 31.23%

Brazil 1.10 -21.29 45.33

Chile -16.51 -6.17 33.35

Colombia -20.86 -27.76 n/a

Mexico 3.40 -23.18 11.94

Peru 9.60 22.11 n/a

Venezuela -17.07 -28.52 n/a

Source: MSCI
SPECIAL CONSIDERATIONS AFFECTING AFRICA
Africa is a continent of roughly 50 countries with a total population of
approximately 840 million people. Literacy rates (the percentage of people
who are over 15 years of age and who can read and write) are relatively
low, ranging from 20% to 60%. The primary industries include crude oil,
natural gas, manganese ore, phosphate, bauxite, copper, iron, diamond,
cotton, coffee, cocoa, timber, tobacco, sugar, tourism, and cattle.
Many of the countries are fraught with political instability. However,
there has been a trend over the past five years toward democratization.
Still, there remain many countries that do not have a stable political
process. Other countries have been enmeshed in civil wars and border
clashes.
Economically, the Northern Rim countries (including Morocco, Egypt, and
Algeria) and Nigeria, Zimbabwe, and South Africa are the wealthier
countries on the continent due to their strong ties with the European
nations. The market capitalization of these countries has been growing
recently as more international companies invest in Africa and as local
companies start to list on the exchanges. However, religious strife has
been a significant source of instability.
On the other end of the economic spectrum are countries, such as Burkina
Faso, Madagascar, and Malawwi, that are considered to be among the poorest
or least developed in the world. These countries are generally landlocked
or have poor natural resources. The economies of many African countries are
heavily dependent on international oil prices. Of all the African
industries, oil has been the most lucrative, accounting for 40% to 60% of
many countries' GDP. However, the general decline in oil prices has had an
adverse impact on many economies.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of each fund by FMR pursuant to authority contained in the
management contract. If FMR grants investment management authority to the
sub-advisers (see the section entitled "Management Contracts"), the
sub-advisers are authorized to place orders for the purchase and sale of
portfolio securities, and will do so in accordance with the policies
described below. FMR is also responsible for the placement of transaction
orders for other investment companies and accounts for which it or its
affiliates act as investment adviser. In selecting broker-dealers, subject
to applicable limitations of the federal securities laws, FMR considers
various relevant factors, including, but not limited to: the size and type
of the transaction; the nature and character of the markets for the
security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; and the
reasonableness of any commissions. Commissions for investments traded on
foreign exchanges will be higher than for investments traded on U.S.
exchanges and may not be subject to negotiation.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; and the availability of
securities or the purchasers or sellers of securities. In addition, such
broker-dealers may furnish analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio strategy,
and performance of accounts; effect securities transactions, and perform
functions incidental thereto (such as clearance and settlement). The
selection of such broker-dealers generally is made by FMR (to the extent
possible consistent with execution considerations) based upon the quality
of research and execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the funds may be useful to FMR in rendering investment management
services to the funds or its other clients, and conversely, such research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the funds. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid the
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause
each fund to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or FMR's overall
responsibilities to the funds and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the funds or shares of other Fidelity
funds to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI) and Fidelity Brokerage Services (FBS), subsidiaries of FMR
Corp., if the commissions are fair, reasonable, and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services. From September 1992 through December 1994, FBS operated
under the name Fidelity Brokerage Services Limited, Inc. (FBSL). As of
January 1995, FBSL was converted to an unlimited liability company and
assumed the name FBS. Prior to September 4, 1992, FBSL operated under the
name Fidelity Portfolio Services, Ltd. (FPSL) as a wholly owned subsidiary
of Fidelity International Limited (FIL). Edward C. Johnson 3d is Chairman
of FIL. Mr. Johnson 3d, Johnson family members, and various trusts for the
benefit of the Johnson family own, directly or indirectly, more than 25% of
the voting common stock of FIL.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, unless certain requirements
are satisfied. Pursuant to such requirements, the Board of Trustees has
authorized FBSI to execute portfolio transactions on national securities
exchanges in accordance with approved procedures and applicable SEC rules.
Each fund's Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio transactions
on behalf of the funds and review the commissions paid by each fund over
representative periods of time to determine if they are reasonable in
relation to the benefits to the fund.
For the fiscal periods ended December 31, 1995 and 1994, the funds'
portfolio turnover rates were:
1995 1994

Short-Term World Bond 284 % 134%

Global Bond 322 % 367%

New Markets Income 306 % 409%

Because a high turnover rate increases transaction costs and may increase
taxable gains, FMR carefully weighs the anticipated benefits of short-term
investing against these consequences. An increased turnover rate is due to
a greater volume of shareholder purchase orders, short-term interest rate
volatility and other special market conditions.
For fiscal 1995 and 1994, New Markets Income paid brokerage commissions of
$65,910 and $428,280, respectively. Each fund pays both commissions and
spreads in connection with the placement of portfolio transactions. FBSI is
paid on a commission basis. During fiscal 1995 and 1994, New Markets Income
paid brokerage commissions of $0 and $2,397, respectively, to FBSI. During
fiscal 1994, this amounted to approximately 1% of the aggregate brokerage
commissions paid by New Markets Income involving approximately 4% of the
aggregate dollar amount of transactions for which the fund paid brokerage
commissions. For fiscal 1995 and 1994, Short-Term World Bond and Global
Bond paid no brokerage commissions. For fiscal 1993, the funds paid no
brokerage commissions.
During fiscal 1995 and 1994, New Markets Income paid $63,509 and $425,883,
respectively, in commissions to brokerage firms that provided research
services involving approximately $12,543,886 and $99,692,929 of
transactions. The provision of research services was not necessarily a
factor in the placement of all this business with such firms. During fiscal
1995 and 1994, Short-Term World Bond and Global Bond paid no fees to
brokerage firms that provided research services.
From time to time the Trustees will review whether the recapture for the
benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to continue
to review whether recapture opportunities are available and are legally
permissible and, if so, to determine in the exercise of their business
judgment whether it would be advisable for each fund to seek such
recapture.
Although the Trustees and officers of each fund are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds and accounts
are managed by the same investment adviser, particularly when the same
security is suitable for the investment objective of more than one fund or
account.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with procedures believed to be appropriate and equitable for each fund. In
some cases this system could have a detrimental effect on the price or
value of the security as far as each fund is concerned. In other cases,
however, the ability of the funds to participate in volume transactions
will produce better executions and prices for the funds. It is the current
opinion of the Trustees that the desirability of retaining FMR as
investment adviser to each fund outweighs any disadvantages that may be
said to exist from exposure to simultaneous transactions.
VALUATION OF PORTFOLIO SECURITIES
Each fund's portfolio securities, including ADRs, EDRs and other forms of
depositary receipts, are valued (i) by appraising portfolio securities that
are traded on the New York Stock Exchange (NYSE) or American Stock Exchange
at the closing bid price, or, if no closing price is available, at the last
traded bid price; and (ii) by appraising foreign securities as nearly as
possible in the manner described in clause (i) if traded on any other U.S.,
Canadian, or foreign exchange, and, if not so traded, on the basis of
closing over-the-counter bid prices, if available.
U.S. Treasury securities are valued on the basis of valuations furnished by
a pricing service which utilizes both dealer-supplied valuations and
electronic data processing techniques. Such techniques take into account
appropriate factors such as institutional-size trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics, and other market data, without exclusive reliance upon
quoted prices or exchange or over-the-counter prices, since such valuations
are believed to reflect more accurately the fair value of such securities.
Foreign securities are valued at the closing bid price in the principal
market where they are traded, or, if closing prices are unavailable, at the
last traded bid price available prior to the time each fund's net asset
value (NAV) is determined. Foreign portfolio security prices are furnished
by quotation services expressed in the local currency's value. FSC
translates the value of foreign securities from the local currency into
U.S. dollars. Foreign security prices that cannot be obtained by the
quotation services are priced individually by FSC using dealer-supplied
quotations. Short-term obligations that mature in sixty days or less are
valued at amortized cost, which constitutes fair value. All other
securities and other assets are appraised at their fair value as determined
in good faith under consistently applied procedures under the general
supervision of the Board of Trustees.
Generally, trading in foreign securities, as well as corporate bonds, U.S.
government securities, money market instruments, and repurchase agreements,
is substantially completed each day at various times prior to the close of
the NYSE. The values of any such securities held by the funds are
determined as of such times for the purpose of computing each fund's NAV.
The procedures set forth in (i) and (ii) above need not be used to
determine the value of debt securities owned by a fund if, in the opinion
of the Board of Trustees, some other method (e.g., based on closing
over-the-counter bid prices in the case of debt instruments traded on an
exchange) would more accurately reflect the fair market value of such debt
securities. Foreign currency exchange rates are also generally determined
prior to the close of the NYSE. If an extraordinary event that is expected
to affect the value of a portfolio security materially occurs after the
close of an exchange on which that security is traded, then the security
will be valued at fair value as determined in good faith under the
direction of the Board of Trustees.
PERFORMANCE
The funds may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. Each fund's share price, yield, and
total return fluctuate in response to market conditions and other factors,
and the value of fund shares when redeemed may be more or less than their
original cost.
YIELD CALCULATIONS. Yields for a fund are computed by dividing the fund's
interest and dividend income for a given 30-day or one-month period, net of
expenses, by the average number of shares entitled to receive distributions
during the period, dividing this figure by the fund's net asset value (NAV)
at the end of the period, and annualizing the result (assuming compounding
of income) in order to arrive at an annual percentage rate. Yields do not
reflect New Markets Income's 1.00% redemption fee, which applies to shares
held less than 180 days. Income is calculated for purposes of yield
quotations in accordance with standardized methods applicable to all stock
and bond funds. Dividends from equity investments are treated as if they
were accrued on a daily basis, solely for the purposes of yield
calculations. In general, interest income is reduced with respect to bonds
trading at a premium over their par value by subtracting a portion of the
premium from income on a daily basis, and is increased with respect to
bonds trading at a discount by adding a portion of the discount to daily
income. For a fund's investments denominated in foreign currencies, income
and expenses are calculated first in their respective currencies, and are
then converted to U.S. dollars, either when they are actually converted or
at the end of the 30-day or one month period, whichever is earlier. Capital
gains and losses generally are excluded from the calculation as are gains
and losses from currency exchange rate fluctuations.
Income calculated for the purposes of calculating a fund's yield differs
from income as determined for other accounting purposes. Because of the
different accounting methods used, and because of the compounding of income
assumed in yield calculations, a fund's yield may not equal its
distribution rate, the income paid to your account, or the income reported
in the fund's financial statements.
In calculating the fund's yield, a fund may from time to time use a
portfolio security's coupon rate instead of its yield to maturity in order
to reflect the risk premium on that security. This practice will have the
effect of reducing the fund's yield.
Yield information may be useful in reviewing a fund's performance and in
providing a basis for comparison with other investment alternatives.
However, each fund's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of the
portfolio securities of respective investment companies they have chosen to
consider.
Investors should recognize that in periods of declining interest rates a
fund's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates the fund's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to a fund from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the
fund's holdings, thereby reducing the fund's current yield. In periods of
rising interest rates, the opposite can be expected to occur.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of a fund's return, including the effect of reinvesting dividends
and capital gain distributions, and any change in the fund's NAV over a
stated period. Average annual total returns are calculated by determining
the growth or decline in value of a hypothetical historical investment in a
fund over a stated period, and then calculating the annually compounded
percentage rate that would have produced the same result if the rate of
growth or decline in value had been constant over the period. For example,
a cumulative total return of 100% over ten years would produce an average
annual total return of 7.18%, which is the steady annual rate of return
that would equal 100% growth on a compounded basis in ten years. While
average annual total returns are a convenient means of comparing investment
alternatives, investors should realize that a fund's performance is not
constant over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to the actual
year-to-year performance of the fund.
In addition to average annual total returns, a fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. Total returns may be quoted on a
before-tax or after-tax basis and may or may not include the effect of New
Markets Income's 1.00% redemption fee on shares held less than 180 days.
Excluding a fund's redemption fee from a total return calculation produces
a higher total return figure. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.
NET ASSET VALUE. Charts and graphs using a fund's net asset values,
adjusted net asset values, and benchmark indices may be used to exhibit
performance. An adjusted NAV includes any distributions paid by a fund and
reflects all elements of its return. Unless otherwise indicated, a fund's
adjusted NAVs are not adjusted for sales charges, if any.
HISTORICAL FUND RESULTS. The following tables show each fund's yields and
total returns for periods ended December 31, 1995. Total return figures do
not include the effect of New Markets Income's 1.00% redemption fee,
applicable to shares held less than 180 days.

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

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

Short-Term World
Bond 4.86% 7.79% n/a 4.63% 7.79% n/a 21.18%

Global
Bond 4.56% 6.66% 5.08% 7.55% 6.66% 28.11% 92.68%

New Markets
Income 10.76% 7.97% n/a 8.77% 7.97% n/a 25.10%

</TABLE>

* From commencement of operations: Short-Term World Bond - October
4, 1991; Global Bond - December 30, 1986; New Markets Income - May 4, 1993.
Note: If FMR had not reimbursed certain fund expenses during these periods,
the funds' total returns would have been lower.
The following table s show the income and capital elements of each
fund's cumulative total return. The table compares the fund's return to the
record of the Standard & Poor's Composite Index of 500 Stocks (S&P 500),
the Dow Jones Industrial Average (DJIA), and the cost of living (measured
by the Consumer Price Index, or CPI) over the same period. The CPI
information is as of the month end closest to the initial investment date
for each fund. Returns for the funds may be compared to the following
indices: the J.P. Morgan Emerging Markets Bond Index and the J.P. Morgan
Emerging Markets Bond Index Plus , broad measure s of bond
performance in developing countries; the Salomon Brothers World Government
Bond Index, which measures the performance of bonds issued by the U.S. and
foreign governments; and the Lehman Brothers 1-3 Year Government Bond
Index, which measures the performance of short-term U.S. government bonds.
The S&P 500 and DJIA comparisons are provided to show how the fund's total
return compared to the record of a broad average of common stocks and a
narrower set of stocks of major industrial companies, respectively, over
the same period. Of course, since the fund invests in fixed-income
securities, common stocks represent a different type of investment from the
fund. Common stocks generally offer greater growth potential than a fund,
but generally experience greater price volatility, which means greater
potential for loss. In addition, common stocks generally provide lower
income than a fixed-income investment such as the funds. Figures for the
S&P 500 and DJIA are based on the prices of unmanaged groups of stocks and,
unlike a fund's returns, do not include the effect of paying brokerage
commissions or other costs of investing.
SHORT-TERM WORLD BOND . During the period from October 4, 1991
(commencement of operations) to December 31, 1995, a hypothetical $10,000
investment in Short-Term World Bond would have grown to
$ 12,118 , assuming all distributions were reinvested. This was a
period of fluctuating interest rates and bond prices and the figures below
should not be considered representative of the dividend income or capital
gain or loss that could be realized from an investment in the fund today.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY Short-Term World Bond FUND INDICES

Year Ended
Value of Value of Value of Total Value S&P 500 DJIA Cost of
12/31
Initial Reinvested Reinvested Living**

$10,000 Dividend Capital Gain
Investment Distributions Distributions

1995
$ 9,010 $ 3,108 $ 0 $ 12,118 $ 18,056 $ 19,265 $ 11,188

1994
8,910 2,333 0 11,243 13,124 14,091 10,911

1993
10,190 1,745 0 11,935 12,954 13,423 10,627

1992
9,680 920 0 10,600 11,768 11,474 10,343

1991*
9,930 182 0 10,112 10,932 10,693 10,051

</TABLE>

* From October 4, 1991 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on October 4,
1991, the net amount invested in fund shares was $10,000. The cost of the
initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(their cash value at the time they were reinvested), amounted to
$ 13,299 . If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
the cash payments for the period would have amounted to $ 2,852 for
dividends and $ 0 for capital gains distributions. Tax consequences
of different investments (with the exception of foreign tax withholdings)
have not been factored into the above figures.
GLOBAL BOND. During the period from December 30, 1986 (commencement of
operations) to December 31, 1995, a hypothetical $10,000 investment in
Global Bond would have grown to $ 19,268 , assuming all distributions
were reinvested. This was a period of fluctuating interest rates and bond
prices and the figures below should not be considered representative of the
dividend income or capital gain or loss that could be realized from an
investment in the fund today.

FIDELITY Global Bond FUND INDICES

Year Ended Value of Value of Value of Total Value S&P 500 DJIA Cost of

12/31 Initial Reinvested Reinvested Living**

$10,000 Dividend Capital Gain

Investment Distributions Distributions

1995 $ 9,940 $ 8,964 $ 364 $ 19,268 $ 33,319 $ 35,585 1

1994 9,880 7,82 5 361 18,06 6 24,218 26,027 13,548

1993 12,610 8,550 427 21,587 23,903 24,794 13,195

1992 11,340 6,368 0 17,708 21,715 21,193 12,842

1991 11,900 5,062 0 16,962 20,173 19,752 12,480

1990 11,380 3,661 0 15,041 15,460 15,885 12,109

1989 11,080 2,316 0 13,396 15,957 15,971 11,412

1988 10,720 1,692 0 12,412 12,118 12,121 10,905

1987 11,210 763 0 11,973 10,392 10,456 10,443

1986* 10,050 0 0 10,050 9,872 9,917 10,000

</TABLE>

* From December 30, 1986 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on December
30, 1986, the net amount invested in fund shares was $10,000. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(their cash value at the time they were reinvested), amounted to $20,468.
If distributions had not been reinvested, the amount of distributions
earned from the fund over time would have been smaller, and cash payments
for the period would have amounted to $7,238 for dividends and $270 for
capital gains distributions. Tax consequences of different investments
(with the exception of foreign tax withholdings) have not been factored
into the above figures.
NEW MARKETS INCOME. During the period from May 4, 1993 (commencement of
operations) to December 31, 1995, a hypothetical $10,000 investment in New
Markets Income would have grown to $12,510, assuming all distributions were
reinvested. This was a period of fluctuating interest rates and bond prices
and the figures below should not be considered representative of the
dividend income or capital gain or loss that could be realized from an
investment in the fund today.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY New Markets Income FUND INDICES

Year Ended
Value of Value of Value of Total Value S&P 500 DJIA Cost of
12/31
Initial Reinvested Reinvested Living**

$10,000 Dividend Capital Gain

Investment Distributions Distributions

1995
$ 9,950 $ 2,263 $ 298 $ 12,510 $ 14,983 $ 15,921 $ 10,660

1994
10,190 1,091 305 11,586 10,891 11,645 10,396

1993*
13,070 632 182 13,884 10,749 11,093 10,125

</TABLE>

* From May 4, 1993 (commencement of operations).
Explanatory Notes: With an initial investment of $10,000 made on May 4,
1993, the net amount invested in fund shares was $10,000. The cost of the
initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(their cash value at the time they were reinvested), amounted to $12,669.
If distributions had not been reinvested, the amount of distributions
earned from the fund over time would have been smaller, and cash payments
for the period would have amounted to $2,030 for dividends and $370 for
capital gains distributions. Tax consequences of different investments
(with the exception of foreign tax withholdings) have not been factored
into the above figures.
INTERNATIONAL INDICES, MARKET CAPITALIZATION, AND NATIONAL STOCK MARKET
RETURN
The following tables show the total market capitalization of certain
countries according to the Morgan Stanley Capital International Indices
database, the total market capitalization of Latin American countries
according to the International Finance Corporation Emerging Markets
database, and the performance of national stock markets as measured in U.S.
dollars by the Morgan Stanley Capital International stock market indices
for the twelve months ended December 31, 1995. Of course, these results are
not indicative of future stock market performance or the funds'
performance. Market conditions during the periods measured fluctuated
widely. Brokerage commissions and other fees are not factored into the
values of the indices.
MARKET CAPITALIZATION. Companies outside the U.S. now make up nearly
two-thirds of the world's stock market capitalization. According to Morgan
Stanley Capital International, the size of the markets as measured in U.S.
dollars grew from $2,886 billion in 1984 to $13,182 billion in 1994.
The following table measures the total market capitalization of certain
countries according to the Morgan Stanley Capital International Indices
database. The value of the markets are measured in billions of U.S. dollars
as of December 31, 1995.
TOTAL MARKET CAPITALIZATION
Australia $245 Japan $3,583

Austria 37 Netherlands 304

Belgium 101 Norway 43

Canada 333 Singapore/Malaysia 149

Denmark 56 Spain 152

France 505 Sweden 177

Germany 579 Switzerland 402

Hong Kong 274 United Kingdom 1,354

Italy 180 United States 6,338

The following table measures the total market capitalization of Latin
American countries according to the International Finance Corporation
Emerging Markets database. The value of the markets is measured in millions
of U.S. dollars as of December 31, 1995.
TOTAL MARKET CAPITALIZATION - LATIN AMERICA
Argentina $ 37,909

Brazil 148,910

Chile 72,969

Colombia 10,134

Mexico 97,384

Venezuela 4,001

Total Latin America 371,307

NATIONAL STOCK MARKET PERFORMANCE. Certain national stock markets have
outperformed the U.S. stock market. The table below represents the
performance of national stock markets as measured in U.S. dollars by the
Morgan Stanley Capital International stock market indices for the twelve
months ended December 31, 1995. The table measures total return based on
the period's change in price, dividends paid on stocks in the index, and
the effect of reinvesting dividends net of any applicable foreign taxes.
These are unmanaged indices composed of a sampling of selected companies
representing an approximation of the market structure of the designated
country.
STOCK MARKET PERFORMANCE (CUMULATIVE TOTAL RETURNS)
MEASURED IN U.S. DOLLARS
Australia $ 11.19 Japan $ 0.69

Austria -4.72 Malaysia 5.16

Belgium 25.88 Netherlands 27.71

Canada 18.31 New Zealand 20.85

Denmark 18.78 Norway 6.02

Finland 4.56 Singapore 6.45

France 14.12 Spain 29.83

Germany 16.41 Sweden 33.36

Hong Kong 22.57 Switzerland 44.12

Ireland 22.38 United Kingdom 21.27

Italy 1.05 United States 37.14

STOCK MARKET PERFORMANCE
FIVE YEARS ENDED TEN YEARS ENDED

DECEMBER 31, 199 5 DECEMBER 31, 199 5

Germany 9.91% 6.80%

Hong Kong 30.16 23.83

Japan 5.59 12.66

Spain 7.71 16.77

United Kingdom 10.66 15.02

United States 15.94 13.72

These results are not indicative of future stock market performance or any
fund's performance. Market conditions during the periods measured
fluctuated widely. Brokerage commissions and other fees are not factored
into the values of the indices.
PERFORMANCE COMPARISONS. A fund's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed as
mutual fund rankings prepared by Lipper Analytical Services, Inc. (Lipper),
an independent service located in Summit, New Jersey that monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of
total return, assuming reinvestment of distributions, but does not take
sales charges or redemption fees into consideration, and is prepared
without regard to tax consequences. Lipper may also rank funds based on
yield. In addition to the mutual fund rankings, a fund's performance may be
compared to stock, bond, and money market mutual fund performance indices
prepared by Lipper or other organizations. When comparing these indices, it
is important to remember the risk and return characteristics of each type
of investment. For example, while stock mutual funds may offer higher
potential returns, they also carry the highest degree of share price
volatility. Likewise, money market funds may offer greater stability of
principal, but generally do not offer the higher potential returns
available from stock mutual funds.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
A fund may be compared in advertising to Certificates of Deposit (CDs) or
other investments issued by banks or other depository institutions. Mutual
funds differ from bank investments in several respects. For example, a fund
may offer greater liquidity or higher potential returns than CDs, a fund
does not guarantee your principal or your return, and fund shares are not
FDIC insured.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. Such
information may include information about current economic, market, and
political conditions; materials that describe general principles of
investing, such as asset allocation, diversification, risk tolerance, and
goal setting; questionnaires designed to help create a personal financial
profile; worksheets used to project savings needs based on assumed rates of
inflation and hypothetical rates of return; and action plans offering
investment alternatives. Materials may also include discussions of
Fidelity's asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
A fund may compare its performance or the performance of securities in
which it may invest to averages published by IBC USA (Publications), Inc.
of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The IBC/Donoghue's MONEY FUND AVERAGES(trademark)/All
Taxable, which is reported in the MONEY FUND REPORT(registered trademark),
covers over 771 taxable money market funds. The Bond Fund Report
AverageS(trademark)/All Taxable, which is reported in the BOND FUND
REPORT(registered trademark), covers over 539 taxable bond funds. When
evaluating comparisons to money market funds, investors should consider the
relevant differences in investment objectives and policies. Specifically,
money market funds invest in short-term, high-quality instruments and seek
to maintain a stable $1.00 share price. Bond funds, however, invests in
longer-term instruments and its share price changes daily in response to a
variety of factors.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include other Fidelity funds; retirement investing;
brokerage products and services; model portfolios or allocations; saving
for college or other goals; charitable giving; and the Fidelity credit
card. In addition, Fidelity may quote or reprint financial or business
publications and periodicals as they relate to current economic and
political conditions, fund management, portfolio composition, investment
philosophy, investment techniques, the desirability of owning a particular
mutual fund, and Fidelity services and products. Fidelity may also reprint,
and use as advertising and sales literature, articles from Fidelity Focus,
a quarterly magazine provided free of charge to Fidelity fund shareholders.
A fund may present its fund number, Quotron(trademark) number, and CUSIP
number, and discuss or quote its current portfolio manager.
VOLATILITY. A fund may quote various measures of volatility and benchmark
correlation in advertising. In addition, the fund may compare these
measures to those of other funds. Measures of volatility seek to compare
the fund's historical share price fluctuations or total returns to those of
a benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. All measures of volatility and correlation
are calculated using averages of historical data. In advertising, a fund
may also discuss or illustrate examples of interest rate sensitivity.
MOMENTUM INDICATORS indicate a fund's price movements over specific periods
of time. Each point on the momentum indicator represents the fund's
percentage change in price movements over that period.
A fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an
investor invests a fixed dollar amount in a fund at periodic intervals,
thereby purchasing fewer shares when prices are high and more shares when
prices are low. While such a strategy does not assure a profit or guard
against loss in a declining market, the investor's average cost per share
can be lower than if fixed numbers of shares are purchased at the same
intervals. In evaluating such a plan, investors should consider their
ability to continue purchasing shares during periods of low price levels.
A fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which may
produce superior after-tax returns over time. For example, a $1,000
investment earning a taxable return of 10% annually would have an after-tax
value of $1,949 after ten years, assuming tax was deducted from the return
each year at a 31% rate. An equivalent tax-deferred investment would have
an after-tax value of $2,100 after ten years, assuming tax was deducted at
a 31% rate from the tax-deferred earnings at the end of the ten-year
period.
As of December 31, 1995, FMR advised over $26.5 billion in tax-free fund
assets, $81 billion in money market fund assets, $240 billion in equity
fund assets, $49 billion in international fund assets, and $23 billion in
Spartan fund assets. The funds may reference the growth and variety of
money market mutual funds and the adviser's innovation and participation in
the industry. The equity funds under management figure represents the
largest amount of equity fund assets under management by a mutual fund
investment adviser in the United States, making FMR America's leading
equity (stock) fund manager. FMR, its subsidiaries, and affiliates maintain
a worldwide information and communications network for the purpose of
researching and managing investments abroad.
In addition to performance rankings, each fund may compare its total
expense ratio to the average total expense ratio of similar funds tracked
by Lipper. A fund's total expense ratio is a significant factor in
comparing bond and money market investments because of its effect on yield.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Each fund is open for business and its net asset value per share (NAV) is
calculated each day the New York Stock Exchange (NYSE) is open for trading.
The NYSE has designated the following holiday closings for 1996: New Year's
Day, Presidents' Day (observed), Good Friday, Memorial Day (observed),
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. Although
FMR expects the same holiday schedule to be observed in the future, the
NYSE may modify its holiday schedule at any time. In addition, the funds
will not process wire purchases and redemptions on days when the Federal
Reserve Wire System is closed.
FSC normally determines each fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier
if trading on the NYSE is restricted or as permitted by the Securities and
Exchange Commission (SEC). To the extent that portfolio securities are
traded in other markets on days when the NYSE is closed, a fund's NAV may
be affected on days when investors do not have access to the fund to
purchase or redeem shares. In addition, trading in some of a fund's
portfolio securities may not occur on days when the fund is open for
business.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing a fund's NAV. Shareholders receiving securities or other property
on redemption may realize a gain or loss for tax purposes, and will incur
any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the 1940
Act), each fund is required to give shareholders at least 60 days' notice
prior to terminating or modifying its exchange privilege. Under the Rule,
the 60-day notification requirement may be waived if (i) the only effect of
a modification would be to reduce or eliminate an administrative fee,
redemption fee, or deferred sales charge ordinarily payable at the time of
an exchange, or (ii) the fund suspends the redemption of the shares to be
exchanged as permitted under the 1940 Act or the rules and regulations
thereunder, or the fund to be acquired suspends the sale of its shares
because it is unable to invest amounts effectively in accordance with its
investment objective and policies.
In the Prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. Because each fund invests significantly in foreign securities,
corporate shareholders should not expect fund dividends to qualify for the
dividends-received deduction. Short-term capital gains are distributed as
dividend income, but do not qualify for the dividends-received deduction.
Each fund will notify corporate shareholders annually of the percentage of
fund dividends that qualify for the dividends-received deduction. Gains
(losses) attributable to foreign currency fluctuations are generally
taxable as ordinary income, and therefore will increase (decrease) dividend
distributions. As a consequence, FMR may adjust a fund's income
distributions to reflect the effect of currency fluctuations. However, if
foreign currency losses exceed a fund's net investment income during a
taxable year, all or a portion of the distributions made in the same
taxable year would be recharacterized as a return of capital to
shareholders, thereby reducing each shareholder's cost basis in his or her
fund. Each fund will send each shareholder a notice in January describing
the tax status of dividend and capital gain distributions for the prior
year.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by each fund on
the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains, regardless of the length of time
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of a fund, and such shares are held six
months or less and are sold at a loss, the portion of the loss equal to the
amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes. Short-term capital gains distributed by
each fund are taxable to shareholders as dividends, not as capital gains.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Foreign governments may
also impose taxes on other payments or gains with respect to foreign
securities. If, at the close of its fiscal year, more than 50% of a fund's
total assets are invested in securities of foreign issuers, the fund may
elect to pass through foreign taxes paid and thereby allow shareholders to
take a credit or deduction on their individual tax returns.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company and
avoid being subject to federal income or excise taxes at the fund level,
each fund intends to distribute substantially all of its net investment
income and net realized capital gains within each calendar year as well as
on a fiscal year basis. Each fund intends to comply with other tax rules
applicable to regulated investment companies, including a requirement that
capital gains from the sale of securities held less than three months
constitute less than 30% of the fund's gross income for each fiscal year.
Gains from some forward currency contracts, futures contracts, and options
are included in this 30% calculation, which may limit a fund's investments
in such instruments.
Each fund is treated as a separate entity from the other funds of Fidelity
Investment Trust for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting each fund and its shareholders,
and no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders may be subject to state and
local taxes on fund distributions, and shares may be subject to state and
local personal property taxes. Investors should consult their tax advisers
to determine whether a fund is suitable to their particular tax situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent organized in
1972. The voting common stock of FMR Corp. is divided into two classes.
Class B is held predominantly by members of the Edward C. Johnson 3d family
and is entitled to 49% of the vote on any matter acted upon by the voting
common stock. Class A is held predominantly by non-Johnson family member
employees of FMR Corp. and its affiliates and is entitled to 51% of the
vote on any such matter. The Johnson family group and all other Class B
shareholders have entered into a shareholders' voting agreement under which
all Class B shares will be voted in accordance with the majority vote of
Class B shares. Under the Investment Company Act of 1940 (1940 Act),
control of a company is presumed where one individual or group of
individuals owns more than 25% of the voting stock of that company.
Therefore, through their ownership of voting common stock and the execution
of the shareholders' voting agreement, members of the Johnson family may be
deemed, under the 1940 Act, to form a controlling group with respect to FMR
Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by three of its divisions as follows: FSC, which is the transfer
and shareholder servicing agent for certain of the funds advised by FMR;
Fidelity Investments Institutional Operations Company, which performs
shareholder servicing functions for institutional customers and funds sold
through intermediaries; and Fidelity Investments Retail Marketing Company,
which provides marketing services to various companies within the Fidelity
organization.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures for
personal investing and restricts certain transactions. For example, all
personal trades in most securities require pre-clearance, and participation
in initial public offerings is prohibited. In addition, restrictions on the
timing of personal investing in relation to trades by Fidelity funds and on
short-term trading have been adopted.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the trust are listed below. Except
as indicated, each individual has held the office shown or other offices in
the same company for the last five years. All persons named as Trustees
also serve in similar capacities for other funds advised by FMR. The
business address of each Trustee and officer who is an "interested person"
(as defined in the Investment Company Act of 1940) is 82 Devonshire Street,
Boston, Massachusetts 02109, which is also the address of FMR. The business
address of all the other Trustees is Fidelity Investments, P.O. Box 9235,
Boston, Massachusetts 02205-9235. Those Trustees who are "interested
persons" by virtue of their affiliation with either the trust or FMR are
indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (65), Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman of
the Board and of the Executive Committee of FMR; Chairman and a Director of
FMR Texas Inc., Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD (54), Trustee and Senior Vice President, is President of
FMR; and President and a Director of FMR Texas Inc., Fidelity Management &
Research (U.K.) Inc., and Fidelity Management & Research (Far East) Inc.
RALPH F. COX (63), Trustee (1991), is a consultant to Western Mining
Corporation (1994). Prior to February 1994, he was President of Greenhill
Petroleum Corporation (petroleum exploration and production, 1990). Until
March 1990, Mr. Cox was President and Chief Operating Officer of Union
Pacific Resources Company (exploration and production). He is a Director of
Sanifill Corporation (non-hazardous waste, 1993) and CH2M Hill Companies
(engineering). In addition, he served on the Board of Directors of the
Norton Company (manufacturer of industrial devices, 1983-1990) and
continues to serve on the Board of Directors of the Texas State Chamber of
Commerce, and is a member of advisory boards of Texas A&M University and
the University of Texas at Austin.
PHYLLIS BURKE DAVIS (64), Trustee (1992). Prior to her retirement in
September 1991, Mrs. Davis was the Senior Vice President of Corporate
Affairs of Avon Products, Inc. She is currently a Director of BellSouth
Corporation (telecommunications), Eaton Corporation (manufacturing, 1991),
and the TJX Companies, Inc. (retail stores, 1990), and previously served as
a Director of Hallmark Cards, Inc. (1985-1991) and Nabisco Brands, Inc. In
addition, she is a member of the President's Advisory Council of The
University of Vermont School of Business Administration.
RICHARD J. FLYNN (71), Trustee, is a financial consultant. Prior to
September 1986, Mr. Flynn was Vice Chairman and a Director of the Norton
Company (manufacturer of industrial devices). He is currently a Trustee of
College of the Holy Cross and Old Sturbridge Village, Inc., and he
previously served as a Director of Mechanics Bank (1971-1995).
E. BRADLEY JONES (68), Trustee (1990). Prior to his retirement in 1984, Mr.
Jones was Chairman and Chief Executive Officer of LTV Steel Company. He is
a Director of TRW Inc. (original equipment and replacement products),
Cleveland-Cliffs Inc. (mining), Consolidated Rail Corporation, Birmingham
Steel Corporation, and RPM, Inc. (manufacturer of chemical products, 1990),
and he previously served as a Director of NACCO Industries, Inc. (mining
and marketing, 1985-1995) and Hyster-Yale Materials Handling, Inc.
(1985-1995). In addition, he serves as a Trustee of First Union Real Estate
Investments, a Trustee and member of the Executive Committee of the
Cleveland Clinic Foundation, a Trustee and member of the Executive
Committee of University School (Cleveland), and a Trustee of Cleveland
Clinic Florida.
DONALD J. KIRK (63), Trustee, is Executive-in-Residence (1995) at Columbia
University Graduate School of Business and a financial consultant. From
1987 to January 1995, Mr. Kirk was a Professor at Columbia University
Graduate School of Business. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance), and he previously served as a Director of
Valuation Research Corp. (appraisals and valuations, 1993-1995). In
addition, he serves as Chairman of the Board of Directors of the National
Arts Stabilization Fund, Vice Chairman of the Board of Trustees of the
Greenwich Hospital Association, and as a Member of the Public Oversight
Board of the American Institute of Certified Public Accountants' SEC
Practice Section (1995).
*PETER S. LYNCH (52), Trustee (1990) is Vice Chairman and Director of FMR
(1992). Prior to May 31, 1990, he was a Director of FMR and Executive Vice
President of FMR (a position he held until March 31, 1991); Vice President
of Fidelity Magellan Fund and FMR Growth Group Leader; and Managing
Director of FMR Corp. Mr. Lynch was also Vice President of Fidelity
Investments Corporate Services (1991-1992). He is a Director of W.R. Grace
& Co. (chemicals) and Morrison Knudsen Corporation (engineering and
construction). In addition, he serves as a Trustee of Boston College,
Massachusetts Eye & Ear Infirmary, Historic Deerfield (1989) and Society
for the Preservation of New England Antiquities, and as an Overseer of the
Museum of Fine Arts of Boston (1990).
GERALD C. McDONOUGH (66), Trustee, is Chairman of G.M. Management Group
(strategic advisory services). Prior to his retirement in July 1988, he was
Chairman and Chief Executive Officer of Leaseway Transportation Corp.
(physical distribution services). Mr. McDonough is a Director of
ACME-Cleveland Corp. (metal working, telecommunications and electronic
products), Brush-Wellman Inc. (metal refining), York International Corp.
(air conditioning and refrigeration), Commercial Intertech Corp. (water
treatment equipment, 1992), and Associated Estates Realty Corporation (a
real estate investment trust, 1993).
EDWARD H. MALONE (71), Trustee. Prior to his retirement in 1985, Mr. Malone
was Chairman, General Electric Investment Corporation and a Vice President
of General Electric Company. He is a Director of Allegheny Power Systems,
Inc. (electric utility), General Re Corporation (reinsurance) and Mattel
Inc. (toy manufacturer). In addition, he serves as a Trustee of the Naples
Philharmonic Center for the Arts and Rensselaer Polytechnic Institute, and
he is a member of the Advisory Boards of Butler Capital Corporation Funds
and Warburg, Pincus Partnership Funds.
MARVIN L. MANN (62), Trustee (1993) is Chairman of the Board, President,
and Chief Executive Officer of Lexmark International, Inc. (office
machines, 1991). Prior to 1991, he held the positions of Vice President of
International Business Machines Corporation ("IBM") and President and
General Manager of various IBM divisions and subsidiaries. Mr. Mann is a
Director of M.A. Hanna Company (chemicals, 1993) and Infomart (marketing
services, 1991), a Trammell Crow Co. In addition, he serves as the Campaign
Vice Chairman of the Tri-State United Way (1993) and is a member of the
University of Alabama President's Cabinet (1990).
THOMAS R. WILLIAMS (67), Trustee, is President of The Wales Group, Inc.
(management and financial advisory services). Prior to retiring in 1987,
Mr. Williams served as Chairman of the Board of First Wachovia Corporation
(bank holding company), and Chairman and Chief Executive Officer of The
First National Bank of Atlanta and First Atlanta Corporation (bank holding
company). He is currently a Director of BellSouth Corporation
(telecommunications), ConAgra, Inc. (agricultural products), Fisher
Business Systems, Inc. (computer software), Georgia Power Company (electric
utility), Gerber Alley & Associates, Inc. (computer software), National
Life Insurance Company of Vermont, American Software, Inc., and AppleSouth,
Inc. (restaurants, 1992).
ROBERT A. LAWRENCE (43), Vice President (1994), is Vice President of
Fidelity's high income funds and Senior Vice President of FMR (1993). Prior
to joining FMR, Mr. Lawrence was Managing Director of the High Yield
Department for Citicorp (1984-1991).
FRED L. HENNING, JR. (56), Vice President, is Vice President of Fidelity's
money market (1994) and fixed-income (1995) funds and Senior Vice President
of FMR Texas Inc.
ARTHUR S. LORING (48), Secretary, is Senior Vice President (1993) and
General Counsel of FMR, Vice President-Legal of FMR Corp., and Vice
President and Clerk of FDC.
KENNETH A. RATHGEBER (48), Treasurer (1995), is Treasurer of the Fidelity
funds and is an employee of FMR (1995). Before joining FMR, Mr. Rathgeber
was a Vice President of Goldman Sachs & Co. (1978-1995), where he served in
various positions, including Vice President of Proprietary Accounting
(1988-1992), Global Co-Controller (1992-1994), and Chief Operations Officer
of Goldman Sachs (Asia) LLC (1994-1995)
JOHN H. COSTELLO (49), Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH (49), Assistant Treasurer (1994), is an employee of FMR
(1994). Prior to becoming Assistant Treasurer of the Fidelity funds, Mr.
Rush was Chief Compliance Officer of FMR Corp. (1993-1994); Chief Financial
Officer of Fidelity Brokerage Services, Inc. (1990-1993); and Vice
President, Assistant Controller, and Director of the Accounting Department
- - First Boston Corp. (1986-1990).
The following table sets forth information describing the compensation of
each current trustee of each fund for his or her services as trustee for
the fiscal year ended December 31, 1995.
COMPENSATION TABLE
Aggregate Compensation

Short-
Term $ 0 $ 87 $ 85 $ 108 $ 0 $ 87 $ 90 $ 0 $ 88 $ 87 $ 87 $ 85
World Bond

Global
Bond 0 129 126 161 0 129 134 0 130 129 129 127

New
Markets 0 73 71 91 0 73 75 0 73 73 73 71
Income

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Trustees Pension or Estimated Annual Total
Retirement Benefits Upon Compensation
Benefits Accrued Retirement from from the Fund
as Part of Fund the Complex*
Expenses from the Fund Complex*
Fund Complex*

J. Gary Burkhead** $ 0 $ 0 $ 0

Ralph F. Cox 5,200 52,000 128,000

Phyllis Burke Davis 5,200 52,000 12 5 ,000

Richard J. Flynn 0 52,000 1 60 ,500

Edward C. Johnson 3d** 0 0 0

E. Bradley Jones 5,200 49,400 12 8,0 00

Donald J. Kirk 5,200 52,000 12 9,5 00

Peter S. Lynch** 0 0 0

Gerald C. McDonough 5,200 52,000 12 8 ,000

Edward H. Malone 5,200 44,200 128,000

Marvin L. Mann 5,200 52,000 12 8 ,000

Thomas R. Williams 5,200 52,000 12 5,0 00

</TABLE>

* Information is as December 31, 1995 for 219 funds in the complex.
** Interested trustees of the fund are compensated by FMR.
The non-interested Trustees may elect to defer receipt of all or a
percentage of their annual fees in accordance with the terms of a Deferred
Compensation Plan (the Plan). Under the Plan, compensation deferred by a
Trustee is periodically adjusted as though an equivalent amount had been
invested and reinvested in shares of one or more funds in the complex
designated by such Trustee (designated securities). The amount paid to the
Trustee under the Plan will be determined based upon the performance of
such investments. Deferral of Trustees' fees in accordance with the Plan
will have a negligible effect on a fund's assets, liabilities, and net
income per share, and will not obligate the fund to retain the services of
any Trustee or to pay any particular level of compensation to the Trustee.
Each fund may invest in such designated securities under the Plan without
shareholder approval.
Under a retirement program adopted in July 1988, the non-interested
Trustees, upon reaching age 72, become eligible to participate in a
retirement program under which they receive payments during their lifetime
from a fund based on their basic trustee fees and length of service. The
obligation of a fund to make such payments is not secured or funded.
Trustees become eligible if, at the time of retirement, they have served on
the Board for at least five years. Currently, Messrs. Ralph S. Saul,
William R. Spaulding, Bertram H. Witham, and David L. Yunich, all former
non-interested Trustees, receive retirement benefits under the program.
On December 31, 1995, the Trustees and officers of each fund owned, in the
aggregate, less than 1% of each fund's total outstanding shares. Also, as
of that date, Charles Schwab & Co., Inc./Mutual Fund department, San
Francisco, CA, was known by New Markets Income and Global Bond to own of
record or beneficially approximately 7.26% and 5.61%, respectively, of each
fund's total outstanding shares.
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of each fund in accordance with its investment objective,
policies, and limitations. FMR also provides each fund with all necessary
office facilities and personnel for servicing each fund's investments,
compensates all officers of each fund and all Trustees who are "interested
persons" of the trust or of FMR, and all personnel of each fund or FMR
performing services relating to research, statistical, and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of each fund. These services include providing facilities
for maintaining each fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with each fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining each
fund's records and the registration of each fund's shares under federal and
state laws; developing management and shareholder services for each fund;
and furnishing reports, evaluations, and analyses on a variety of subjects
to the Trustees.
In addition to the management fee payable to FMR and the fees payable to
FSC, each fund pays all of its expenses, without limitation, that are not
assumed by those parties. Each fund pays for the typesetting, printing, and
mailing of its proxy materials to shareholders, legal expenses, and the
fees of the custodian, auditor and non-interested Trustees. Although each
fund's current management contract provides that each fund will pay for
typesetting, printing, and mailing prospectuses, statements of additional
information, notices, and reports to shareholders, the trust, on behalf of
each fund has entered into a revised transfer agent agreement with FSC,
pursuant to which FSC bears the costs of providing these services to
existing shareholders. Other expenses paid by each fund include interest,
taxes, brokerage commissions, and each fund's proportionate share of
insurance premiums and Investment Company Institute dues. Each fund is also
liable for such non-recurring expenses as may arise, including costs of any
litigation to which each fund may be a party, and any obligation it may
have to indemnify its officers and Trustees with respect to litigation.
FMR is Short-Term World Bond's and Global Bond's manager pursuant to
management contracts dated March 1, 1992, which were approved by
shareholders on February 19, 1992. FMR is also New Markets Income's manager
pursuant to a management contract dated April 15, 1993, which was approved
by FMR, then the sole shareholder, on April 29, 1993.
For the services of FMR under the contract, each fund pays FMR a monthly
management fee composed of the sum of two elements: a group fee rate and an
individual fund fee rate.
The group fee rate is based on the monthly average net assets of all of the
registered investment companies with which FMR has management contracts and
is calculated on a cumulative basis pursuant to the graduated fee rate
schedule shown on the left on the following page. The schedule on the right
on the following page shows the effective annual group fee rate at various
asset levels, which is the result of cumulatively applying the annualized
rates on the left. For example, the effective annual fee rate at $367
billion of group net assets - the approximate level for December 1995 - was
.1482%, which is the weighted average of the respective fee rates for each
level of group net assets up to $367 billion.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate

0 - $3 billion .3700% $ 0.5 billion .3700%

3 - 6 .3400 25 .2664

6 - 9 .3100 50 .2188

9 - 12 .2800 75 .1986

12 - 15 .2500 100 .1869

15 - 18 .2200 125 .1793

18 - 21 .2000 150 .1736

21 - 24 .1900 175 .1695

24 - 30 .1800 200 .1658

30 - 36 .1750 225 .1629

36 - 42 .1700 250 .1604

42 - 48 .1650 275 .1583

48 - 66 .1600 300 .1565

66 - 84 .1550 325 .1548

84 - 120 .1500 350 .1533

120 - 174 .1450 400 .1507

174 - 228 .1400

228 - 282 .1375

282 - 336 .1350

Over 336 .1325

</TABLE>

Under each fund's current management contract with FMR, the group fee rate
is based on a schedule with breakpoints ending at .1400% for average group
assets in excess of $174 billion. For Short-Term World Bond and Global
Bond, prior to March 1, 1992, the group fee rate breakpoints shown above
for average group assets in excess of $120 billion and under $228 billion
were voluntarily adopted by FMR, and went into effect on January 1, 1992.
The additional breakpoints shown above for average group assets in excess
of $228 billion were voluntarily adopted by FMR on November 1, 1993.
On August 1, 1994, FMR voluntarily revised the prior extensions to the
group fee rate schedule, and added new breakpoints for average group assets
in excess of $156 billion and under $372 billion as shown in the schedule
on the following page. The revised group fee rate schedule was identical to
the above schedule for average group assets under $156 billion.
On January 1, 1996, FMR voluntarily added new breakpoints to the revised
schedule for average group assets in excess of $372 billion, pending
shareholder approval of a new management contract reflecting the revised
schedule and additional breakpoints. The revised group fee rate schedule
and its extensions provide for lower management fee rates as FMR's assets
under management increase. For average group assets in excess of $156
billion, the revised group fee rate schedule with additional breakpoints
voluntarily adopted by FMR is as follows:
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate

120 -$156 billion .1450% $ 150 billion .1736%

156 - 192 .1400 175 .1690

192 - 228 .1350 200 .1652

228 - 264 .1300 225 .1618

264 - 300 .1275 250 .1587

300 - 336 .1250 275 .1560

336 - 372 .1225 300 .1536

372 - 408 .1200 325 .1514

408 - 444 .1175 350 .1494

444 - 480 .1150 375 .1476

480 - 516 .1125 400 .1459

Over 516 .1100 425 .1443

450 .1427

475 .1413

500 .1399

525 .1385

550 .1372

</TABLE>

The individual fund fee rate is .45% for Short-Term World Bond , and
.55% for Global Bond and New Markets Income. Based on the average group net
assets of the funds advised by FMR for December 1995, the annual management
fee rates would be calculated as follows:

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Group Fee Rate Individual Fund Fee Rate Management Fee Rate

Short-Term World Bond .1482% + .45% = .5982%

Global Bond .1482% + .55% = .6982%

New Markets Income .1482% + .55% = .6982%

</TABLE>

One-twelfth of this annual management fee rate is applied to each fund's
net assets averaged for the most recent month, giving a dollar amount,
which is the fee for that month.
The table below shows the management fees paid to FMR by each fund for the
last three fiscal years:
SHORT-TERM WORLD BOND

Years Ended 12/31 Management Fees as a
Management Fees % of Average Net Assets

1995 $ 1,001,348 .60 %

1994 $ 2,008,467 .61%

1993 $ 2,464,314 .62%

GLOBAL BOND

Years Ended 12/31 Management Fees as a
Management Fees % of Average Net Assets

1995 $ 1,785,715 .70 %

1994 $ 3,938,370 .71%

1993 $ 3,097,304 .71%

NEW MARKETS INCOME

Years Ended 12/31 Management Fees as a
Management Fees % of Average Net Assets

1995 $ 1,149,541 .70 %

1994 $ 1,686,850 .71%

1993* $ 538,269 .71%+

* From commencement of operations, May 4, 1993.
+ Annualized
FMR may, from time to time, voluntarily reimburse all or a portion of each
fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). FMR retains the ability to be
repaid for these expense reimbursements in the amount that expenses fall
below the limit prior to the end of the fiscal year. Expense reimbursements
by FMR will increase each fund's total returns and yield and repayment of
the reimbursement by each fund will lower its total returns and yield.
During the fiscal periods reported, FMR voluntarily agreed to reimburse
certain funds to the extent that the fund's aggregate operating expenses
were in excess of an annual rate of its average net assets. The table below
identifies the funds in reimbursement; the levels of and periods for such
reimbursement; the amount of management fees incurred under each contract
before reimbursement; and the dollar amount reimbursed by FMR, if any, for
each period.
NEW MARKETS INCOME

<TABLE>
<CAPTION>
<S> <C> <C>
From To Expense Limitations

May 4, 1993 -- 1.20%

Fiscal Period Ended Management Fees Before Amount of Expense Limitations
Reimbursement Reimbursement

December 31, 1995 $ 1,149,541 $ 0

Decem b er 31, 1994 1,686,850 529,663

Decem b er 31, 1993* 538,269 327,595

</TABLE>

* From commencement of operations May 4, 1993.
To comply with the California Code of Regulations, FMR will reimburse each
fund if and to the extent that each fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating each fund's expenses for purposes of this regulation, each
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its distribution plan expenses and
custodian fees attributable to investments in foreign securities.
SUB-ADVISERS. On behalf of Short-Term World Bond , Global Bond, and
New Markets Income, FMR has entered into sub-advisory agreements with FMR
U.K., FMR Far East, FIJ, and FIIA. FIIA, in turn, has entered into a
sub-advisory agreement with FIIAL U.K. Pursuant to the sub-advisory
agreements, FMR may receive investment advice and research services outside
the United States from the sub-advisers. FMR may also grant the
sub-advisers investment management authority as well as the authority to
buy and sell securities if FMR believes it would be beneficial to the
funds.
Currently, FMR U.K., FMR Far East, FIJ, FIIA, and FIIAL U.K. each focus on
issuers in countries other than the United States such as those in Europe,
Asia, and the Pacific Basin.
FMR U.K. and FMR Far East, which were organized in 1986, are wholly owned
subsidiaries of FMR. FIJ and FIIA are wholly owned subsidiaries of Fidelity
International Limited (FIL), a Bermuda company formed in 1968 which
primarily provides investment advisory services to non-U.S. investment
companies and institutional investors investing in securities throughout
the world. Edward C. Johnson 3d, Johnson family members, and various trusts
for the benefit of the Johnson family owns, directly or indirectly, more
than 25% of the voting common stock of FIL. FIJ was organized in Japan in
1986. FIIA was organized in Bermuda in 1983. FIIAL U.K. was organized in
the United Kingdom in 1984, and is a wholly owned subsidiary of Fidelity
International Management Holdings Limited, an indirect wholly owned
subsidiary of FIL.
Under the sub-advisory agreements FMR pays the fees of FMR U.K., FMR Far
East, FIJ, and FIIA. FIIA, in turn, pays the fees of FIIAL U.K. For
providing non-discretionary investment advice and research services the
sub-advisers are compensated as follows:
(small solid bullet) FMR pays FMR U.K. and FMR Far East fees equal to 110%
and 105%, respectively, of FMR U.K.'s and FMR Far East's costs incurred in
connection with providing investment advice and research services.
(small solid bullet) FMR pays FIIA and FIJ fees equal to 30% of FMR's
monthly management fee with respect to the average net assets held by the
fund for which the sub-adviser has provided FMR with investment advice and
research services.
(small solid bullet) FIIA pays FIIAL U.K. a fee equal to 110% of FIIAL
U.K.'s costs incurred in connection with providing investment advice and
research services.
For providing discretionary investment management and executing portfolio
transactions, the sub-advisers are compensated as follows:
(small solid bullet) FMR pays FMR U.K., FMR Far East, FIJ, and FIIA a fee
equal to 50% of its monthly management fee with respect to the fund's
average net assets managed by the sub-adviser on a discretionary basis.
(small solid bullet) FIIA pays FIIAL U.K. a fee equal to 110% of FIIAL
U.K.'s costs incurred in connection with providing discretionary investment
management services.
Currently, FIIAL U.K. exercises discretionary management authority over
Short-Term World Bond and Global Bond in its capacity as sub-adviser.
For the fiscal years ended 1995, 1994, and 1993, no fees were paid by FMR
to any of the sub-advisers on behalf of the funds.
DISTRIBUTION AND SERVICE PLANS
The Trustees have approved Distribution and Service Plans on behalf of the
funds (the Plans) pursuant to Rule 12b-1 under the Investment Company Act
of 1940 (the Rule). The Rule provides in substance that a mutual fund may
not engage directly or indirectly in financing any activity that is
primarily intended to result in the sale of shares of a fund except
pursuant to a plan approved on behalf of the fund under the Rule. The
Plans, as approved by the Trustees, allow the funds and FMR to incur
certain expenses that might be considered to constitute indirect payment by
the funds of distribution expenses.
Under each Plan, if the payment of management fees by the funds to FMR is
deemed to be indirect financing by the funds of the distribution of their
shares, such payment is authorized by the Plans. Each Plan also
specifically recognizes that FMR, either directly or through FDC, may use
its management fee revenue, past profits, or other resources, without
limitation, to pay promotional and administrative expenses in connection
with the offer and sale of shares of each fund. In addition, each Plan
provides that FMR may use its resources, including its management fee
revenues, to make payments to third parties that assist in selling shares
of each fund, or to third parties, including banks, that render shareholder
support services.
Payments made by FMR to third parties during the fiscal year ended December
31, 1995 amounted to $19,211 for Global Bond. No third party payments were
made in fiscal 1995 for Short-Term World Bond or New Markets Income or in
fiscal 1994 and 1993 for any of the funds.
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan, and have
determined that there is a reasonable likelihood that the Plan will benefit
the fund and its shareholders. In particular, the Trustees noted that the
Plans do not authorize payments by a fund other than those made to FMR
under its management contract with the fund. To the extent that each Plan
gives FMR and FDC greater flexibility in connection with the distribution
of shares of each fund, additional sales of fund shares may result.
Furthermore, certain shareholder support services may be provided more
effectively under the Plans by local entities with whom shareholders have
other relationships.
The Plans for Short-Term World Bond and Global Bond were approved by each
fund's shareholders on February 19, 1992 and November 12, 1987,
respectively. The Plan for New Markets Income was approved by FMR as the
initial shareholder on April 29, 1993.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services, or
servicing and recordkeeping functions. FDC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the funds
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. In addition, state securities laws on
this issue may differ from the interpretations of federal law expressed
herein, and banks and financial institutions may be required to register as
dealers pursuant to state law.
Each fund may execute portfolio transactions with, and purchase securities
issued by, depository institutions that receive payments under the Plans.
No preference for the instruments of such depository institutions will be
shown in the selection of investments.
CONTRACTS WITH FMR AFFILIATES
FSC is transfer, dividend disbursing, and shareholder servicing agent for
each fund. FSC receives annual account fees and asset-based fees for each
retail account and certain institutional accounts based on account size. In
addition, the fees for retail accounts are subject to increase based on
postal rate changes. With respect to certain institutional retirement
accounts, FSC receives asset-based fees only. With respect to certain other
institutional retirement accounts, FSC receives annual account fees and
asset-based fees based on fund type. In addition, these fees are subject
to increase based on postal rate changes. FSC also collects small
account fees from certain accounts with balances of less than $2,500.
FSC pays out-of-pocket expenses associated with providing transfer agent
services. In addition, FSC bears the expense of typesetting, printing, and
mailing prospectuses, statements of additional information, and all other
reports, notices, and statements to shareholders, with the exception of
proxy statements.
FSC also performs the calculations necessary to determine each fund's
net asset value per share and dividends, and maintains each fund's
accounting records. The annual fee rates for these pricing and bookkeeping
services are based on each fund's average net assets, specifically,
.0 75 % for the first $500 million of average net assets and
.03 75 % for average net assets in excess of $500 million. The fee is
limited to a minimum of $ 60 ,000 and a maximum of $ 80 0,000 per
year.
The table below shows the fees paid to FSC for pricing and bookkeeping
services, including related out-of-pocket expenses during each fund's last
three fiscal years:
Pricing and Bookkeeping Fees
1995 1994 1993

Short-Term World Bond $ 101,506 $ 198,213 $ 245,437

Global Bond $ 155,301 $ 312,138 $ 255,949

New Markets Income $ 98,972 $ 143,864 $ 52,922*

* From May 4, 1993 (commencement of operations).
For fiscal 1995, 1994, and 1993, there were no securities lending fees
incurred by the funds.
Each fund has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The distribution agreements call
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of each fund, which are continuously
offered at net asset value. Promotional and administrative expenses in
connection with the offer and sale of shares are paid by FMR.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Short-Term World Bond, Global Bond, and New Markets
Income are funds of Fidelity Investment Trust, an open-end management
investment company organized as a Massachusetts business trust on April 20,
1984. On October 18, 1984 the trust's name was changed from Fidelity
International Trust to Fidelity Overseas Fund. On November 1, 1986, the
trust's name was changed from Fidelity Overseas Fund to Fidelity Investment
Trust to reflect the multiple funds within the trust. Currently, there are
twenty-two funds of the trust: Fidelity Overseas Fund, Fidelity Europe
Fund, Fidelity Europe Capital Appreciation Fund, Fidelity Pacific Basin
Fund, Fidelity International Growth & Income Fund, Fidelity Global Bond
Fund, Fidelity Canada Fund, Fidelity Worldwide Fund, Fidelity Emerging
Markets Fund, Fidelity Latin America Fund, Fidelity Southeast Asia Fund,
Fidelity Short-Term World Bond Fund, Fidelity Diversified International
Fund, Fidelity New Markets Income Fund, Fidelity Japan Fund, Fidelity
International Value Fund, Fidelity France Fund, Fidelity Germany Fund,
Fidelity Hong Kong and China Fund, Fidelity Japan Small Companies Fund,
Fidelity Nordic Fund, and Fidelity United Kingdom Fund. The Declaration of
Trust permits the Trustees to create additional funds.
In the event that FMR ceases to be the investment adviser to a trust or a
fund, the right of the trust or fund to use the identifying name "Fidelity"
may be withdrawn. There is a remote possibility that one fund might become
liable for any misstatement in its prospectus or statement of additional
information about another fund.
The assets of the trust received for the issue or sale of shares of each of
its funds and all income, earnings, profits, and proceeds thereof, subject
only to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general liabilities of their respective trusts. Expenses with respect to
each trust are to be allocated in proportion to the asset value of their
respective funds, except where allocations of direct expense can otherwise
be fairly made. The officers of the trust, subject to the general
supervision of the Boards of Trustees, have the power to determine which
expenses are allocable to a given fund, or which are general or allocable
to all of the funds of a certain trust. In the event of the dissolution or
liquidation of the trust, shareholders of each fund of the trust are
entitled to receive as a class the underlying assets of such fund available
for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as "Massachusetts business trust." Under Massachusetts law,
shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. The Declaration of
Trust provides that the trust shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed by the
trust or its Trustees shall include a provision limiting the obligations
created thereby to the trust and its assets. The Declaration of Trust
provides for indemnification out of each fund's property of any shareholder
held personally liable for the obligations of the fund. The Declaration of
Trust also provides that its funds shall, upon request, assume the defense
of any claim made against any shareholder for any act or obligation of the
fund and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the fund itself would be unable to meet its
obligations. FMR believes that, in view of the above, the risk of personal
liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protect Trustees
against any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of their office.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. The shares have no preemptive or conversion rights; the voting
and dividend rights, the right of redemption, and the privilege of exchange
are described in the Prospectus. Shares are fully paid and nonassessable,
except as set forth under the heading "Shareholder and Trustee Liability"
above. Shareholders representing 10% or more of the trust or a fund may, as
set forth in the Declaration of Trust, call meetings of a trust or fund for
any purpose related to the trust or fund, as the case may be, including, in
the case of a meeting of an entire trust, the purpose of voting on removal
of one or more Trustees. The trust or fund may be terminated upon the sale
of its assets to another open-end management investment company, or upon
liquidation and distribution of its assets, if approved by vote of the
holders of a majority of the outstanding shares of the trust or the fund.
If not so terminated, each trust or fund will continue indefinitely.
CUSTODIAN. Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts, is custodian of the assets of Short-Term World Bond .
The Chase Manhattan Bank, N.A., 1211 Avenue of the Americas, New York, New
York, is custodian of the assets of Global Bond and New Markets Income. The
custodian is responsible for the safekeeping of a fund's assets and the
appointment of the subcustodian banks and clearing agencies. The custodian
takes no part in determining the investment policies of a fund or in
deciding which securities are purchased or sold by a fund. However, a fund
may invest in obligations of the custodian and may purchase securities from
or sell securities to the custodian. The Bank of New York and Chemical
Bank, each headquartered in New York, also may serve as a special purpose
custodian of certain assets in connection with pooled repurchase agreement
transactions.
FMR, its officers and directors, its affiliated companies, and the Board of
Trustees may, from time to time, conduct transactions with various banks,
including banks serving as custodians for certain funds advised by FMR. The
Boston branch of Short-Term World Bond's custodian leases its office space
from an affiliate of FMR at a lease payment which, when entered into, was
consistent with prevailing market rates. Transactions that have occurred to
date include mortgages and personal and general business loans. In the
judgment of FMR, the terms and conditions of those transactions were not
influenced by existing or potential custodial or other fund relationships.
AUDITOR. Coopers & Lybrand L.L.P., One Post Office Square, Boston,
Massachusetts, serves as Short-Term World Bond' s and Global Bond's
independent accountant. Price Waterhouse LLP, 160 Federal Street, Boston,
Massachusetts serves as New Markets Income's independent accountant. The
auditors examine financial statements for the funds and provide other
audit, tax, and related services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the fiscal
year ended December 31, 1995 are included in the fund's Annual Report,
which is a separate report supplied with this Statement of Additional
Information. Each fund's financial statements and financial highlights are
incorporated herein by reference.
APPENDIX
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value of
each investment by the number of days remaining to its maturity, adding
these calculations, and then dividing the total by the value of the fund's
portfolio. An obligation's maturity is typically determined on a stated
final maturity basis, although there are some exceptions to this rule.
For example, if it is probable that the issuer of an instrument will take
advantage of a maturity-shortening device, such as a call, refunding, or
redemption provision, the date on which the instrument will probably be
called, refunded, or redeemed may be considered to be its maturity date.
Also, the maturities of mortgage-backed securities and some asset-backed
securities, such as collateralized mortgage obligations, are determined on
a weighted average life basis, which is the average time for principal to
be repaid. For a mortgage security, this average time is calculated by
estimating the timing of principal payments, including unscheduled
prepayments, during the life of the mortgage. The weighted average life of
these securities is likely to be substantially shorter than their stated
final maturity.
The descriptions that follow are examples of eligible ratings for the
funds. A fund may, however, consider the ratings for other types of
investments and the ratings assigned by other rating organizations when
determining the eligibility of a particular investment.
DESCRIPTION OF MOODY'S CORPORATE BOND RATINGS:
AAA - Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edge d ." Interest payments are
protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues.
AA - Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than the Aaa securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered adequate
but elements may be present which suggest a susceptibility to impairment
sometime in the future.
BAA - Bonds which are rated Baa are considered as medium-grade
obligations, ( i.e., they are neither highly protected nor poorly
secured ) . Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.
BA - Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
CAA - Bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with respect
to principal or interest.
CA - Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked short-comings.
C - Bonds which are rated C are the lowest-rated class of bonds and
issue s so rated can be regarded as having extremely poor prospects
of ever attaining any real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
DESCRIPTION OF S&P'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's
to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rate BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal
payments. The BB rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal. The
CCC rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied B or B- rating.
CC - Debt rated CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may
be used to cover a situation where a bankruptcy petition has been filed but
debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period. The D rating will also
be used upon the filing of a bankruptcy petition if debt service payments
are jeopardized.
The ratings from AA to CCC may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.

FIDELITY
SHORT-TERM WORLD BOND
FUND
(FORMERLY FIDELITY SHORT-TERM WORLD INCOME FUND)
ANNUAL REPORT
DECEMBER 31, 1995
(2_FIDELITY_LOGOS)
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.

PERFORMANCE 4 How the fund has done over time.

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

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

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

FINANCIAL STATEMENTS 17 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.

NOTES 21 Notes to the financial statements.

REPORT OF INDEPENDENT 26 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, 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 were fairly positive in 1995, no one can predict what
lies ahead for investors. The previous 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, as well as reinvestment of
any dividends (or income) and capital gains (the profits the fund earns
when it sells bonds that have grown in value). You can also look at the
fund's dividends and yield. If Fidelity had not reimbursed certain fund
expenses, life of fund figures would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1995 PAST 1 LIFE OF
YEAR FUND

Short-Term World Bond 7.79% 21.18%

Lehman Brothers 1-3 Year Government Bond Index 10.84% n/a

Salomon Brothers 1-3 Year World Government Bond 11.17% n/a
Index

Average Short World Multi-Market Income Fund 7.80% n/a

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
October 4, 1991. 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 1-3 Year Government Bond Index - a broad gauge of the performance
of short-term U.S. government bonds or to the Salomon Brothers 1-3 Year
World Government Bond Index which includes both U.S. and foreign government
bonds (with foreign currency exposure hedged into U.S. dollars). To measure
how the fund's performance stacked up against its peers, you can compare it
to the average short world multi-market income fund, which reflects the
performance of 43 funds with similar objectives tracked by Lipper
Analytical Services over the past 12 months. Both benchmarks include
reinvested dividends and capital gains, if any, and exclude sales charges.
Recent U.S. Consumer Price Index information is not available from the U.S.
Department of Labor. Therefore, the CPI comparison has not been included in
this report.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1995 PAST 1 LIFE OF
YEAR FUND

Short-Term World Bond 7.79% 4.63%

Lehman Brothers 1-3 Year Government Bond Index 10.84% n/a

Salomon Brothers 1-3 Year World Government Bond 11.17% n/a
Index

Average Short World Multi-Market Income Fund 7.80% n/a

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
Short-Term WorldSalomon Brothers
10/31/91 10000.00 10000.00
11/30/91 9953.55 10076.49
12/31/91 10013.89 10199.32
01/31/92 10073.94 10218.30
02/29/92 10167.77 10248.45
03/31/92 10203.63 10241.75
04/30/92 10340.52 10322.15
05/31/92 10393.30 10394.73
06/30/92 10450.55 10475.69
07/31/92 10563.77 10567.25
08/31/92 10594.04 10623.64
09/30/92 10348.11 10729.72
10/31/92 10510.46 10755.96
11/30/92 10442.45 10753.73
12/31/92 10497.71 10827.98
01/31/93 10595.46 10916.76
02/28/93 10718.75 10997.71
03/31/93 10825.83 11027.86
04/30/93 10901.95 11086.48
05/31/93 11019.75 11100.44
06/30/93 11203.34 11198.70
07/31/93 11348.48 11238.35
08/31/93 11487.08 11319.30
09/30/93 11471.74 11355.59
10/31/93 11633.27 11410.31
11/30/93 11676.59 11431.52
12/31/93 11819.14 11497.40
01/31/94 11890.79 11532.58
02/28/94 11700.76 11463.35
03/31/94 11369.94 11436.55
04/30/94 11247.98 11423.15
05/31/94 11417.32 11437.11
06/30/94 11157.58 11431.52
07/31/94 11239.08 11505.22
08/31/94 11320.82 11505.22
09/30/94 11380.60 11523.09
10/31/94 11421.99 11567.75
11/30/94 11462.67 11590.08
12/31/94 11134.20 11612.42
01/31/95 11064.33 11748.65
02/28/95 11083.40 11867.01
03/31/95 11111.02 11960.81
04/30/95 11246.96 12077.49
05/31/95 11436.96 12273.46
06/30/95 11496.19 12319.25
07/31/95 11569.38 12414.72
08/31/95 11640.73 12504.61
09/30/95 11724.49 12588.91
10/31/95 11798.75 12688.29
11/30/95 11911.99 12813.91
12/29/95 12001.21 12908.83

$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Short-Term World Bond Fund on October 31, 1991, shortly after the fund
started. As the chart shows, by December 31, 1995, the value of your
investment would have grown to $12,001 - a 20.01% increase on your initial
investment. For comparison, look at how the Salomon Brothers 1-3 Year World
Government Bond Index did over the same period. With dividends reinvested,
the same $10,000 investment would have grown to $12,909 - a 29.09%
increase. Henceforth, the fund will compare its performance to the Salomon
Brothers 1-3 Year World Government Bond Index rather than the Lehman
Brothers 1-3 Year Government Bond Index. The Salomon Brothers Index
includes both U.S. and foreign government bonds (with foreign currency
exposure hedged into U.S. dollars), which is more reflective of the fund's
range of permitted investments. For comparison purposes, both indexes 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)
DIVIDENDS AND YIELD
PERIODS ENDED DECEMBER 31, 1995 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR

Dividends per share 4.73(cents) 27.56(cents) 56.84(cents)

Annualized dividend rate 6.19% 6.12% 6.40%

30-day annualized yield 4.86% - -

DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on the fund's average share price of $8.99
over the past month, $8.94 over the past six months and $8.88 over the past
year, you can compare the fund's income distributions over these three
periods.
The 30-day annualized YIELD is a standard formula for all bond funds based
on the yields of the bonds in the fund, averaged over the past 30 days.
This figure shows you the yield characteristics of the fund's investments
at the end of the period. It also helps you compare funds from different
companies on an equal basis. It does not reflect the cost of hedging and
other currency gains and losses.
FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
Both developed and emerging
fixed-income markets recorded
strong returns in 1995. For the
12 months ended December 31,
1995, the Salomon Brothers World
Government Bond Index - a
proxy of government bond market
performance in developed nations
including the U.S. - rose
19.04%. Emerging markets
shrugged off the fallout from
December 1994's Mexican peso
devaluation to record strong
returns. The J.P. Morgan Emerging
Markets Bond Index posted a
27.54% return for the year. To
compare, the Lehman Brothers
Aggregate Bond Index - a broad
measure of taxable bonds in the
U.S. market - had a total return of
18.47%. Bond markets in
developed countries benefited
from slow economic growth and
relatively low inflation pressures.
This led to a more favorable interest
rate environment, as the central
banks of the U.S., Germany and
Great Britain all lowered their
respective short-term interest
rates. Record low interest rates
in Japan and a strengthening
dollar pushed a significant amount
of money into the U.S., as overseas
investors in 1995 purchased a
record net $99.4 billion in U.S.
Treasury securities - helping fuel
the U.S. rally. The bulk of emerging
markets' total return came from a
springtime rally following the
announcement of a $50 billion
bailout package for Mexico by the
U.S. Treasury and the International
Monetary Fund.
An interview with Scott Kuldell, Portfolio Manager of Fidelity Short-Term
World Bond Fund
Q. SCOTT, HOW HAS THE FUND PERFORMED?
A. For the 12 months ended December 31, 1995, the fund's total return was
7.79%. The average short world multi-market income fund tracked by Lipper
Analytical Services returned 7.80% during the same period. And the Salomon
Brothers 1-3 Year World Government Bond Index posted an 11.17% return
during the 12-month period.
Q. WHY DID THE FUND'S PERFORMANCE TRAIL THAT OF THE INDEX?
A. The fund held emerging markets investments in the first three months of
the period. At that time, those markets saw sharp sell-offs, largely as a
result of the Mexican peso devaluation in late 1994. Since then, the fund's
stategy has changed in a number of ways, including no longer actively
investing in emerging markets. My main strategy now is to outperform the
return of the global short-term government bond market - which includes
only developed countries with consistent records of paying debt - by
exploiting anomalies and inefficiencies in the market, and by using
Fidelity's worldwide credit research.
Q. WHAT HAS THE INVESTING ENVIRONMENT BEEN LIKE OVER THE PAST SIX MONTHS?
A. Short-term fixed-income investments overseas have provided better
opportunities than similar investments in the U.S. That's because of the
difference between the shapes of the yield curve - the graphical
representation of the yields of various bond maturities - in the U.S. and
abroad. In most countries, the yield curve has remained upward sloping.
That is, the longer-term the bond, the higher the yield. In the U.S., we've
had an inverted yield curve in the short end. That is, yields on
three-month bank deposits have been higher than yields on two-year Treasury
issues.
Q. WHY HAS THAT PROVIDED AN OPPORTUNITY?
A. In a normally shaped, upward-sloping yield curve, the yield on two-year
bonds goes down - and the price goes up - as their maturities get shorter.
That's because the bonds are priced off of the lower end of the yield curve
as they age. In the U.S., the inverted yield curve has created the opposite
effect for two-year bonds that are in the process of aging. As a result,
foreign bonds on the short end of the curve generally have performed better
than comparable U.S. bonds with similar maturities.
Q. WHERE HAVE YOU FOUND INVESTMENT OPPORTUNITIES?
A. One of the advantages of investing in foreign bond markets is that there
are more price inefficiencies to take advantage of than in the U.S. The U.S
market is the most highly analyzed market in the world. While the flow of
information in foreign markets is less efficient, Fidelity uses its strong
research base to try to find hidden opportunities. Let me give you an
example of one such opportunity that the fund took advantage of over the
period. The Kingdom of Belgium issues two different types of bonds: Olos
are issued to institutional investors, and Philippe bonds are issued to
individual retail investors. In the fall, the government issued a new
Philippe bond with a nine-year maturity. The bond came with a reset feature
which, every three years, provides the holder with the option to reset the
coupon rate at either the then-prevailing three-year interest rate or
6.75%, whichever is higher. In addition to this valuable option, the bonds
were priced cheaper than three-year Olos without the option. At the end of
the period, the bonds still were trading cheaply, but at some point,
investors will realize the value of the coupon reset option and they should
outperform comparable bonds. The Belgian government was surprised at how
much interest these bonds generated. In fact, they canceled an Olo auction
because they sold so many of these Philippe bonds.
NOTE TO SHAREHOLDERS: EFFECTIVE FEBRUARY 26, 1996, CHARLES MORRISON AND LUC
HUYGHEBAERT BECAME CO-MANAGERS OF THE FUND. MR. MORRISON JOINED FIDELITY IN
1987 AND ALSO MANAGES FIDELITY ADVISOR SHORT FIXEDINCOME FUND, FIDELITY
SHORT-TERM BOND PORTFOLIO AND FIDELITY SPARTAN SHORT-TERM INCOME FUND. HE
WILL MANAGE THE U.S. PORTION OF THE FUND. MR. HUYGHEBAERT, WHO IS BASED IN
LONDON AND WILL MANAGE THE INTERNATIONAL PORTION OF THE FUND, JOINED
FIDELITY INTERNATIONAL, LIMITED, A SISTER COMPANY OF FIDELITY INVESTMENTS,
IN 1994. HE MANAGES SEVERAL FUNDS FOR FIL, INCLUDING INTERNATIONAL BOND
FUND, EUROPEAN BOND FUND, YEN BOND FUND AND DM SHORT TERM BOND FUND. THE
FOLLOWING IS THEIR COMMENT ON THE OUTLOOK FOR THE FUND.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. In addition to looking for opportunities such as the Belgian bonds, the
fund probably will increase its investments in U.S. corporate securities.
The fundamentals and technicals of the domestic corporate market are
strong, and compensate for the high valuations within that market. In
general, the world-wide government bond market environment also is
favorable relative to money markets although yields are lower than they
were a year ago. Short rates have continued to fall, as economic growth has
slowed and inflation has not posed any significant problems. This should
provide a good backdrop for short-term bond investing.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: high current income
and preservation of capital
by investing mainly in
short-term debt securities
around the world
START DATE: October 4, 1991
SIZE: as of December 31,
1995, more than $121 million
MANAGERS: Scott Kuldell,
from April 1994 to February
1996; Charles Morrison and
Luc Huyghebaert, since
February 1996
(checkmark)
LUC HUYGHEBAERT ON
DIVERSIFICATION AND HEDGED BOND
FUNDS:
"While economic and political
factors can affect the fund, in
one sense it has less volatility
than a fund that invests in a
single country. That's because
it is invested in several
countries that don't have
perfect correlations between
them. Diversification of interest
rate risk helps lower the overall
volatility of the fund. And
keeping the overall credit
quality of the portfolio high
helps to keep event risk to a
minimum.
"In addition, in this fund, every
country's returns are hedged
into dollars. We use
techniques to limit the fund's
exposure to currency risk,
or the risk that movements in
the currency of the country in
which an investment is made
will reduce the returns from
the investment. Therefore, we
can translate the excess
returns from one country into
another. Excess returns are
the returns generated from
the bonds you own -
generally two- or three-year
bonds - in excess of the
money market rate. If we can
translate excess returns in
Germany, for example, into
excess returns in the U.S., then
the degree to which we
outperform money market funds
in Germany directly translates
into the fund's outperformance
of a U.S. money market fund.
This has been especially
beneficial this year, when
short-term bonds have
yielded less than money
market instruments in the
U.S."
INVESTMENT CHANGES

TOP COUNTRIES AS OF DECEMBER 31, 1995
(BY LOCATION OF ISSUER) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS 6 MONTHS AGO

United States 41 51

Italy 12 9

Canada 7 7

Germany 6 5

France 5 2

TOP COUNTRIES ARE BASED ON THE LOCATION OF THE ISSUER OF EACH SECURITY,
INDICATING WHERE THE FUND IS EXPOSED TO POLITICAL AND CREDIT RISKS. THE
FUND'S LARGEST POSITION AS OF DECEMBER 31 WAS IN SECURITIES OF UNITED
STATES ISSUERS.
TOP INTEREST RATE EXPOSURES AS OF DECEMBER 31, 1995
(ESTIMATED, BY COUNTRY) % OF FUND'S TOTAL INTEREST % OF FUND'S TOTAL
RATE EXPOSURE INTEREST RATE EXPOSURE
6 MONTHS AGO

United States 40 44

Japan 16 17

Italy 10 9

Germany 6 6

France 6 5

FIDELITY ESTIMATES INTEREST-RATE EXPOSURES BASED ON THE DURATION, OR
INTEREST RATE SENSITIVITY, OF THE FUND'S HOLDINGS. AS OF DECEMBER 31, THE
FUND WAS MOST SENSITIVE TO INTEREST RATE MOVEMENTS IN THE U.S., WHICH
ACCOUNT FOR APPROXIMATELY 40% OF THE FUND'S INTEREST RATE EXPOSURE.
ASSET ALLOCATION
AS OF DECEMBER 31, 1995 AS OF JUNE 30, 1995
1
Corporate bonds 16.9%
Foreign
Government
obligations 42.1%
U.S. Government
obligations 24.2%
Other 13.3%
Short-term
investments 3.5%
Corporate bonds 10.3%
Foreign
Government
obligations 32.8%
U.S. Government
obligations 33.9%
Other 12.3%
Short-term
investments 10.7%
Row: 1, Col: 1, Value: 3.5
Row: 1, Col: 2, Value: 13.3
Row: 1, Col: 3, Value: 24.2
Row: 1, Col: 4, Value: 42.1
Row: 1, Col: 5, Value: 16.9
Row: 1, Col: 1, Value: 10.7
Row: 1, Col: 2, Value: 12.3
Row: 1, Col: 3, Value: 33.9
Row: 1, Col: 4, Value: 32.8
Row: 1, Col: 5, Value: 10.3
INVESTMENTS DECEMBER 31, 1995

Showing Percentage of Total Value of Investments in Securities

NONCONVERTIBLE BONDS - 16.9%
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (A)
AUSTRALIA - 0.7%
New South Wales Treasury
Corp.
7 1/2%, 2/1/98 Aa2 AUD 1,200,000 $ 893,412
CANADA - 6.5%
Ford Motor Credit Co. of
Canada Ltd.:
10 1/2%, 5/17/96 Aa3 CAD 4,300,000 3,198,014
8.90%, 2/23/98 A1 CAD 1,676,000 1,287,388
General Motors Acceptance Corp.
of Canada Ltd.:
8.30%, 4/12/98 A3 CAD 1,000,000 759,043
8 1/2%, 5/27/99 A3 CAD 1,350,000 1,036,483
Household Financial Ltd. 7 1/4%,
9/17/98 A2 CAD 2,000,000 1,489,940
TOTAL CANADA 7,770,868
NETHERLANDS - 0.1%
Ford Capital BV yankee 9 3/8%,
1/1/98 A1 150,000 160,644
UNITED STATES OF AMERICA - 9.6%
Associates Corp. North America
8 3/8%, 6/1/96 Aa3 1,310,000 1,324,030
Beneficial Corp.:
8.26%, 8/20/96 A2 1,000,000 1,015,340
8.22%, 6/15/98 A2 225,000 237,994
8.80%, 6/15/98 A2 1,600,000 1,713,328
Discover Card Trust 7 1/2%,
6/16/00 A2 210,000 217,875
Finova Capital Corp. 5.98%,
10/31/97 Baa 480,000 480,778
General Motors Acceptance Corp.:
8.80%, 3/20/96 A3 1,000,000 1,006,140
7%, 5/27/97 A3 1,003,000 1,022,288
5 3/4%, 12/10/97 A3 720,000 722,275
6.40%, 6/8/98 A3 1,000,000 1,017,040
Household Finance Corp. 7.55%,
3/16/98 A2 560,000 581,375
Northwest Financial, Inc. 6%,
8/15/97 Aa3 1,100,000 1,109,705
Wells Fargo & Co. 8.20%, 11/1/96 A2 1,000,000 1,020,580
TOTAL UNITED STATES OF AMERICA 11,468,748
TOTAL NONCONVERTIBLE BONDS
(Cost $20,517,594) 20,293,672
GOVERNMENT OBLIGATIONS (G) - 66.3%
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (A)
ARGENTINA - 1.8%
Province of Chaco 11 7/8%,
9/10/97 (d) - $ 2,066,666 $ 2,145,406
BELGIUM - 4.3%
Kingdom of Belgium (c):
6 1/4%, 11/25/96 AAA BEF 100,000 3,453,788
5.10%, 11/21/04 (e) AAA BEF 50,000 1,693,365
TOTAL BELGIUM 5,147,153
DENMARK - 1.3%
Kingdom of Denmark:
6 1/4%, 2/10/97 Aaa DKK 4,000,000 728,802
9%, 11/15/98 Aaa DKK 4,000,000 782,923
TOTAL DENMARK 1,511,725
FRANCE - 5.3%
French Government OAT:
8 1/2%, 11/12/97 Aaa FRF 24,150,000 5,209,982
8 1/8%, 5/25/99 Aaa FRF 5,000,000 1,096,199
TOTAL FRANCE 6,306,181
GERMANY - 6.1%
Federal Republic of Germany:
6 1/8%, 7/21/97 Aaa DEM 6,000,000 4,318,081
6 3/8%, 8/14/98 Aaa DEM 4,100,000 3,005,146
TOTAL GERMANY 7,323,227
ITALY - 11.8%
Republic of Italy (c):
8 1/2%, 1/1/97 A1 ITL 7,000,000 4,356,044
8 1/2%, 8/01/97 A1 ITL 9,000,000 5,542,821
8 1/2%, 1/1/99 A1 ITL 7,000,000 4,243,638
TOTAL ITALY 14,142,503
GOVERNMENT OBLIGATIONS (G) - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (A)
NETHERLANDS - 3.1%
Netherland Government 6 1/4%,
7/15/98 Aaa NLG 5,700,000 $ 3,714,216
SPAIN - 2.8%
Kingdom of Spain (c):
11.85%, 8/30/96 AAA ESP 100,000 830,122
11.60%, 1/15/97 Aa2 ESP 100,000 841,379
11.45%, 8/30/98 AAA ESP 200,000 1,726,470
TOTAL SPAIN 3,397,971
SWEDEN - 2.0%
Kingdom of Sweden 10 3/4%,
1/23/97 Aa1 SEK 16,000,000 2,463,869
UNITED KINGDOM - 3.6%
United Kingdom, Great Britian &
Northern Ireland:
10 1/2%, 2/21/97 Aaa GBP 1,000,000 1,622,957
14%, 5/22/01 Aaa GBP 1,500,000 2,711,389
TOTAL UNITED KINGDOM 4,334,346
UNITED STATES OF AMERICA - 24.2%
Federal Home Loan Bank
4.83%, 9/21/98 (callable) Aaa 275,000 270,789
Federal Home Loan Mortgage Corp.
4.78%, 2/10/97 (callable) Aaa 210,000 208,368
Federal National Mortgage
Association
3%, 7/13/98 (h) Aaa 300,000 309,891
Government Trust Certificates
(assets of trust
guaranteed by U.S. Government
through
Defense Security Assistance
Agency):
Class T-2 9.40%, 11/15/96 Aaa 448,480 457,198
Class 3-B 8.55%, 11/15/97 Aaa 283,912 290,490
Class 1-C 9 1/4%, 11/15/01 Aaa 176,000 195,518
State of Israel (guaranteed by
U.S. Government
through Agency for International
Development)
5 1/4%, 3/15/98 Aaa 220,000 219,519
Private Export Funding
Corp. secured:
9.10%, 10/30/98 Aaa 60,000 65,588
9 1/2%, 3/31/99 Aaa 230,000 257,218
Tennessee Valley Authority
4.60%, 12/15/96 Aaa 260,000 258,014
GOVERNMENT OBLIGATIONS (G) - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (A)
UNITED STATES OF AMERICA - CONTINUED
U.S. Treasury Notes:
4 3/8%, 11/15/96 Aaa $ 4,940,000 $ 4,903,740
8 1/2%, 5/15/97 Aaa 370,000 385,840
5 1/8%, 3/31/98 Aaa 4,045,000 4,038,043
9%, 5/15/98 Aaa 310,000 335,671
9 1/4%, 8/15/98 Aaa 6,240,000 6,844,469
9 1/8%, 5/15/99 Aaa 1,538,000 1,716,316
7 3/4%, 12/31/99 Aaa 7,630,000 8,279,771
TOTAL UNITED STATES OF AMERICA 29,036,443
TOTAL GOVERNMENT OBLIGATIONS
(Cost $77,768,424) 79,523,040
SUPRANATIONAL OBLIGATIONS - 9.8%
Eurofima euro 11 3/8%,
11/30/99 Aaa GBP 200,000 355,509
International Bank for
Reconstruction & Development
Worldbank 4 1/2%, 12/22/97 (c) Aaa JPY 1,100,000 11,420,213
TOTAL SUPRANATIONAL OBLIGATIONS
(Cost $13,470,852) 11,775,722
INTEREST INDEXED SECURITIES - 3.5%
UNITED STATES OF AMERICA - 3.5%
Citibank Nassau 8.5625%, 3/13/96
(coupon inversely indexed to JPY LIBOR and
principal indexed to value of 3-year
Japanese securities) (Cost $4,000,000) (f) 4,000,000 4,217,600
REPURCHASE AGREEMENTS - 3.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a
joint trading account at 5.88%,
dated 12/29/95 due 1/2/96 $ 4,152,711 4,150,000
TOTAL INVESTMENT IN SECURITIES - 100.0%
(Cost $119,906,870) $ 119,960,034
FORWARD FOREIGN CURRENCY CONTRACTS
SETTLEMENT UNREALIZED
DATE VALUE GAIN/(LOSS)
CONTRACTS TO BUY
1,614,426 FRF 1/8/96 $ 329,104 $ (896)
144,120 DEM 2/1/96 100,398 398
30,273,000 JPY 2/1/96 294,248 (5,752)
655,830 SEK 1/17/96 98,387 (1,613)
TOTAL CONTRACTS TO BUY
(Payable amount $830,000) $ 822,137 $ (7,863)
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 0.7%
CONTRACTS TO SELL
1,182,389 AUD 2/1/96 $ 876,702 $ 20,731
151,404,945 BEF 3/27/96 5,150,054 7,142
3,064,550 GBP 2/1/96 4,748,531 78,136
10,374,095 CAD 1/29/96 7,603,942 (51,730)
8,258,017 DKK 1/17/96 1,484,525 997
5,791,609 NLG 2/12/96 3,611,381 42,630
31,991,286 FRF 1/8/96 6,521,480 (76,950)
10,776,540 DEM 2/1/96 7,507,264 192,155
22,866,360,000 ITL 3/27/96 14,233,178 (78,824)
1,219,160,000 JPY 2/1/96 11,850,004 314,856
414,185,207 ESP 2/12/96 to
3/27/96 3,379,574 (24,559)
18,320,016 SEK 1/17/96 2,748,354 (122,095)
TOTAL CONTRACTS TO SELL
(Receivable amount
$70,017,478) $ 69,714,989 $ 302,489
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 58.1%
CURRENCY ABBREVIATIONS
AUD - Australian dollar
BEF - Belgian franc
GBP - British pound
CAD - Canadian dollar
DKK - Danish krone
NLG - Dutch guilder
FRF - French franc
DEM - German deutsche mark
ITL - Italian lira
JPY - Japanese yen
ESP - Spanish peseta
SEK - Swedish krona
LEGEND
1. Principal amount is stated in United States dollars unless otherwise
noted.
2. Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
3. Principal amount in thousands.
4. Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Province of Chaco
11 7/8%, 9/10/97 3/9/94 $2,207,850
5. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
6. Coupon is inversely indexed to a floating interest rate multiplied by a
specified factor. If the floating rate is high enough, the coupon rate may
be zero or be a negative amount that is carried forward to reduce future
interest and/or principal payments. The price may be considerably more
volatile than the price of a comparable fixed rate security. The rate shown
is the rate at period end.
7. Some foreign government obligations have not been individually rated by
S&P or Moody's. The ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
8. Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 84.4% AAA, AA, A 84.5%
Baa 0.4% BBB 2.8%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
For some foreign government obligations, FMR has assigned the ratings of
the sovereign credit of the issuing government.The percentage not rated by
either S&P or Moody's amounted to 1.8% including long-term debt categorized
as other securities.
INCOME TAX INFORMATION
At December 31, 1995, the aggregate cost of investment securities for
income tax purposes was $119,906,870. Net unrealized appreciation
aggregated $53,164, of which $2,698,618 related to appreciated investment
securities and $2,645,454 related to depreciated investment securities.
At December 31, 1995, the fund had a capital loss carryforward of
approximately $32,196,000 of which $349,000, $2,324,000, $13,718,000 and
$15,805,000 will expire on December 31, 1999, 2000, 2002 and 2003,
respectively.
MARKET SECTOR DIVERSIFICATION
(Unaudited)
As a Percentage of Total Value of Investments
Finance 16.2%
Foreign Government Obligations 42.1
Indexed Securities 3.5
Repurchase Agreements 3.5
Supranational Obligations 9.8
Services 0.7
U.S. Government Obligations 24.2
100.0%
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, 1995

ASSETS

Investment in securities, at value (including repurchase $ 119,960,034
agreements of $4,150,000) (cost $119,906,870) -
See accompanying schedule

Unrealized appreciation on foreign currency contracts 660,776

Interest receivable 2,811,292

TOTAL ASSETS 123,432,102

LIABILITIES

Payable to custodian bank $ 83,541

Unrealized depreciation on foreign currency contracts 366,150

Payable for fund shares redeemed 766,018

Distributions payable 116,358

Accrued management fee 62,695

Other payables and accrued expenses 103,677

TOTAL LIABILITIES 1,498,439

NET ASSETS $ 121,933,663

Net Assets consist of:

Paid in capital $ 154,796,573

Distributions in excess of net investment income (1,222,475)

Accumulated undistributed net realized gain (loss) on (32,195,911)
investments and foreign currency transactions

Net unrealized appreciation (depreciation) on 555,476
investments and assets and liabilities in foreign
currencies

NET ASSETS, for 13,537,905 shares outstanding $ 121,933,663

NET ASSET VALUE, offering price and redemption price per $9.01
share ($121,933,663 (divided by) 13,537,905 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1995

INVESTMENT INCOME $ 12,495,833
Interest

Less foreign taxes withheld (70,743)

TOTAL INCOME 12,425,090

EXPENSES

Management fee $ 1,001,348

Transfer agent fees 435,424

Accounting fees and expenses 101,506

Non-interested trustees' compensation 1,000

Custodian fees and expenses 66,354

Registration fees 25,568

Audit 116,650

Legal 1,699

Interest 14,106

Miscellaneous 2,167

TOTAL EXPENSES 1,765,822

NET INVESTMENT INCOME 10,659,268

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

Investment securities (12,488,210)

Foreign currency transactions 2,547,981 (9,940,229)

Change in net unrealized appreciation (depreciation) on:

Investment securities 14,548,595

Assets and liabilities in foreign currencies (4,518,240) 10,030,355

NET GAIN (LOSS) 90,126

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 10,749,394
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1994

INCREASE (DECREASE) IN NET ASSETS

Operations $ 10,659,268 $ 24,839,382
Net investment income

Net realized gain (loss) (9,940,229) (33,931,861)

Change in net unrealized appreciation (depreciation) 10,030,355 (13,418,051)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 10,749,394 (22,510,530)
FROM OPERATIONS

Distributions to shareholders (10,715,310) (6,841,239)
From net investment income

In excess of net investment income - (1,710,314)

Return of capital - (15,696,807)

TOTAL DISTRIBUTIONS (10,715,310) (24,248,360)

Share transactions 27,319,850 192,214,787
Net proceeds from sales of shares

Reinvestment of distributions 8,969,845 20,522,507

Cost of shares redeemed (179,797,316) (323,172,774)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING (143,507,621) (110,435,480)
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS (143,473,537) (157,194,370)

NET ASSETS

Beginning of period 265,407,200 422,601,570

End of period (including distributions in excess of $ 121,933,663 $ 265,407,200
net investment income of $1,222,475 and
$4,188,209, respectively)

OTHER INFORMATION
Shares

Sold 3,087,868 20,004,614

Issued in reinvestment of distributions 1,012,063 2,165,313

Redeemed (20,354,972) (33,838,814)

Net increase (decrease) (16,255,041) (11,668,887)

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31, TWO MONTH YEAR OCTOBER 4, 1991
PERIOD ENDED (COMMENCEME
ENDED OCTOBER NT OF
DECEMBER 31, OPERATIONS) TO
31, OCTOBER 31,

1995 1994 1993 D 1992 1992 1991

SELECTED PER-SHARE DATA

Net asset value, $ 8.910 $ 10.190 $ 9.680 $ 9.800 $ 10.040 $ 10.000
beginning of period

Income from .619 .644 .564 .191 .835 .061
Investment
Operations
Net investment
income

Net realized and .049 (1.218) .621 (.203) (.338) .037
unrealized gain
(loss)

Total from .668 (.574) 1.185 (.012) .497 .098
investment
operations

Less Distributions (.568) (.199) (.543) (.108) (.737) (.058)
From net
investment
income

In excess of net - (.050) (.132) - - -
investment
income

Return of capital - (.457) - - - -

Total distributions (.568) (.706) (.675) (.108) (.737) (.058)

Net asset value, end $ 9.010 $ 8.910 $ 10.190 $ 9.680 $ 9.800 $ 10.040
of period

TOTAL RETURN B, C 7.79% (5.80) 12.59% (.12)% 5.10% .98%
%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of $ 121,934 $ 265,407 $ 422,602 $ 458,846 $ 648,448 $ 44,318
period (000 omitted)

Ratio of expenses to 1.06% 1.01% 1.00% 1.20% A, 1.09% 1.00% A,
average net assets E E

Ratio of net 6.42% 7.54% 8.00% 8.63% A 9.04% 9.07% A
investment income
to average net
assets

Portfolio turnover rate 284% 134% 160% 117% A 154% 62% 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 FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D EFFECTIVE JANUARY 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.
E 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 December 31, 1995

1. SIGNIFICANT ACCOUNTING POLICIES.
On December 14, 1995, the Board of Trustees approved a change in the fund's
name from Fidelity Short-Term World Income Fund to Fidelity Short-Term
World Bond Fund. The fund's name change will be effective in 1996 with the
next prospectus revision.
Fidelity Short-Term World Bond Fund (the fund) is a fund of Fidelity
Investment Trust (the trust) and is authorized to issue an unlimited number
of shares. The trust is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities (including restricted securities) for which
exchange quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in good
faith under consistently applied procedures under the general supervision
of the Board of Trustees. Short-term securities maturing within sixty days
of their purchase date are valued at amortized cost or original cost plus
accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment
securities and other assets and liabilities denominated in a foreign
currency are translated into U.S. dollars at the prevailing rates of
exchange at period end. Purchases and sales of securities, income receipts,
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts and foreign currency options, 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. The
effects of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or loss
on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to 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. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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.
Dividends are declared daily and paid monthly from net interest income.
Distributions to shareholders from realized capital gains on investments,
if any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for futures
and options transactions, foreign currency transactions, market discount,
capital loss carryforwards and losses deferred due to wash sales, futures
and options, 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 and foreign currency transactions may include temporary book
and tax basis differences that will reverse in a subsequent period. Any
taxable income or gain remaining at fiscal year end is distributed in the
following year.
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. These contracts
involve market risk in excess of the unrealized gain or loss reflected in
the fund's Statement of Assets and Liabilities. The U.S. dollar value of
the currencies the fund has committed to buy or sell is shown in the
schedule of investments under the caption "Forward Foreign Currency
Contracts." This amount represents the aggregate exposure to each currency
the fund has acquired or hedged through currency contracts at period end.
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. Contracts that have been offset with
2. OPERATING POLICIES - CONTINUED
FORWARD FOREIGN CURRENCY CONTRACTS - CONTINUED
different counterparties are reflected as both a contract to buy and a
contract to sell in the schedule of investments under the caption "Forward
Foreign Currency Contracts."
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.
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 and currency values.
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.
INDEXED SECURITIES. The fund may invest in indexed securities whose values
are linked either directly or inversely to changes in foreign currencies,
interest rates, commodities, indices, or other underlying instruments. The
fund uses these securities to increase or decrease its exposure to
different underlying instruments and to gain exposure to markets that might
be difficult to invest in through conventional securities. Indexed
securities may be more volatile than their underlying instruments, but any
loss is limited to the amount of the original investment.
RESTRICTED SECURITIES. The fund is permitted to invest in securities that
are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
2. OPERATING POLICIES - CONTINUED
RESTRICTED SECURITIES - CONTINUED
registration or to the public if the securities are registered. Disposal of
these securities may involve time-consuming negotiations and expense, and
prompt sale at an acceptable price may be difficult. At the end of the
period, restricted securities (excluding 144A issues) amounted to
$2,145,406 or 1.8% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $455,371,759 and $379,028,862, respectively, of which U.S.
government and government agency obligations aggregated $124,807,391 and
$108,185,595, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .1200% to .3700% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .45%. For
the period, the management fee was equivalent to an annual rate of .60% of
average net assets.
The Board of Trustees has approved a new group fee rate schedule with rates
ranging from .1100% to .3700%. Effective January 1, 1996, FMR voluntarily
agreed to implement this new group fee rate schedule as it results in the
same or a lower management fee.
SUB-ADVISER FEE. FMR, on behalf of the fund, entered into sub-advisory
agreements with affiliates of FMR. In addition, one of the sub-advisers,
Fidelity International Investment Advisors (FIIA), entered into a
sub-advisory agreement with its subsidiary, Fidelity International
Investment Advisors (U.K.) Limited (FIIAL U.K.). Under the sub-advisory
arrangements, FMR may receive investment advice and research services and
may grant the sub-advisers investment management authority to buy and sell
securities. FMR pays its sub-advisers either a portion of its management
fee or a fee based on costs incurred for these services. FIIA pays FIIAL
U.K. a fee based on costs incurred for either service.
DISTRIBUTION AND SERVICE PLAN.
Pursuant to the Distribution and Service Plan (the Plan), and in accordance
with Rule 12b-1 of the 1940 Act, FMR or the fund's distributor, Fidelity
Distributors Corporation (FDC), an affiliate of FMR, may use their
resources to pay administrative and promotional expenses related to the
sale of the fund's shares. Subject to the approval of the Board of
Trustees, the Plan also authorizes
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
payments to third parties that assist in the sale of the fund's shares or
render shareholder support services. No payments were made to third parties
under the Plan during the period.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
FSC receives account fees and asset-based fees that vary according to
account size and type of account. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
5. 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 period for
which loans were outstanding amounted to $7,546,000 and $2,449,438,
respectively. The weighted average interest rate was 6.48%.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Investment Trust and the Shareholders of
Fidelity Short-Term World Income Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Investment Trust: Fidelity Short-Term World Income Fund, including
the schedule of portfolio investments, as of December 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 three years in the period
ended December 31, 1995, for the two month period ended December 31, 1992,
for the year ended October 31, 1992 and for the period October 4,
1991(commencement of operations) to October 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 December 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 Investment Trust: Fidelity Short-Term World Income Fund, as of
December 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 three years in the
period ended December 31, 1995, for the two month period ended December 31,
1992, for the year ended October 31, 1992 and for the period October 4,
1991(commencement of operations) to October 31, 1991, in conformity with
generally accepted accounting principles.
/s/COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 8, 1996
TO CALL FIDELITY

FOR FUND INFORMATION AND QUOTES
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(PIN)
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you
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only you have automated telephone
access to your account information.
Please have your Customer Number
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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)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND
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1.
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2.
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3.
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4.
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5.
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6.
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4.
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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
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AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
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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
6300 Canoga Avenue
Woodland Hills, 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
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
56 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
1271 Avenue of the
Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
1903 East Ninth Street
Cleveland, 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
2701 Drexel Drive
Houston, TX
1010 Lamar Street
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
511 Pine Street
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI

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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
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Fidelity Investments
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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
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. London, England
Fidelity Management & Research
(Far East) Inc. Tokyo, Japan
Fidelity International Investment Advisors
Fidelity International Investment Advisors (U.K.) Limited
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
Brown Brothers Harriman & Co.
Boston, MA
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FIDELITY
SHORT-TERM BOND
FUND
(FORMERLY FIDELITY SHORT-TERM BOND PORTFOLIO)
ANNUAL REPORT
APRIL 30, 1996
(2_FIDELITY_LOGOS)
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.

PERFORMANCE 4 How the fund has done over time.

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

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

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

FINANCIAL STATEMENTS 21 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.

NOTES 25 Notes to the financial statements.

REPORT OF INDEPENDENT 29 The auditors' opinion.
ACCOUNTANTS

DISTRIBUTIONS 30

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 stocks have managed to post solid returns through the first four
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in bond markets so far this year. In 1995,
both stock and bond markets posted strong results, while the year before,
stocks posted below-average returns and bonds had one of the worst years in
history.
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). You can also look at the fund's
income to measure performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Short-Term Bond 6.52% 35.31% 84.58%

Lehman Brothers 1-3 Year 6.92% 36.16% n/a
Government/Corporate Bond Index

Short Investment Grade Debt Funds Average 6.47% 34.06% n/a

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 September 15, 1986. 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 1-3 Year Government/Corporate Bond Index, which is
comprised of government and corporate fixed-rate debt issues. Issues
included in the Index have maturities of one to three years. To measure how
the fund's performance stacked up against its peers, you can compare it to
the short investment grade debt funds average, which reflects the
performance of 89 funds with similar objectives tracked by Lipper
Analytical Services over the past 12 months. These benchmarks include
reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Short-Term Bond 6.52% 6.23% 6.57%

Lehman Brothers 1-3 Year 6.92% 6.37% n/a
Government/Corporate Bond Index

Short Investment Grade Debt Funds Average 6.47% 6.03% n/a

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
IMAHDR PRASUN SHR__CHT 19960430 19960521 102225 S00000000000001
Short Term Bond Lehman Bros 1-3 Yr Govt.
00450 LB013
1986/09/30 10000.00 10000.00
1986/10/31 10069.77 10088.57
1986/11/30 10138.99 10150.23
1986/12/31 10170.64 10175.10
1987/01/31 10215.26 10247.66
1987/02/28 10274.67 10293.65
1987/03/31 10276.47 10316.13
1987/04/30 10149.25 10244.25
1987/05/31 10161.09 10260.26
1987/06/30 10275.84 10373.36
1987/07/31 10296.52 10430.59
1987/08/31 10329.75 10445.92
1987/09/30 10265.39 10410.15
1987/10/31 10418.73 10616.25
1987/11/30 10484.31 10687.11
1987/12/31 10574.50 10761.37
1988/01/31 10730.97 10923.52
1988/02/29 10843.38 11018.91
1988/03/31 10843.15 11043.43
1988/04/30 10850.72 11058.08
1988/05/31 10825.58 11053.65
1988/06/30 10937.56 11164.37
1988/07/31 10946.69 11172.20
1988/08/31 10965.95 11200.48
1988/09/30 11067.97 11330.27
1988/10/31 11181.95 11444.39
1988/11/30 11143.72 11417.14
1988/12/31 11178.13 11443.37
1989/01/31 11274.51 11535.34
1989/02/28 11295.04 11538.07
1989/03/31 11329.47 11584.74
1989/04/30 11473.78 11772.78
1989/05/31 11648.24 11940.04
1989/06/30 11843.87 12160.45
1989/07/31 11992.37 12341.68
1989/08/31 11962.36 12271.84
1989/09/30 12011.88 12344.06
1989/10/31 12210.32 12536.54
1989/11/30 12293.74 12648.61
1989/12/31 12353.56 12698.69
1990/01/31 12329.70 12711.97
1990/02/28 12385.64 12779.42
1990/03/31 12431.65 12819.96
1990/04/30 12458.04 12851.98
1990/05/31 12666.40 13050.59
1990/06/30 12757.54 13188.55
1990/07/31 12905.49 13348.32
1990/08/31 12885.90 13395.67
1990/09/30 12908.16 13496.17
1990/10/31 12876.09 13635.50
1990/11/30 12943.37 13768.69
1990/12/31 13068.02 13929.82
1991/01/31 13049.95 14055.87
1991/02/28 13200.05 14157.38
1991/03/31 13457.30 14260.26
1991/04/30 13640.86 14399.93
1991/05/31 13779.97 14489.87
1991/06/30 13830.52 14543.69
1991/07/31 13940.66 14671.44
1991/08/31 14174.78 14870.38
1991/09/30 14321.37 15030.49
1991/10/31 14487.30 15192.30
1991/11/30 14637.21 15345.94
1991/12/31 14900.84 15577.93
1992/01/31 14962.00 15561.91
1992/02/29 15091.80 15611.31
1992/03/31 15195.32 15607.90
1992/04/30 15277.96 15750.64
1992/05/31 15425.08 15898.14
1992/06/30 15569.00 16060.64
1992/07/31 15753.44 16249.02
1992/08/31 15891.30 16380.17
1992/09/30 16022.61 16535.17
1992/10/31 15909.24 16435.70
1992/11/30 15894.19 16412.54
1992/12/31 16001.64 16567.54
1993/01/31 16265.43 16744.34
1993/02/28 16446.97 16880.94
1993/03/31 16548.82 16935.79
1993/04/30 16630.11 17042.07
1993/05/31 16658.66 17003.24
1993/06/30 16839.92 17132.00
1993/07/31 16937.39 17171.18
1993/08/31 17123.55 17314.94
1993/09/30 17186.94 17370.81
1993/10/31 17296.72 17411.34
1993/11/30 17331.52 17416.45
1993/12/31 17462.58 17486.97
1994/01/31 17576.35 17598.36
1994/02/28 17423.47 17491.74
1994/03/31 17091.56 17401.81
1994/04/30 16960.41 17335.72
1994/05/31 17054.21 17359.22
1994/06/30 16897.11 17404.87
1994/07/31 17024.28 17563.28
1994/08/31 17094.13 17622.55
1994/09/30 17121.89 17583.38
1994/10/31 17113.31 17623.57
1994/11/30 17139.68 17549.65
1994/12/31 16747.81 17583.04
1995/01/31 16875.67 17824.56
1995/02/28 17053.61 18071.20
1995/03/31 17162.13 18173.74
1995/04/30 17327.86 18338.27
1995/05/31 17636.66 18655.77
1995/06/30 17742.65 18757.28
1995/07/31 17792.31 18832.23
1995/08/31 17905.07 18946.35
1995/09/30 17997.31 19040.03
1995/10/31 18115.52 19198.09
1995/11/30 18272.06 19363.31
1995/12/31 18392.46 19510.13
1996/01/31 18533.50 19677.06
1996/02/29 18481.62 19602.11
1996/03/31 18439.71 19587.80
1996/04/30 18457.76 19607.56
IMATRL PRASUN SHR__CHT 19960430 19960521 102229 R00000000000092

$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Short-Term
Bond Fund on September 30, 1986, shortly after the fund started. As the
chart shows, by April 30, 1996, the value of your investment would have
grown to $18,462 - an 84.62% increase on your initial investment. For
comparison, look at how the Lehman Brothers 1-3 Year Government/Corporate
Bond Index did over the same period. With dividends reinvested, the same
$10,000 investment would have grown to $19,608 - a 96.08% 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
YEARS ENDED APRIL 30,

1996 1995 1994 1993 1992

Dividend return 6.52% A 6.13% 6.51% 8.00% 9.28%
A

Capital appreciation 0.00% -3.96% -4.52% 0.85% 2.72%
return

Total return 6.52% 2.17% 1.99% 8.85% 12.00%

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.
DIVIDENDS AND YIELD
PERIODS ENDED APRIL 30, 1996 PAST PAST 6 PAST 1
MONTH MONTHS YEAR

Dividends per share A 4.86(cents) 28.66(cents) 55.92(cents)

Annualized dividend rate 6.77% 6.50% 6.33%

30-day annualized yield 5.68% - -

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 $8.73 over
the past month, $8.84 over the past six months, and $8.83 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.

A NON-TAXABLE DIVIDENDS: DIVIDENDS PAID ARE BASED ON THE FUND'S INVESTMENT
INCOME AND DO NOT REFLECT CURRENCY RELATED LOSSES. AS A RESULT OF CURRENCY
LOSSES, DIVIDENDS PAID DURING 1996 OF APPROXIMATELY 5.5(CENTS) PER SHARE
ARE EXPECTED TO BE A NON-TAXABLE RETURN OF CAPITAL. DIVIDENDS PAID DURING
1995 OF APPROXIMATELY 11.8(CENTS) PER SHARE WERE A NON-TAXABLE RETURN OF
CAPITAL. THE EXACT NON-TAXABLE AMOUNT TO USE IN PREPARING YOUR INCOME TAX
RETURN WILL DEPEND ON YOUR SHARE ACTIVITY AND WILL BE REPORTED TO YOU IN
JANUARY 1997.
FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
Signs of strength in the economy
cooled off a hot 1995 bond
market and served to lower
returns for the 12 months ended
April 30, 1996. For the period, the
Lehman Brothers Aggregate
Bond Index - a broad measure
of U.S. taxable bonds - posted a
total return of 8.64%. Even
though in late January the
Federal Reserve Board lowered
its target for the fed funds rate -
the rate banks charge each
other on overnight loans - from
5.50% to 5.25%, the move largely
was discounted by the bond
market. Stronger-than-expected
economic signals - including
surprisingly robust employment
reports in February and March -
rattled the bond market and
caused the yield on the 30-year
bond to rise to over 7% - a level
not seen in over a year. Although
mortgage-backed securities were
held back by the overall downturn
in bond prices, they have
performed well thus far in 1996
relative to other investment-grade
securities as prepayment fears
eased in the face of a rising
mortgage rate environment. To
illustrate, the Salomon Brothers
Mortgage Index returned 8.54%
during the period, almost
matching the return posted by the
more aggressive Aggregate
Bond Index.
An interview with Charles Morrison, Portfolio Manager of Fidelity
Short-Term Bond Fund
Q. CHARLIE, HOW HAS THE FUND PERFORMED?
A. It has performed in line with the market and its competitors over the
past year. For the 12 months ended April 30, 1996, the fund returned 6.52%,
compared to 6.47% for the short investment grade debt funds average tracked
by Lipper Analytical Services, and 6.92% for the Lehman Brothers 1-3 Year
Government/Corporate Bond Index.
Q. WHAT SORT OF MOVES DID YOU MAKE WITH THE FUND?
A. I continued to maintain a defensive posture over the past six months, as
many of the sectors in the short end of the market continued to trade at
historically high valuations. Sectors such as mortgage-backed securities
and corporate bonds offered only a small yield advantage over Treasuries.
As a way of adding incremental return, I took advantage of opportunities to
trade out of some securities and into others that I felt provided stronger
fundamental and/or structural characteristics.
Q. CAN YOU GIVE US SOME EXAMPLES OF THE DIFFERENT KINDS OF BONDS YOU'VE
INVESTED IN?
A. One area of focus has been in selective longer maturity - four to five
years - BBB-rated corporates. Strong fundamentals (factors related to the
fiscal health of issuers) and technicals (the supply of and demand for
corporate issues), in addition to expectations of such positive events as
stronger-than-projected earnings, made certain corporate securities
attractive. Beyond that, my general theme was to concentrate the fund in
short-duration corporate bonds, asset-backed securities and some commercial
mortgage-backed securities.
Q. YOU'VE TALKED ABOUT ASSET-BACKED SECURITIES IN THE PAST, AND HAD 15.0%
OF THE FUND INVESTED IN THEM AS OF THE END OF THE PERIOD. HOW HAS THAT
MARKET WORKED OUT OVER THE PAST SIX MONTHS?
A. To remind shareholders, asset-backed securities are bonds issued by
financial institutions that are backed by loans or credit payments.
Traditionally, they have originated primarily from auto loans and credit
cards. During the first quarter of 1996, issuance in this market was at
historically high levels. With such a large supply, one would think prices
would be low and yields high to attract buyers. On the contrary, there was
such strong demand for short-duration, high-quality asset-backed securities
that yields have remained relatively low. In spite of that, I have
maintained large exposure to the asset-backed market, but diversified into
several non-traditional funding sources, such as equipment loan trusts,
manufactured housing and third-party guarantor issuers where I felt yield
spreads offered more value.
Q. LET'S TOUCH ON COMMERCIAL MORTGAGE-BACKED SECURITIES . . .
A. I continued to own primarily high-quality securities over the past six
months. I did sell some of the highest dollar-price issues in the fund as
the market was rallying in January in order to help cushion the fund from
unexpected prepayment activity. My strategy has been to focus on
shorter-duration commercial mortgage-backed securities. As with many
mortgage-backeds, actual versus expected prepayment activity is an
important determinant of total return. By maintaining shorter-term exposure
to the commercial mortgage-backed market, the measurement and volatility of
cash flows often are more predictable than with longer-duration commercial
mortgage-backed securities. These shorter-maturity securities are more
appropriate for this fund, which aims at providing consistent and
relatively stable returns in keeping with its goal of high current income
with preservation of capital.
Q. DID CURRENCIES HAVE AN EFFECT ON THE FUND'S DIVIDEND THIS YEAR?
A. Yes, currency-related losses caused part of this year's dividend to be
non-taxable. Most of this resulted from losses carried over from 1994, when
the fund sold some bonds whose currencies had weakened versus the dollar.
As I mentioned in last year's annual report, I don't expect to be making
significant investments in non-dollar-denominated bonds going forward.
Q. WHAT'S YOUR OUTLOOK?
A. As I noted above, I consider the fund to be defensively positioned at
this time. I find this to be appropriate given the relative valuations that
exist in today's market. The fund's positioning allows for flexibility in
the event I wish to take an aggressive stance at some point in the future.
Looking forward, I do not expect the overall positioning of the fund to
change dramatically, unless we see some cheapening of those parts of the
market that offer a yield advantage to comparable Treasuries, such as
corporate bonds and mortgage-backed securities. With that said, I will
continue to scour the market for opportunities to sell some securities and
buy others that I think may provide stronger fundamental and/or structural
characteristics.
FUND FACTS
GOAL: high current income
with preservation of capital
START DATE: September 15,
1986
SIZE: as of April 30, 1996,
more than $1.0 billion
MANAGER: Charles Morrison,
since February 1995;
manager, Fidelity Advisor
Short Fixed-Income Fund
and Spartan Short-Term
Bond Fund, since February
1995; co-manager, Fidelity
Short-Term World Bond
Fund, since February 1996;
vice president of Fidelity
Management Trust
Company, since 1992; joined
Fidelity in 1987
(checkmark)
CHARLIE MORRISON ON
CORPORATE BONDS:
"The corporate market today
offers little yield advantage
relative to the Treasury market.
There are a number of factors
that justify this relationship. For
example, the fundamentals
(factors relating to the fiscal
health of issuers) and technicals
(the supply of and demand for
corporate issues) of the corporate
market are in very sound shape.
Further, continued modest
economic growth has been
supportive of the market as
corporate America has taken the
opportunity to use its improved
cash flow to further enhance its
balance sheet. In addition, recent
takeover activity has generally
proven bond-holder neutral, as
many acquisitions have been
achieved through stock swaps,
rather than the issuance of
additional debt. As equity market
valuations remain high, this
trend of financing is unlikely to
change in the foreseeable
future. Given this strong overall
positioning, I am comfortable
maintaining a significantly
overweighted exposure to the
corporate market."
(solid bullet) As of June 24, 1996, there
will be two changes to the fund's
investment policies. First, Fidelity
will use two additional agencies
- - Duff & Phelps Credit Rating
Co. and Fitch Investor Services,
as well as Moody's Investors
Service and Standard & Poor's,
which the fund already uses -
to determine the credit quality of
the fund's bonds. In addition, as
of June 24, the fund will reserve
the right to invest up to 5% in
non-investment grade securities.
The fund does not intend to seek
out the lower quality bonds.
Instead, this change gives the
fund additional flexi- bility under
unusual circumstances.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
INVESTMENT CHANGES

QUALITY DIVERSIFICATION AS OF APRIL 30, 1996
(MOODY'S RATINGS) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS 6 MONTHS AGO

Aaa 57.4 61.9

Aa 0.2 0.1

A 14.2 13.2

Baa 17.9 13.0

Ba 2.2 2.1

Not rated 7.2 9.7

TABLE EXCLUDES SHORT-TERM INVESTMENTS. UNRATED DEBT SECURITIES THAT ARE
EQUIVALENT TO BA AND BELOW AT APRIL 30, 1996 AND OCTOBER 31, 1995 ACCOUNT
FOR 0% AND 1.8%, RESPECTIVELY, OF THE FUND'S INVESTMENTS.
AVERAGE YEARS TO MATURITY AS OF APRIL 30, 1996
6 MONTHS AGO

Years 2.2 2.1

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, 1996
6 MONTHS AGO

Years 1.7 1.7

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 APRIL 30, 1996* AS OF OCTOBER 31, 1995**
27.3.3
Row: 1, Col: 1, Value: 2.4
Row: 1, Col: 2, Value: 0.9
Row: 1, Col: 3, Value: 11.8
Row: 1, Col: 4, Value: 41.5
Row: 1, Col: 5, Value: 43.4
Row: 1, Col: 1, Value: 2.0
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 11.8
Row: 1, Col: 4, Value: 55.4
Row: 1, Col: 5, Value: 30.8
Corporate bonds 43.4%
U.S. government
and agency
obligations 41.5%
Mortgage-backed
securities 11.8%
Short-term
investments 0.9%
Other investments 2.4%
Corporate bonds 30.8%
U.S. government
and agency
obligations 55.4%
Mortgage-backed
securities 11.8%
Short-term
investments 0.0%
Other investments 2.0%
FOREIGN
INVESTMENTS 1.0%
**
*
FOREIGN
INVESTMENTS 0.8%
INVESTMENTS APRIL 30, 1996

Showing Percentage of Total Value of Investments in Securities

NONCONVERTIBLE BONDS - 43.4%
MOODY'S RATING PRINCIPAL VALUE (NOTE 1)
S
(UNAUDITED) (A) AMOUNT (000S)
(000S)

BASIC INDUSTRIES - 0.9%
CHEMICALS & PLASTICS - 0.9%
Methanex Corp. 8 7/8%, 11/15/01 A3 $8,440 $ 9,112
DURABLES - 0.3%
AUTOS, TIRES, & ACCESSORIES - 0.3%
General Motors Corp. 9 5/8%,
12/1/00 A3 2,990 3,305
ENERGY - 0.2%
OIL & GAS - 0.2%
Occidental Petroleum Corp.
6.09%, 11/29/99 Baa3 910 890
USX Corp.:
8 7/8%, 9/15/97 Baa3 1,000 1,030
6 3/8%, 7/15/98 Baa3 490 485
2,405
FINANCE - 28.2%
ASSET-BACKED SECURITIES - 15.0%
Boatmens Auto Trust 6.35%,
10/15/01 A2 1,375 1,367
Case Equipment Loan Trust:
6.15%, 9/15/02 Aaa 15,090 15,005
6.45%, 9/15/02 A3 3,000 2,939
5.85%, 2/15/03 A3 1,770 1,722
Caterpillar Financial Asset Trust
6.65%, 6/25/00 A2 2,530 2,530
Chase Manhattan Grantor Trust
5.90%, 11/15/01 Aaa 10,273 10,241
Chevy Chase Auto Receivables Trust
5.80%, 6/15/02 Aaa 6,204 6,171
Concord Leasing, Inc. (c):
5.04%, 7/15/98 AAA 993 983
5.31%, 1/20/99 AAA 508 504
Discover Card Master Trust I
6.90%, 2/16/00 A2 4,030 4,055
Discover Card Trust:
7 7/8%, 4/16/98 A2 1,170 1,167
6 1/8%, 5/15/98 A2 2,100 2,096
7 1/2%, 6/16/00 A2 1,360 1,383
Ford Credit Grantor Trust 5.90%,
10/15/00 Aaa 10,522 10,476
General Motors Acceptance
Corp. Grantor Trust
1995-A, 7.15%, 3/15/00 Aaa 9,020 9,124
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S RATING PRINCIPAL VALUE (NOTE 1)
S
(UNAUDITED) (A) AMOUNT (000S)
(000S)
FINANCE - CONTINUED
ASSET-BACKED SECURITIES - CONTINUED
Green Tree Financial Corp.:
5 1/2%, 1/31/00 Aaa $ 1,114 $ 1,095
5.80%, 2/15/27 Aaa 7,800 7,661
6.10%, 4/15/27 Aaa 8,201 8,145
6.45%, 5/15/27 Aaa 3,460 3,452
KeyCorp Auto Grantor Trust
5.80%, 7/15/00 A3 923 921
MBNA Master Credit Card Trust
7 3/4%, 10/15/98 Aaa 2,150 2,167
Midlantic Grantor Trust Class B
5.15%, 9/15/97 A1 359 358
Premier Auto Trust:
4.95%, 2/2/99 A2 299 296
8.05%, 4/4/00 Aaa 11,500 11,872
6.35%, 7/6/00 A3 4,370 4,328
Prime Credit Card Master Trust
7.45%, 11/15/02 AAA 3,520 3,609
SCFC Recreational Vehicle
Loan Trust 7 1/4%, 9/15/06 Aaa 529 530
Standard Credit Card Master
Trust I: 4.85%, 3/7/99 A2 2,500 2,476
7.65%, 2/15/00 A2 1,800 1,837
6 3/4%, 6/7/00 Aaa 10,700 10,780
TMS Auto Grantor Trust 5.90%,
9/15/02 Aaa 2,258 2,239
Toyota Auto Receivables
Grantor Trust 6.15%, 1/15/99 Baa2 1,737 1,730
Union Federal Savings Bank
Grantor Trust: 6.975%, 7/10/00 Baa2 1,107 1,107
7.275%, 10/10/00 Baa2 1,097 1,105
8.20%, 1/10/01 Baa2 1,001 1,015
WFS Financial Grantor Trust:
6.05%, 6/1/00 Aaa 7,640 7,640
5 7/8%, 3/1/02 Aaa 7,750 7,692
Western Financial Grantor
Trust 6.20%, 2/1/02 Aaa 3,471 3,476
155,294
BANKS - 7.9%
Bank of Boston Corp. 9 1/2%,
8/15/97 Baa1 2,315 2,407
Banponce Corp.: 5 3/4%, 3/1/99 Baa1 2,190 2,132
6.34%, 3/29/99 Baa1 2,450 2,420
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S RATING PRINCIPAL VALUE (NOTE 1)
S
(UNAUDITED) (A) AMOUNT (000S)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Banponce Financial Corp.:
6%, 4/15/97 Baa1 $ 560 $ 559
7.65%, 5/3/00 Baa1 2,790 2,843
6.88%, 6/16/00 Baa1 1,370 1,366
Capital One Bank:
8 1/8%, 2/27/98 Baa3 4,590 4,706
6.66%, 8/17/98 Baa3 6,290 6,278
Chemical Bank Corp. euro 0%,
2/16/97 Baa1 1,000 951
First Fidelity Bancorporation
8 1/2%, 4/1/98 A2 2,200 2,279
First USA Bank 6 1/4%, 10/9/98 Baa2 5,000 4,947
Fleet/Norstar Financial Group,
Inc. 7.65%, 3/1/97 A2 5,000 5,061
Kansallis-Osake-Pankki (NY)
yankee 9 3/4%, 12/15/98 A3 2,220 2,383
KeyCorp: 8.96%, 5/30/96 A1 2,000 2,005
7.10%, 3/28/97 A1 3,180 3,210
Manufacturers Hanover Trust, NY
euro 5 3/4%, 7/15/97 (d) A2 12,400 12,276
Marine Midland Banks, Inc.
8 5/8%, 3/1/97 Baa1 19,567 19,903
Mellon Financial Co. 6 1/2%,
12/1/97 A2 1,000 1,002
Provident Bank (Cincinnati, Ohio)
6 1/8%, 12/15/00 A3 5,610 5,414
82,142
CREDIT & OTHER FINANCE - 4.2%
Advanta National Bank 6.41%,
4/30/98 Baa2 4,170 4,160
Aristar, Inc. 7 3/8%, 2/15/97 A3 2,000 2,020
Chrysler Financial Corp.
6 1/2%, 5/27/97 A3 3,000 3,016
General Motors Acceptance Corp.:
5 3/8%, 3/9/98 A3 12,810 12,601
5.45%, 3/1/99 A3 8,070 7,822
6 3/8%, 4/26/99 A3 1,600 1,589
Greyhound Financial Corp.:
6.94%, 1/28/98 Baa2 4,000 4,023
6.95%, 1/28/98 Baa2 2,000 2,012
MCN Investment Corp. 5.84%,
2/1/99 Baa2 3,640 3,563
Tenneco Credit Corp. 10 1/8%,
12/1/97 Baa2 1,110 1,170
Union Acceptance Corp. 7.075%,
7/10/02 Baa2 1,381 1,382
43,358
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S RATING PRINCIPAL VALUE (NOTE 1)
S
(UNAUDITED) (A) AMOUNT (000S)
(000S)
FINANCE - CONTINUED
INSURANCE - 0.6%
ITT Hartford Group, Inc.
7 1/4%, 12/1/96 A1 $ 5,700 $ 5,718
SAVINGS & LOANS - 0.5%
Golden West Financial Corp.
10 1/4%, 5/15/97 A3 5,350 5,562
TOTAL FINANCE 292,074
HEALTH - 0.5%
MEDICAL EQUIPMENT & SUPPLIES - 0.5%
Cardinal Distribution, Inc. 8%,
3/1/97 A3 5,000 5,077
MEDIA & LEISURE - 3.1%
BROADCASTING - 1.6%
Time Warner, Inc. 7.45%, 2/1/98 Ba1 16,800 16,993
LEISURE DURABLES & TOYS - 1.5%
Mattel, Inc. 6 7/8%, 8/1/97 Baa1 15,150 15,164
TOTAL MEDIA & LEISURE 32,157
NONDURABLES - 1.5%
FOODS - 0.5%
Nabisco, Inc. 8%, 1/15/00 Baa2 5,430 5,582
TOBACCO - 1.0%
RJR Nabisco, Inc.:
8%, 1/15/00 Baa3 2,807 2,796
8%, 7/15/01 Baa3 7,390 7,252
10,048
TOTAL NONDURABLES 15,630
RETAIL & WHOLESALE - 2.3%
GENERAL MERCHANDISE STORES - 1.3%
Dayton Hudson Corp. 10%,
12/1/00 A3 2,380 2,642
Sears Roebuck & Co.:
8.95%, 11/27/96 A2 545 554
9.22%, 1/30/97 A2 3,760 3,854
7 3/4%, 2/27/97 A2 4,890 4,962
7.30%, 6/12/97 A2 545 553
5.83%, 7/27/98 A2 1,040 1,027
13,592
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S RATING PRINCIPAL VALUE (NOTE 1)
S
(UNAUDITED) (A) AMOUNT (000S)
(000S)
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - 1.0%
American Stores Co.:
8.21%, 4/16/97 Baa3 $ 1,000 $ 1,019
8 1/4%, 4/21/98 Baa3 4,700 4,825
8.44%, 4/24/98 Baa3 4,700 4,842
10,686
TOTAL RETAIL & WHOLESALE 24,278
TECHNOLOGY - 2.7%
COMPUTERS & OFFICE EQUIPMENT - 2.7%
Comdisco, Inc.:
6.89%, 8/30/96 Baa2 5,490 5,511
7 3/4%, 1/29/97 Baa2 4,000 4,046
7.73%, 2/18/97 Baa2 10,950 11,080
7 1/4%, 4/15/98 Baa2 2,320 2,353
5.76%, 1/19/99 Baa2 3,000 2,935
5 3/4%, 2/15/01 Baa2 2,710 2,579
TOTAL TECHNOLOGY 28,504
TRANSPORTATION - 1.7%
AIR TRANSPORTATION - 1.7%
AMR Corp.:
7 3/4%, 12/1/97 Baa3 12,500 12,725
9 1/2%, 7/15/98 Baa3 1,280 1,347
Delta Air Lines, Inc. 9 7/8%,
1/1/98 Baa3 2,890 3,038
17,110
UTILITIES - 2.0%
CELLULAR - 0.6%
360 Degrees Communications Co.
7 1/8%, 3/1/03 Ba2 6,140 5,878
ELECTRIC UTILITY - 0.6%
United Illuminating Co. 7 3/8%,
1/15/98 Baa3 6,550 6,584
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S RATING PRINCIPAL VALUE (NOTE 1)
S
(UNAUDITED) (A) AMOUNT (000S)
(000S)
UTILITIES - CONTINUED
GAS - 0.8%
Florida Gas 7 3/4%,
11/1/97 (c) Baa2 $ 3,570 $ 3,642
Transcontinental Gas Pipe Line
Corp.: 9%, 11/15/96 Baa1 1,370 1,391
extendible 6.21%, 5/15/00 Baa1 2,800 2,801
7,834
TOTAL UTILITIES 20,296
TOTAL NONCONVERTIBLE BONDS
(Cost $451,801) 449,948
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 41.5%
U.S. TREASURY OBLIGATIONS - 39.4%
7 1/4%, 11/15/96 Aaa 2,147 2,167
8 1/2%, 5/15/97 Aaa 1,206 1,239
8 3/4%, 10/15/97 Aaa 67,350 69,991
7 3/8%, 11/15/97 Aaa 68,928 70,328
9%, 5/15/98 Aaa 68,850 72,658
9 1/4%, 8/15/98 Aaa 136,540 145,522
8 7/8%, 2/15/99 Aaa 1,990 2,124
9 1/8%, 5/15/99 Aaa 16,407 17,689
7 3/4%, 12/31/99 Aaa 25,736 26,902
408,620
U.S. GOVERNMENT AGENCY OBLIGATIONS - 2.1%
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 Aaa 2,325 2,495
(assets of Trust guaranteed by
U.S. Government through
Export-Import Bank) Series
1994-C 6.61%, 9/15/99 Aaa 657 660
Israel Export Trust Certificate
Series 1994-1 (assets of Trust
guaranteed by U.S. Government
through Export-Import Bank)
6.88%, 1/26/03 Aaa 2,174 2,189
Private Export Funding Corp.
secured 6.86%, 4/30/04 Aaa 1,372 1,380
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
MOODY'S RATING PRINCIPAL VALUE (NOTE 1)
S
(UNAUDITED) (A) AMOUNT (000S)
(000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
State of Israel (guaranteed by U.S. Government
through Agency for International Development):
4 7/8%, 9/15/98 Aaa $ 4,490 $ 4,355
7 3/4%, 11/15/99 Aaa 6,955 7,228
5 3/4%, 3/15/00 Aaa 3,259 3,174
21,481
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $436,538) 430,101
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 0.8%
Federal Home Loan Mortgage Corp.
12%, 11/1/19 Aaa 492 560
Federal National Mortgage
Association 11 1/2%, 11/1/15 Aaa 1,773 2,000
Government National Mortgage
Association 11%, 12/15/09 to
8/15/20 Aaa 1,645 1,836
11 1/2%, 4/15/13 to 8/15/13 Aaa 3,078 3,485
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $7,997) 7,881
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.5%
PRIVATE SPONSOR - 0.3%
General Electric Capital Mortgage
Services, Inc. planned amortization
class series 1993-18 Class A-5,
6%, 2/25/02 AAA 2,825 2,822
U.S. GOVERNMENT AGENCY - 0.2%
Federal National Mortgage
Association planned amortization
class Series 155-PC, 5 1/4%,
3/25/13 Aaa 2,610 2,584
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $5,340) 5,406
COMMERCIAL MORTGAGE SECURITIES - 10.5%
MOODY'S RATING PRINCIPAL VALUE (NOTE 1)
S
(UNAUDITED) (A) AMOUNT (000S)
(000S)
CBM Funding Corp. commercial (c):
Series 1996-1 Class A-1,
7.55%, 7/1/99 AA $ 612 $ 619
Series 1996-1 Class A-2, 6.88%,
7/1/02 AA 2,170 2,146
CS First Boston Mortgage
Securities Corp.: commercial
floater Series 1994-CFB1 Class A-1,
6.9523%, 1/25/28 (d) Aaa 6,366 6,352
commercial Series 1995-AEWI
Class A1, 6.665%, 11/25/27 AAA 3,468 3,428
Federal Deposit Insurance Corp.
commercial: Series 1994-C1
Class II-A1, 6.30%, 9/25/25 Aaa 264 263
Series 1994-C1 Class II-A2,
7.85%, 9/25/25 Aaa 4,945 4,997
Goldman Sachs Mortgage Securities
Corp. II commercial Series 1996
Class A-1, 7.02%, 2/15/27 Aaa 8,262 8,241
Kearny Street Mortgage
commercial (c): Class II-B,
6.60%, 10/15/02 - 717 717
Class II-C, 7.30%, 10/15/03 - 900 901
Class II-D, 7 3/4%, 10/15/05 - 600 601
Lennar Central Partners LP
commercial (c): floater Series
1994-1 Class B, 6 3/8%, 9/15/01 (d) - 10,631 10,631
Series 1995-1 Class C, 7.55%,
5/15/03 - 2,700 2,705
Meritor Mortgage Security Corp.
commercial Series 1987-1 Class
A-3, 9.40%, 6/1/99 Baa3 1,449 1,460
Nomura Asset Securities Corp.
commercial floater Series
1994-MD-II Class A-6, 6.7025%,
7/4/03 (d) - 2,808 2,784
Oregon Commercial Mortgage, Inc.
commercial Series 1995 Class 1-A,
7.15%, 6/25/26 (c) AAA 9,372 9,325
Resolution Trust Corp.: commercial
floater (d): Series 1992-C3 Class
A-2, 6.35%, 8/25/23 Aa2 505 505
Series 1993-C2 Class A-2, 6.37%,
3/25/25 AAA 6,593 6,622
Series 1994-C1 Class A-3, 6.05%,
6/25/26 AAA 6,089 6,089
commercial: Series 1994-N2 Class
3, 7 1/2%, 12/15/04 (b)(c) Baa2 6,800 6,798
Series 1995-C1 Class A-2A,
6 1/4%, 2/25/27 Aaa 1,142 1,140
Series 1995-C1 Class A-4A,
6 1/4%, 2/25/27 Aaa 2,898 2,878
Series 1995-C2 Class A-1A,
6 1/4%, 5/25/27 Aaa 3,227 3,208
COMMERCIAL MORTGAGE SECURITIES - CONTINUED
MOODY'S RATING PRINCIPAL VALUE (NOTE 1)
S
(UNAUDITED) (A) AMOUNT (000S)
(000S)
Resolution Trust Corp. - continued
commercial: - continued
Series 1995-C2 Class A-1B,
6 1/4%, 5/25/27 Aaa $ 3,320 $ 3,220
SC Finance Corp. commercial
floater 6.9875%, 8/1/04 (c)(d) - 9,400 9,130
SKW Real Estate LP commercial
(b)(c): Series II Class A,
6.95%, 4/15/02 AA 967 967
Series II Class C, 7.45%,
4/15/03 BBB 3,800 3,801
Structured Asset Securities Corp.
commercial: Series 1993-C1 Class
A-1, 6.60%, 10/25/24 AA+ 1,944 1,932
Series 1995-C4 Class A-1A, 6.90%,
6/25/26 AAA 3,217 3,194
Series 1996 Class A-1B, 5.751%,
2/25/28 AAA 1,039 1,015
Series 1996 Class A-1C, 5.944%,
2/25/28 AAA 3,607 3,464
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $109,931) 109,133
FOREIGN GOVERNMENT OBLIGATIONS - 0.1%
Ontario Province Canada 15 1/4%,
8/31/12 (Cost $1,198) Aa2 990 1,153
CERTIFICATES OF DEPOSIT - 0.4%
Advanta National Bank 6.26%,
9/1/97 (Cost $3,996) Baa2 4,000 3,994
MUNICIPAL SECURITIES - 1.9%
Louisiana Pub. Facs. Auth. Rev.
9.95%, 6/1/96 A3 16,735 16,757
Shreveport Louisiana Wtr. & Swr.
Rev. Taxable Rfdg. Series A,
0%, 12/1/96 Aaa 3,500 3,380
TOTAL MUNICIPAL SECURITIES
(Cost $21,396) 20,137
REPURCHASE AGREEMENTS - 0.9%
MATURITY VALUE
AMOUNT (NOTE 1)
(000S) (000S)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.33%, dated
4/30/96 due 5/1/96 $ 8,938 $ 8,937
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,047,134) $ 1,036,690
LEGEND
1. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
2. Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
3. Security exempt from registration under
Rule 144A of the Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to qualified institutional
buyers. At the period end, the value of these securities amounted to
$53,470,000 or 5.1% of net assets.
4. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
OTHER INFORMATION
The composition of long-term debt holdings
as a percentage of total value of investment in securities, is as follows
(ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 71.8% AAA, AA, A 72.6%
Baa 17.9% BBB 19.4%
Ba 2.2% BB 1.8%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 2.7%.
INCOME TAX INFORMATION
At April 30, 1996, the aggregate cost of investment securities for income
tax purposes was $1,047,802,000. Net unrealized depreciation aggregated
$11,112,000, of which $2,650,000 related to appreciated investment
securities and $13,762,000 related to depreciated investment securities.
At April 30, 1996, the fund had a capital loss carryforward of
approximately $134,757,000 of which $6,892,000, $7,352,000, $2,771,000,
$4,373,000, $39,290,000 and $74,079,000 will expire on April 30, 1997,
1998, 1999, 2002, 2003 and 2004, respectively.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) APRIL 30, 1996

ASSETS

Investment in securities, at value (including repurchase $ 1,036,690
agreements of $8,937) (cost $1,047,134) -
See accompanying schedule

Receivable for investments sold 14,672

Interest receivable 17,047

Other receivables 39

TOTAL ASSETS 1,068,448

LIABILITIES

Payable to custodian bank $ 4,028

Payable for investments purchased 13,038

Payable for fund shares redeemed 1,568

Distributions payable 597

Accrued management fee 411

Other payables and accrued expenses 309

TOTAL LIABILITIES 19,951

NET ASSETS $ 1,048,497

Net Assets consist of:

Paid in capital $ 1,200,606

Distributions in excess of net investment income (6,111)

Accumulated undistributed net realized gain (loss) on (135,554)
investments and foreign currency transactions

Net unrealized appreciation (depreciation) on (10,444)
investments and assets and liabilities in foreign
currencies

NET ASSETS, for 120,287 shares outstanding $ 1,048,497

NET ASSET VALUE, offering price and redemption price per $8.72
share ($1,048,497 (divided by) 120,287 shares)

</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR ENDED APRIL 30, 1996

INVESTMENT INCOME $ 86,161
Interest

EXPENSES

Management fee $ 5,483

Transfer agent fees 2,435

Accounting fees and expenses 349

Non-interested trustees' compensation 5

Custodian fees and expenses 40

Registration fees 48

Audit 40

Legal 13

Interest 1

Miscellaneous 14

Total expenses before reductions 8,428

Expense reductions (84) 8,344

NET INVESTMENT INCOME 77,817

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

Investment securities 7,914

Foreign currency transactions (1,792) 6,122

Change in net unrealized appreciation (depreciation) on:

Investment securities (4,570)

Assets and liabilities in foreign currencies (29) (4,599)

NET GAIN (LOSS) 1,523

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 79,340
FROM OPERATIONS

STATEMENT OF CHANGES IN NET ASSETS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1996 1995

INCREASE (DECREASE) IN NET ASSETS

Operations $ 77,817 $ 107,182
Net investment income

Net realized gain (loss) 6,122 (146,282)

Change in net unrealized appreciation (depreciation) (4,599) 69,532

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 79,340 30,432
FROM OPERATIONS

Distributions to shareholders (69,491) (81,691)
From net investment income

Return of capital (Note 1) (7,635) (22,323)

TOTAL DISTRIBUTIONS (77,126) (104,014)

Share transactions 352,679 686,551
Net proceeds from sales of shares

Reinvestment of distributions 68,318 89,372

Cost of shares redeemed (678,234) (1,361,013)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING (257,237) (585,090)
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS (255,023) (658,672)

NET ASSETS

Beginning of period 1,303,520 1,962,192

End of period (including distributions in excess of $ 1,048,497 $ 1,303,520
net investment income of $6,111 and $18,863,
respectively)

OTHER INFORMATION
Shares

Sold 39,939 77,385

Issued in reinvestment of distributions 7,738 10,112

Redeemed (76,899) (154,192)

Net increase (decrease) (29,222) (66,695)

</TABLE>

FINANCIAL HIGHLIGHTS

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

1996 1995 E 1994 C 1993 1992

SELECTED PER-SHARE DATA

Net asset value, beginning of $ 8.720 $ 9.080 $ 9.510 $ 9.430 $ 9.180
period

Income from Investment .579 .344 .588 .744 .810
Operations
Net investment income

Net realized and unrealized (.020) D (.156) (.392) .063 .251
gain (loss)

Total from investment operations .559 .188 .196 .807 1.061

Less Distributions (.504) (.430) (.592) (.727) (.811)
From net investment income

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

Return of capital (Note 1) (.055) (.118) - - -

Total distributions (.559) (.548) (.626) (.727) (.811)

Net asset value, end of period $ 8.720 $ 8.720 $ 9.080 $ 9.510 $ 9.430

TOTAL RETURN A 6.52% 2.17% 1.99% 8.85% 12.00%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period $ 1,048 $ 1,304 $ 1,962 $ 1,990 $ 984
(in millions)

Ratio of expenses to average .69% .69% .80% .77% .86%
net assets

Ratio of expenses to average net .68% .69% .80% .77% .86%
assets after expense reductions B

Ratio of net investment income to 6.37% 6.37% 6.70% 7.68% 8.23%
average net assets

Portfolio turnover rate 151% 113% 73% 63% 87%

</TABLE>

A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS).
B FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS).
C 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.
D THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET GAIN (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 AMOUNTS HAVE BEEN ADJUSTED TO CONFORM WITH PRESENT PERIOD ACCOUNTING
POLICIES.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1996

1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Short-Term Bond Fund (formerly Fidelity Short-Term Bond Portfolio)
(the fund) is a fund of Fidelity Fixed-Income Trust (the trust) and is
authorized to issue an unlimited number of shares. The trust is registered
under the Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust. The financial statements have been prepared in conformity
with generally accepted accounting principles which permit management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting policies of
the fund:
SECURITY VALUATION. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. 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 (including restricted securities) for
which market quotations are not readily available are valued at their fair
value as determined in good faith under consistently applied procedures
under the general supervision of the Board of Trustees.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of 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. The effects of changes in foreign
currency exchange rates on investments in securities are included with the
net realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to 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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net investment income. Distributions from realized gains, if
any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for paydown
gains/losses on certain securities, foreign currency transactions, market
discount, capital loss carryforwards and losses deferred due to wash sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital 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 and foreign currency transactions may include temporary book
and tax basis differences that will reverse in a subsequent period. Any
taxable income or gain remaining at fiscal year end is distributed in the
following year.
For the period ended April 30, 1996, the fund's distributions exceeded the
aggregate amount of taxable income and net realized gains resulting in a
return of capital. This was due to certain foreign currency losses which
decreased taxable income available for distribution after certain
distributions had been made. (The tax treatment of distributions for the
1996 calendar year will be reported to shareholders prior to February 1,
1997.)
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.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other affiliated
entities of
2. OPERATING POLICIES - CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
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 securities, other than short-term securities,
aggregated $1,792,531,000 and $2,056,550,000, respectively, of which U.S.
government and government agency obligations aggregated $1,450,263,000 and
$1,455,990,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .1100% to .3700% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .30%. For
the period, the management fee was equivalent to an annual rate of .45% of
average net assets.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $60,000 for the
period.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
FSC receives account fees and asset-based fees that vary according to
account size and type of account. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements. For the
period, the transfer agent fees were equivalent to an annual rate of .20%
of average net assets.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
5. 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 balance during the period for which
the loan was outstanding amounted to $9,199,000. The weighted average
interest rate was 5.69%.
6. EXPENSE REDUCTIONS.
The fund has entered into arrangements with its custodian and transfer
agent whereby interest earned on uninvested cash balances was used to
offset a portion of the fund's expenses. During the period, the fund's
custodian and transfer agent fees were reduced by $32,000 and $52,000,
respectively, under these arrangements.
7. PROPOSED REORGANIZATION.
The Board of Trustees of the Fidelity Fixed Income Trust has approved an
Agreement and Plan of Reorganization ("Agreement") between the fund and
Fidelity Short-Term World 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 Fidelity Short-Term
World Bond Fund in exchange solely for the number of shares of the fund
having the same aggregate net asset value as the outstanding shares of
Fidelity Short-Term World Bond Fund at the close of business on the day
that 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 Fidelity Short-Term World Bond Fund. A Special Meeting of
Shareholders (Meeting) of Fidelity Short-Term World Bond Fund will be held
on October 11, 1996 to approve the Agreement. If the Agreement is approved
at the Meeting, the Reorganization is expected to become effective on or
about October 31, 1996.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Fixed-Income Trust and the Shareholders of
Fidelity Short-Term Bond Fund (formerly Fidelity Short-Term Bond
Portfolio):
We have audited the accompanying statement of assets and liabilities of
Fidelity Fixed-Income Trust: Fidelity Short-Term Bond Fund (formerly
Fidelity Short-Term Bond Portfolio), including the schedule of portfolio
investments, as of April 30, 1996, 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, 1996 by correspondence with the custodian
and brokers. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Fixed-Income Trust: Fidelity Short-Term Bond Fund (formerly
Fidelity Short-Term Bond Portfolio) as of April 30, 1996, the results of
its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
June 10, 1996
DISTRIBUTIONS

A total of 40.77% 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 1997 of the applicable
percentages for use in preparing 1996 income tax returns.
TO CALL FIDELITY

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2.
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3.
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4.
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Identification Number (PIN).
5.
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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
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2.
To change your Personal
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3.
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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
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
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 Bond
Spartan Ginnie Mae
Spartan Government Income
Spartan High Income
Spartan Investment Grade Bond
Spartan Limited Maturity
Government
Spartan Short-Intermediate
Government
Spartan Short-Term Bond
Target Timeline 1999, 2001 & 2003
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
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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

PART C. OTHER INFORMATION
Item 15. Indemnification
Article XI, Section 2 of the Amended and Restated 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) Amended and Restated Declaration of Trust, dated March 17, 1994, is
incorporated herein by reference to Exhibit 1(a) of Post-Effective
Amendment No. 70.
(2) Bylaws of the Trust, as amended, are incorporated herein by reference
to Exhibit 2(a) of Fidelity Union Street Trust's (File No. 2-50318)
Post-Effective Amendment No. 87.
(3) Not applicable.
(4) Agreement and Plan of Reorganization between Fidelity Fixed-Income
Trust: Fidelity Short-Term Bond Fund and Fidelity Investment Trust:
Fidelity Short-Term World Bond Fund is filed herein as Exhibit 1 to the
Proxy Statement and Prospectus.
(5) Not applicable.
(6)(a) Management Contract, dated November 1, 1993, between Fidelity
Short-Term Bond Portfolio (currently known as Fidelity Short Term Bond
Fund) and Fidelity Management & Research Company is incorporated herein by
reference to Exhibit 5(a) of 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) of 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) of 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) of 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) of
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 (currently known as Fidelity
Short-Term Bond Fund) is incorporated herein by reference to Exhibit 5(f)
of 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 (currently known as
Fidelity Short-Term Bond Fund) is incorporated herein by reference to
Exhibit 5(g) of 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 (currently known as Fidelity
Investment Grade Bond Fund) is incorporated herein by reference to Exhibit
5(h) of 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 (currently known as Fidelity
Investment Grade Bond Fund) is incorporated herein by reference to Exhibit
5(i) of 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) of 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) of Post-Effective Amendment No. 74.
(7)(a) General Distribution Agreement, dated April 1, 1987, between
Fidelity Flexible Bond Portfolio (currently known as Fidelity Investment
Grade Bond Fund) and Fidelity Distributors Corporation is incorporated
herein by reference to Exhibit 6(a) of Post-Effective Amendment No. 74.
(b) Amendment, dated January 1, 1988, to General Distribution Agreement
between Fidelity Flexible Bond Portfolio (currently known as Fidelity
Investment Grade Bond Fund) and Fidelity Distributors Corporation is
incorporated herein by reference to Exhibit 6(b) of Post-Effective
Amendment No. 74.
(c) General Distribution Agreement, dated April 1, 1987, between Fidelity
Short-Term Bond Portfolio (currently known as Fidelity Short-Term Bond
Fund) and Fidelity Distributors Corporation is incorporated herein by
reference to Exhibit 6(c) of Post-Effective Amendment No. 74.
(d) Amendment, dated January 1, 1988, to General Distribution Agreement
between Fidelity Short-Term Bond Portfolio (currently known as Fidelity
Short-Term Bond Fund) and Fidelity Distributors Corporation is
incorporated herein by reference to Exhibit 6(d) of 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) of 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) of 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) of Post-Effective
Amendment No. 74.
(h) General Distribution Agreement, dated November 19, 1992, between
Spartan Short-Intermediate Government Fund and Fidelity Distributors
Corporation is incorporated herein by reference to Exhibit 6(h) of
Post-Effective Amendment No. 77.
(8)(a) 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).
(b) The Fee Deferral Plan for Non-Interested Person Directors and
Trustees of the Fidelity Funds, effective as of December 1, 1995, is
incorporated herein by reference to Exhibit 7(b) of Fidelity School Street
Trust's (File No. 2-57167) Post-Effective Amendment No. 47.
(9)(a) Custodian Agreement and Appendix C, dated December 1, 1994, between
The Bank of New York and the Registrant, is incorporated herein by
reference to Exhibit 8(a) of Fidelity Hereford Street Trust's
Post-Effective Amendment No. 4 (File No. 33-52577).
(b) Appendix A, dated January 18, 1996, to the Custodian Agreement, dated
December 1, 1994, between The Bank of New York and the Registrant, is
incorporated herein by reference to Exhibit 8(b) of Fidelity Institutional
Cash Portfolios Post-Effective Amendment No. 31 (File 2-74808).
(c) Appendix B, dated September 14, 1995, to the Custodian Agreement,
dated December 1, 1994, between The Bank of New York and the Registrant, is
incorporated herein by reference to Exhibit 8(e) of Fidelity Charles Street
Trust's Post-Effective Amendment No. 54 (File No. 2-73133).
(d) Fidelity Group Repo Custodian Agreement among The Bank of New York, J.
P. Morgan Securities, Inc., and the Registrant, dated February 12, 1996, is
incorporated herein by reference to Exhibit 8(d) of Fidelity Institutional
Cash Portfolios' (File No. 2-74808) Post-Effective Amendment No. 31.
(e) Schedule 1 to the Fidelity Group Repo Custodian Agreement between The
Bank of New York and the Registrant, dated February 12, 1996, is
incorporated herein by reference to Exhibit 8(e) of Fidelity Institutional
Cash Portfolios' (File No. 2-74808) Post-Effective Amendment No. 31.
(f) Fidelity Group Repo Custodian Agreement among Chemical Bank, Greenwich
Capital Markets, Inc., and the Registrant, dated November 13, 1995, is
incorporated herein by reference to Exhibit 8(f) of Fidelity Institutional
Cash Portfolios' (File No. 2-74808) Post-Effective Amendment No. 31.
(g) Schedule 1 to the Fidelity Group Repo Custodian Agreement between
Chemical Bank and the Registrant, dated November 13, 1995, is incorporated
herein by reference to Exhibit 8(g) of Fidelity Institutional Cash
Portfolios' (File No. 2-74808) Post-Effective Amendment No. 31.
(h) Joint Trading Account Custody Agreement between The Bank of New York
and the Registrant, dated May 11, 1995, is incorporated herein by reference
to Exhibit 8(h) of Fidelity Institutional Cash Portfolios' (File No.
2-74808) Post-Effective Amendment No. 31.
(i) First Amendment to Joint Trading Account Custody Agreement between The
Bank of New York and the Registrant, dated July 14, 1995, is incorporated
herein by reference to Exhibit 8(i) of Fidelity Institutional Cash
Portfolios' (File No. 2-74808) Post-Effective Amendment No. 31.
(10)(a) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Short-Term Bond Portfolio (currently known as Fidelity Short-Term Bond
Fund) is incorporated herein by reference to Exhibit 15(a) of
Post-Effective Amendment No. 74.
(b) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Flexible Bond Portfolio (currently known as Fidelity Investment Grade Bond
Fund) is incorporated herein by reference to Exhibit 15(b) of
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) of
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) of
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) of Post-Effective Amendment No. 74.
(11) Opinion and Consent of Kirkpatrick & Lockhart LLP as to the legality
of shares being registered is filed herein as Exhibit 11.
(12) Opinion and Consent of Kirkpatrick & Lockhart LLP as to tax matters in
connection with the reorganization of Fidelity Short-Term World Bond Fund
is filed herein as Exhibit 12.
(13) Not applicable.
(14) Consent of Coopers & Lybrand, L.L.P. is filed herein as Exhibit 14.
(15) Not applicable.
(16) Powers of Attorney are filed herein as Exhibit 16.
(17) Rule 24f-2 Notice for Registrant's most recent fiscal year ended April
30, 1996 is filed herein as Exhibit 17.
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 3rd day of July 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.
<TABLE>
<CAPTION>
<S> <C> <C>
(Signature) (Title) (Date)

/s/Edward C. Johnson 3d(dagger) President and Trustee July 3, 1996

Edward C. Johnson 3d (Principal Executive Officer)

/s/Kenneth A. Rathgeber Treasurer July 3, 1996

Kenneth A. Rathgeber

/s/J. Gary Burkhead Trustee July 3, 1996

J. Gary Burkhead

/s/Ralph F. Cox * Trustee July 3, 1996

Ralph F. Cox

/s/Phyllis Burke Davis * Trustee July 3, 1996

Phyllis Burke Davis

/s/Richard J. Flynn * Trustee July 3, 1996

Richard J. Flynn

/s/E. Bradley Jones * Trustee July 3, 1996

E. Bradley Jones

/s/Donald J. Kirk * Trustee July 3, 1996

Donald J. Kirk

/s/Peter S. Lynch * Trustee July 3, 1996

Peter S. Lynch

/s/Edward H. Malone * Trustee July 3, 1996

Edward H. Malone

/s/Marvin L. Mann_____* Trustee July 3, 1996

Marvin L. Mann

/s/Gerald C. McDonough* Trustee July 3, 1996

Gerald C. McDonough

/s/Thomas R. Williams * Trustee July 3, 1996

Thomas R. Williams
</TABLE>
(dagger) Signatures affixed by /s/ J. Gary Burkhead pursuant to a power of
attorney dated December 15, 1994 and filed herewith.
* Signature affixed by /s/ Robert C. Hacker pursuant to a power of attorney
dated December 15, 1994 and filed herewith.

Exhibit 4
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the Agreement) is made as of
the 12th day of August, 1996, by and between Fidelity Investment Trust, a
Massachusetts business trust, on behalf of Fidelity Short-Term World Bond
Fund (Short-Term World), a series of Fidelity Investment Trust, and
Fidelity Fixed-Income Trust, a Massachusetts business trust, on behalf of
Fidelity Short-Term Bond Fund (Short-Term Bond), a series of Fidelity
Fixed-Income Trust. Fidelity Investment Trust and Fidelity Fixed-Income
Trust may be referred to herein collectively as the "Trusts" or each
individually as a "Trust." Short-Term Bond and Short-Term World may be
referred to herein collectively as the "Funds" or each individually as the
"Fund."
This Agreement is intended to be, and is adopted as, a plan of
reorganization within the meaning of Section 368(a)(1)(C) of the Internal
Revenue Code of 1986, as amended (the Code). The reorganization will
comprise: (a) the transfer of all of the assets of Short-Term World to
Short-Term Bond solely in exchange for shares of beneficial interest in
Short-Term Bond (the Short-Term Bond Shares) and the assumption by
Short-Term Bond of Short-Term World's liabilities; and (b) the constructive
distribution of such shares by Short-Term World PRO RATA to its
shareholders in complete liquidation and termination of Short-Term World in
exchange for all of Short-Term World's outstanding shares. Short-Term World
shall receive shares of Short-Term Bond having an aggregate net asset value
equal to the value of the assets of Short-Term World on the closing date
(as defined below), which Short-Term World shall then distribute PRO RATA
to its shareholders. The foregoing transactions are referred to herein as
the "Reorganization."
In consideration of the mutual promises and subject to the terms and
conditions herein, the parties covenant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF SHORT-TERM WORLD. Short-Term World
represents and warrants to and agrees with Short-Term Bond that:
(a) Short-Term World is a series of Fidelity Investment Trust, a business
trust duly organized, validly existing, and in good standing under the laws
of the Commonwealth of Massachusetts, and has the power to own all of its
properties and assets and to carry out its obligations under this
Agreement. It has all necessary federal, state, and local authorizations to
carry on its business as now being conducted and to carry out this
Agreement;
(b) Fidelity Investment Trust is an open-end, management investment
company duly registered under the Investment Company Act of 1940, as
amended (the 1940 Act), and such registration is in full force and effect;
(c) The Prospectus and Statement of Additional Information of Short-Term
World dated February 26, 1996 and Supplement to the Prospectus dated June
24, 1996 previously furnished to Short-Term Bond, did not and does not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading;
(d) There are no material legal, administrative, or other proceedings
pending or, to the knowledge of Short-Term World, threatened against
Short-Term World which assert liability on the part of Short-Term World.
Short-Term World knows of no facts which might form the basis for the
institution of such proceedings;
(e) Short-Term World is not in, and the execution, delivery, and
performance of this Agreement will not result in, violation of any
provision of its Restated Declaration of Trust or By-laws, or, to the
knowledge of Short-Term World, of any agreement, indenture, instrument,
contract, lease, or other undertaking to which Short-Term World is a party
or by which Short-Term World is bound or result in the acceleration of any
obligation or the imposition of any penalty under any agreement, judgment
or decree to which Short-Term World is a party or is bound;
(f) The Statement of Assets and Liabilities, the Statement of Operations,
the Statement of Changes in Net Assets, Financial Highlights, and the
Schedule of Investments (including market values) of Short-Term World at
December 31, 1995, have been audited by Coopers & Lybrand L.L.P.,
independent accountants, and have been furnished to Short-Term Bond. Said
Statement of Assets and Liabilities and Schedule of Investments fairly
present the Fund's financial position as of such date and said Statement of
Operations, Changes in Net Assets, and Financial Highlights fairly reflect
its results of operations, changes in financial position, and financial
highlights for the periods covered thereby in conformity with generally
accepted accounting principles consistently applied;
(g) Short-Term World has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on its
Statement of Assets and Liabilities as of December 31, 1995 and those
incurred in the ordinary course of Short-Term World's business as an
investment company since December 31, 1995;
(h) The registration statement (Registration Statement) filed with the
Securities and Exchange Commission (Commission) by Short-Term Bond on Form
N-14 relating to the shares of Short-Term Bond issuable hereunder and the
proxy statement of Short-Term World included therein (Proxy Statement), on
the effective date of the Registration Statement and insofar as they relate
to Short-Term World (i) will comply in all material respects with the
provisions of the Securities Act of 1933, as amended (the 1933 Act), the
Securities Exchange Act of 1934, as amended (the 1934 Act), and the 1940
Act, and the rules and regulations thereunder, and (ii) will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; and at the time of the shareholders' meeting referred to in
Section 7 and on the Closing Date, the prospectus contained in the
Registration Statement of which the Proxy Statement is a part (the
Prospectus), as amended or supplemented, insofar as it relates to
Short-Term World, will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading;
(i) All material contracts and commitments of Short-Term World (other than
this Agreement) will be terminated without liability to Short-Term World
prior to the Closing Date (other than those made in connection with
redemption of shares and the purchase and sale of portfolio securities made
in the ordinary course of business);
(j) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by Short-Term World
of the transactions contemplated by this Agreement, except such as have
been obtained under the 1933 Act, the 1934 Act, the 1940 Act, and state
securities or blue sky laws (which term as used herein shall include the
District of Columbia and Puerto Rico);
(k) Short-Term World has filed or will file all federal and state tax
returns which, to the knowledge of Short-Term World's officers, are
required to be filed by Short-Term World and has paid or will pay all
federal and state taxes shown to be due on said returns or provision shall
have been made for the payment thereof, and, to the best of Short-Term
World's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to such returns;
(l) Short-Term World has met the requirements of Subchapter M of the Code
for qualification and treatment as a regulated investment company for all
prior taxable years and intends to meet such requirements for its current
taxable year ending on the Closing Date (as defined in Section 6);
(m) All of the issued and outstanding shares of Short-Term World are, and
at the Closing Date will be, duly and validly issued and outstanding and
fully paid and nonassessable as a matter of Massachusetts law (except as
disclosed in the Fund's Statement of Additional Information), and have been
offered for sale and in conformity with all applicable federal securities
laws. All of the issued and outstanding shares of Short-Term World will, at
the Closing Date, be held by the persons and in the amounts set forth in
the list of shareholders submitted to Short-Term Bond in accordance with
this Agreement;
(n) At both the Valuation Time (as defined in Section 4) and the Closing
Date (as defined in Section 6), Short-Term World will have the full right,
power, and authority to sell, assign, transfer, and deliver its portfolio
securities and any other assets of Short-Term World to be transferred to
Short-Term Bond pursuant to this Agreement. At the Closing Date, subject
only to the delivery of Short-Term World's portfolio securities and any
such other assets as contemplated by this Agreement, Short-Term Bond will
acquire Short-Term World's portfolio securities and any such other assets
subject to no encumbrances, liens, or security interests (except for those
that may arise in the ordinary course and are disclosed to Short-Term Bond)
and without any restrictions upon the transfer thereof; and
(o) The execution, performance, and delivery of this Agreement will have
been duly authorized prior to the Closing Date by all necessary corporate
action on the part of Short-Term World, and this Agreement constitutes a
valid and binding obligation of Short-Term World enforceable in accordance
with its terms, subject to shareholder approval.
2. REPRESENTATIONS AND WARRANTIES OF SHORT-TERM BOND. Short-Term Bond
represents and warrants to and agrees with Short-Term World that:
(a) Short-Term Bond is a series of Fidelity Fixed-Income Trust, a business
trust duly organized, validly existing, and in good standing under the laws
of the Commonwealth of Massachusetts, and has the power to own all of its
properties and assets and to carry out its obligations under this
Agreement. It has all necessary federal, state, and local authorizations to
carry on its business as now being conducted and to carry out this
Agreement;
(b) Fidelity Fixed-Income Trust is an open-end, management investment
company duly registered under the 1940 Act, and such registration is in
full force and effect;
(c) The Prospectus and Statement of Additional Information of Short-Term
Bond, dated June 24, 1996, previously furnished to Short-Term World did not
and does not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading;
(d) There are no material legal, administrative, or other proceedings
pending or, to the knowledge of Short-Term Bond, threatened against
Short-Term Bond which assert liability on the part of Short-Term Bond.
Short-Term Bond knows of no facts which might form the basis for the
institution of such proceedings;
(e) Short-Term Bond is not in, and the execution, delivery, and
performance of this Agreement will not result in, violation of any
provision of its Amended and Restated Declaration of Trust or By-laws, or,
to the knowledge of Short-Term Bond, of any agreement, indenture,
instrument, contract, lease, or other undertaking to which Short-Term Bond
is a party or by which Short-Term Bond is bound or result in the
acceleration of any obligation or the imposition of any penalty under any
agreement, judgment, or decree to which Short-Term Bond is a party or is
bound;
(f) The Statement of Assets and Liabilities, the Statement of Operations,
the Statement of Changes in Net Assets, Financial Highlights, and the
Schedule of Investments (including market values) of Short-Term Bond at
April 30, 1996, have been audited by Coopers & Lybrand L.L.P., independent
accountants, and have been furnished to Short-Term World. Said statement of
Assets and Liabilities and Schedule of Investments fairly present its
financial position as of such date and said Statement of Operations,
Changes in Net Assets, and Financial Highlights fairly reflect its results
of operations, changes in financial position, and financial highlights for
the periods covered thereby in conformity with generally accepted
accounting principles consistently applied;
(g) Short-Term Bond has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on its
Statement of Assets and Liabilities as of April 30, 1996 and those incurred
in the ordinary course of Short-Term Bond's business as an investment
company since April 30, 1996;
(h) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by Short-Term Bond
of the transactions contemplated by this Agreement, except such as have
been obtained under the 1933 Act, the 1934 Act, the 1940 Act, and state
securities or blue sky laws (which term as used herein shall include the
District of Columbia and Puerto Rico);
(i) Short-Term Bond has filed or will file all federal and state tax
returns which, to the knowledge of Short-Term Bond's officers, are required
to be filed by Short-Term Bond and has paid or will pay all federal and
state taxes shown to be due on said returns or provision shall have been
made for the payment thereof, and, to the best of Short-Term Bond's
knowledge, no such return is currently under audit and no assessment has
been asserted with respect to such returns;
(j) Short-Term Bond has met the requirements of Subchapter M of the Code
for qualification and treatment as a regulated investment company for all
prior taxable years and intends to meet such requirements for its current
taxable year ending on April 30, 1997;
(k) By the Closing Date, the shares of beneficial interest of Short-Term
Bond to be issued to Short-Term World will have been duly authorized and,
when issued and delivered pursuant to this Agreement, will be legally and
validly issued and will be fully paid and nonassessable (except as
disclosed in the Fund's Statement of Additional Information) by Short-Term
Bond, and no shareholder of Short-Term Bond will have any preemptive right
of subscription or purchase in respect thereof;
(l) The execution, performance, and delivery of this Agreement will have
been duly authorized prior to the Closing Date by all necessary corporate
action on the part of Short-Term Bond, and this Agreement constitutes a
valid and binding obligation of Short-Term Bond enforceable in accordance
with its terms, subject to approval by the shareholders of Short-Term
World;
(m) The Registration Statement and the Proxy Statement, on the effective
date of the Registration Statement and insofar as they relate to Short-Term
Bond, (i) will comply in all material respects with the provisions of the
1933 Act, the 1934 Act, and the 1940 Act, and the rules and regulations
thereunder, and (ii) will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and at the time of
the shareholders' meeting referred to in Section 7 and on the Closing Date,
the Prospectus, as amended or supplemented, insofar as it relates to
Short-Term Bond, will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading;
(n) The issuance of the Short-Term Bond Shares pursuant to this Agreement
will be in compliance with all applicable federal securities laws; and
(o) All of the issued and outstanding shares of Short-Term Bond have been
offered for sale and sold in conformity with the federal securities laws.
3. REORGANIZATION.
(a) Subject to the requisite approval of the shareholders of Short-Term
World and to the other terms and conditions contained herein, Short-Term
World agrees to assign, sell, convey, transfer, and deliver to Short-Term
Bond on the Closing Date (as defined in Section 6) all of the assets of
Short-Term World of every kind and nature existing on the Closing Date.
Short-Term Bond agrees in exchange therefore: (i) to assume all of
Short-Term World's liabilities existing on or after the Closing Date,
whether or not determinable on the Closing Date, and (ii) to issue and
deliver to Short-Term World the number of full and fractional shares of
Short-Term Bond having an aggregate net asset value equal to the value of
the assets of Short-Term World transferred hereunder, less the value of the
liabilities of Short-Term World, determined as provided for under Section
4.
(b) The assets of Short-Term World to be acquired by Short-Term Bond shall
include, without limitation, all cash, cash equivalents, securities,
receivables (including interest or dividends receivable), claims, choses in
action, and other property owned by Short-Term World, and any deferred or
prepaid expenses shown as an asset on the books of Short-Term World on the
Closing Date. Short-Term World will pay or cause to be paid to Short-Term
Bond any dividend or interest payments received by it on or after the
Closing Date with respect to the assets transferred to Short-Term Bond
hereunder, and Short-Term Bond will retain any dividend or interest
payments received by it after the Valuation Time (as defined in Section 4)
with respect to the assets transferred hereunder without regard to the
payment date thereof.
(c) The liabilities of Short-Term World to be assumed by Short-Term Bond
shall include (except as otherwise provided for herein) all of Short-Term
World's liabilities, debts, obligations, and duties, of whatever kind or
nature, whether absolute, accrued, contingent, or otherwise, whether or not
arising in the ordinary course of business, whether or not determinable on
the Closing Date, and whether or not specifically referred to in this
Agreement. Notwithstanding the foregoing, Short-Term World agrees to use
its best efforts to discharge all of its known liabilities prior to the
Closing Date.
(d) Pursuant to this Agreement, as soon after the Closing Date as is
conveniently practicable (the Liquidation Date), Short-Term World will
constructively distribute PRO RATA to its shareholders of record,
determined as of the Valuation Time on the Closing Date, the Short-Term
Bond Shares in exchange for such shareholders' shares of beneficial
interest in Short-Term World and Short-Term World will be liquidated in
accordance with Short-Term World's Restated Declaration of Trust. Such
distribution shall be accomplished by the Funds' transfer agent opening
accounts on Short-Term Bond's Share transfer books for the Short-Term Bond
Shares in the names of Short-Term World shareholders and transferring the
Short-Term Bond Shares thereto. Each Short-Term World shareholder's account
shall be credited with the respective PRO RATA number of full and
fractional (rounded to the third decimal place) Short-Term Bond Shares due
that shareholder. All outstanding Short-Term World shares, including any
represented by certificates, shall simultaneously be canceled on Short-Term
World's share transfer records. Short-Term Bond shall not issue
certificates representing the Short-Term Bond Shares in connection with the
Reorganization.
(e) Any reporting responsibility of Short-Term World is and shall remain
its responsibility up to and including the date on which it is terminated.
(f) Any transfer taxes payable upon issuance of the Short-Term Bond Shares
in a name other than that of the registered holder on Short-Term World's
books of the Short-Term World shares constructively exchanged for the
Short-Term Bond Shares shall be paid by the person to whom such Short-Term
Bond Shares are to be issued, as a condition of such transfer.
4. VALUATION.
(a) The Valuation Time shall be 4:00 p.m. Eastern time on the Closing Date
(as defined in Section 6), or such other date as may be mutually agreed
upon in writing by the parties hereto (the Valuation Time).
(b) On the Closing Date, Short-Term Bond will deliver to Short-Term World
the number of Short-Term Bond Shares having an aggregate net asset value
equal to the value of the assets of Short-Term World transferred hereunder
less the liabilities of Short-Term World, determined as provided in this
Section 4.
(c) The net asset value of the Short-Term Bond Shares to be delivered to
Short-Term World, the value of the assets of Short-Term World transferred
hereunder, and the value of the liabilities of Short-Term World to be
assumed hereunder shall in each case be determined as of the Valuation
Time.
(d) The net asset value of the Short-Term Bond Shares shall be computed in
the manner set forth in the then-current Short-Term Bond Prospectus and
Statement of Additional Information, and the value of the assets and
liabilities of Short-Term World shall be computed in the manner set forth
in the then-current Short-Term World Prospectus and Statement of Additional
Information.
(e) All computations pursuant to this Section shall be made by or under
the direction of Fidelity Service Co., a division of FMR Corp., in
accordance with its regular practice as pricing agent for Short-Term World
and Short-Term Bond.
5. FEES; EXPENSES.
(a) Short-Term World shall be responsible for all expenses, fees and other
charges in connection with entering into and carrying out the provisions of
this Agreement, whether or not the transactions contemplated hereby are
consummated. Such expenses shall include legal, accounting, printing,
filing, and proxy solicitation expenses, portfolio transfer taxes (if any),
costs incurred in connection with the purchase or sale of portfolio
securities, or other similar expenses incurred with respect to the
Reorganization.
(b) Each of Short-Term Bond and Short-Term World represents that there is
no person who has dealt with it who by reason of such dealings is entitled
to any broker's or finder's or other similar fee or commission arising out
of the transactions contemplated by this Agreement.
6. CLOSING DATE.
(a) The Reorganization, together with related acts necessary to consummate
the same (the Closing), unless otherwise provided herein, shall occur at
the principal office of the Trusts, 82 Devonshire Street, Boston,
Massachusetts, at the Valuation Time on October 31, 1996, or at some other
time, date, and place agreed to by Short-Term World and Short-Term Bond
(the Closing Date).
(b) In the event that on the Closing Date: (i) any of the markets for
securities held by the Funds is closed to trading, or (ii) trading thereon
is restricted, or (iii) trading or the reporting of trading on said market
or elsewhere is disrupted, all so that accurate appraisal of the total net
asset value of Short-Term World and the total net asset value of Short-Term
Bond is impracticable, the Valuation Time and the Closing Date shall be
postponed until the first business day after the day when such trading
shall have been fully resumed and such reporting shall have been restored,
or such other date as the parties may agree.
7. SHAREHOLDER MEETING AND TERMINATION OF SHORT-TERM WORLD.
(a) Short-Term World agrees to call a meeting of its shareholders after
the effective date of the Registration Statement, to consider transferring
its assets to Short-Term Bond as herein provided, adopting this Agreement,
and authorizing the liquidation of Short-Term World.
(b) Short-Term World agrees that as soon as reasonably practicable after
distribution of the Short-Term Bond Shares, Short-Term World shall be
terminated as a series of Fidelity Investment Trust pursuant to its
Restated Declaration of Trust, any further actions shall be taken in
connection therewith as required by applicable law, and on and after the
Closing Date Short-Term World shall not conduct any business except in
connection with its liquidation and termination.
8. CONDITIONS TO SHORT-TERM BOND'S OBLIGATIONS. The obligations of
Short-Term Bond hereunder shall be subject to the following conditions:
(a) That Short-Term World furnishes to Short-Term Bond a statement, dated
as of the Closing Date, signed by an officer of Fidelity Investment Trust,
certifying that as of the Valuation Time and the Closing Date all
representations and warranties of Short-Term World made in this Agreement
are true and correct in all material respects and that Short-Term World has
complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to such dates;
(b) That Short-Term World furnishes Short-Term Bond with copies of the
resolutions, certified by an officer of Fidelity Investment Trust,
evidencing the adoption of this Agreement and the approval of the
transactions contemplated herein by the requisite vote of the holders of
the outstanding shares of beneficial interest of Short-Term World;

Exhibit 11
July 3, 1996
Fidelity Fixed-Income Trust
82 Devonshire Street
Boston, Massachusetts 02109
Ladies and Gentlemen:
You have requested our opinion regarding certain matters in connection
with the issuance of shares of Short-Term Bond Fund ("Short-Term Bond"), a
series of Fidelity Fixed-Income Trust (the "Trust"), pursuant to a
Registration Statement to be filed by the Trust on Form N-14 ("Registration
Statement") under the Securities Act of 1933 ("1933 Act") in connection
with the proposed acquisition by Short-Term Bond of all of the assets of
Short-Term World Bond Fund ("Short-Term World"), a series of Fidelity
Investment Trust, and the assumption by Short-Term Bond of the liabilities
of Short-Term World solely in exchange for Short-Term Bond shares.
In connection with our services as counsel for the Trust, we have
examined, among other things, originals or copies of such documents,
certificates and corporate and other records as we deemed necessary or
appropriate for purposes of this opinion. We have assumed the genuineness
of all signatures, the authenticity of all documents submitted to us, the
conformity to original documents of all documents presented to us as copies
thereof and the authenticity of the original documents from which any such
copies were made, which assumptions we have not independently verified. As
to various matters of fact material to this opinion, we have relied upon
statements and certificates of officers of the Trust. Based upon this
examination, we are of the opinion that the shares to be issued pursuant to
the Registration Statement, when issued upon the terms provided in the
Registration Statement, subject to compliance with the 1933 Act, the
Investment Company Act of 1940, and applicable state law regulating the
offer and sale of securities, will be legally issued, fully paid, and
non-assessable.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of a business trust
may be held personally liable for the obligations of the Trust. The
Trust's Declaration of Trust provides that the Trustees shall have no power
to bind any shareholder personally or to call upon any shareholder for the
payment of any sum of money or assessment whatsoever other than such as the
shareholder may at any time personally agree to pay by way of subscription
for any shares or otherwise. The Declaration of Trust also requires that
every note, bond, contract or other undertaking issued by or on behalf of
the Trust or the Trustees relating to the Trust shall include a recitation
limiting the obligation represented thereby to the Trust and its assets
(although the omission of such recitation shall not operate to bind any
shareholder). The Declaration of Trust provides that: (i) in case any
shareholder or any former shareholder of any Series of the Trust shall be
held personally liable solely by reason of his being or having been a
shareholder and not because of his acts or omissions or for some other
reason, the shareholder or former shareholder shall be entitled out of the
assets belonging to the applicable series to be held harmless from and
indemnified against all loss and expense arising from such liability; and
(ii) a series shall, upon request by the shareholder, assume the defense of
any claim made against any shareholder for any act or obligation of that
series and satisfy any judgment thereon.

We hereby consent to the reference to our firm under the captions "Federal
Income Tax Consequences of the Reorganization," "Federal Income Tax
Considerations" and "Legal Matters" in the Proxy Statement and Prospectus
which constitute a part of the Registration Statement. We further consent
to your filing a copy of this opinion as an exhibit to the Registration
Statement.
Yours truly,
/s/ Kirkpatrick & Lockhart LLP
Kirpatrick & Lockhart LLP

Exhibit 12

July 3, 1996
Fidelity Investment Trust
Fidelity Fixed-Income Trust
82 Devonshire Street
Boston, MA 02109
Ladies and Gentlemen:
Fidelity Investment Trust ("FIT"), a Massachusetts business trust, on
behalf of Fidelity Short-Term World Bond Fund ("Acquired"), a series of
FIT, and Fidelity Fixed-Income Trust ("FFT"), a Massachusetts business
trust, on behalf of Fidelity Short-Term Bond Fund ("Acquiring"), a series
of FFT, have requested our opinion as to certain federal income tax
consequences of a transaction ("Reorganization") in which Acquiring will
acquire all of the assets and assume all of the liabilities of Acquired in
exchange solely for shares of beneficial interest in Acquiring ("Acquiring
Shares") pursuant to an Agreement and Plan of Reorganization ("Agreement")
expected to be entered into between Acquired and Acquiring on August 12,
1996.
In rendering this opinion, we have examined a draft of the Agreement
("Draft Agreement"), the prospectus/proxy statement to be filed with the
Securities and Exchange Commission in connection with the Reorganization,
the currently effective prospectuses and statements of additional
information of Acquired and Acquiring, and such other documents as we have
deemed necessary. We have also relied, with your consent, on certificates
of officers of FIT and FFT.
OPINION
Based solely on the facts and representations set forth in the reviewed
documents and the certificates of officers of FFT and FIT, and assuming
that (i) those representations are true on the date of the Reorganization,
(ii) the Reorganization is consummated in accordance with the Agreement,
and (iii) the Agreement does not differ materially from the Draft
Agreement, our opinion with respect to the federal income tax consequences
of the Reorganization is as follows.
The Reorganization will be a reorganization under section 368(a)(1)(C) of
the Internal Revenue Code of 1986, as amended ("Code"), and Acquired and
Acquiring will each be parties to the Reorganization under section 368(b)
of the Code.
No gain or loss will be recognized by Acquired upon the transfer of all
of its assets to Acquiring in exchange solely for Acquiring Shares and
Acquiring's assumption of Acquired's liabilities followed by the
distribution of those Acquiring Shares to the Acquired shareholders in
liquidation of Acquired.
No gain or loss will be recognized by Acquiring on the receipt of
Acquired's assets in exchange solely for Acquiring Shares and the
assumption of Acquired's liabilities.
The basis of Acquired's assets in the hands of Acquiring will be the same
as the basis of such assets in Acquired's hands immediately prior to the
Reorganization.
Acquiring's holding period in the assets to be received from Acquired
will include Acquired's holding period in such assets.
The Acquired shareholders will recognize no gain or loss on the exchange
of the shares of beneficial interest in Acquired ("Acquired Shares") solely
for the Acquiring Shares in the Reorganization.
The Acquired shareholders' basis in the Acquiring Shares to be received
by them will be the same as their basis in the Acquired Shares to be
surrendered in exchange therefor.
The holding period of the Acquiring Shares to be received by the Acquired
shareholders will include the holding period of the Acquired Shares to be
surrendered in exchange therefor, provided those Acquired Shares were held
as capital assets on the date of the Reorganization.
The foregoing opinion is based on, and is conditioned on the continued
applicability of, the provisions of the Code and the regulations
thereunder, case law precedent, and the Internal Revenue Service
pronouncements in existence at the date hereof. We express no opinion as
to whether Acquired will recognize gain or loss under Section 1256 of the
Code on the transfer of futures, forwards, or options to Acquiring in the
Reorganization. Nor do we express any opinion other than those contained
herein.
We consent to the inclusion of this opinion in the Registration Statement
on Form N-14 filed with the Securities and Exchange Commission and the
inclusion of the name "Kirkpatrick &
Lockhart LLP" in the "Federal Income Tax Consequences of the
Reorganization," "Federal Income Tax Considerations" and "Legal Matters"
sections of that Registration Statement.
Very truly yours,
/s/ Kirkpatrick & Lockhart LLP
Kirkpatrick & Lockhart LLP

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: Fidelity Short-Term Bond Fund, of our report
dated June 10, 1996 on the financial statements and financial highlights
included in the April 30, 1996 Annual Report to Shareholders of Fidelity
Short-Term Bond Fund.
We also consent to the incorporation by reference in the Registration
Statement, of our report dated February 8, 1996 on the financial statements
and financial highlights included in the December 31, 1995 Annual Report to
Shareholders of Fidelity Investment Trust: Fidelity Short-Term World 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
Fidelity Short-Term Bond Fund and Fidelity Short-Term World Bond Fund,
which are also incorporated by reference into the Proxy/Prospectus.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
June 28, 1996

Exhibit 16
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

Exhibit 16
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 17
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
"Rule 24f-2 Notice"
Fidelity Fixed Income Trust
(Name of Registrant)
File No. 2-41839
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 24F-2
Annual Notice of Securities Sold
Pursuant to Rule 24f-2
Read instructions at end of Form Before preparing Form.
Please print or type.
1.
Name and address of issuer: Fidelity Fixed Income Trust
82 Devonshire Street, Boston, MA, 02109
2.
Name of each series or class of funds for which this notice is filed:
Fidelity Investment Grade Bond Fund
3.
Investment Company Act File Number: 811-2105
Securities Act File Number: 2-41839
4.
Last day of fiscal year for which this notice is filed: April 30, 1996
5.
Check box if this notice is being filed more than 180 days after
the close of the issuer's fiscal year for purposes of reporting securities
sold after the close of the fiscal year but before termination of
the issuer's 24f-2 declaration:
[ ]
6.
Date of termination of issuer's declaration under rule 24f-2(a)(1),
if applicable (see Instruction A.6):
7.
Number and amount of securities of the same class or series which
had been registered under the Securites Act of 1933 other than pursuant
to rule 24f-2 in a prior fiscal year, but which remained unsold at
the beginning of the fiscal year:
Number of Shares: 4,719,259
Aggregate Price: 38,167,688
8.
Number and amount of securities registered during the fiscal year
other than pursuant to rule 24f-2:
Number of Shares: 0
Aggregate Price: 0
9.
Number and aggregate sale price of securities sold during the fiscal
year:
Number of Shares: 105,220,331
Aggregate Price: 760,582,654
10.
Number and aggregate sale price of securities sold during the fiscal
year in reliance upon registration pursuant to rule 24f-2:
Number of Shares: 100,501,072
Aggregate Price: 722,414,966
11.
Number and aggregate sale price of securities issued during the fiscal
year in connection with dividend reinvestment plans, if applicable
(see Instruction B.7):
12.
Calculation of registration fee:
(i)
Aggregate sale price of securities sold during the fiscal
year in reliance on rule 24f-2 (from Item 10): 722,414,966

(ii)
Aggregate price of shares issued in connection with
dividend reinvestment plans (from Item 11, if applicable): 0

(iii)
Aggregate price of shares redeemed or repurchased during
the fiscal year (if applicable): (487,256,158)

(iv)
Aggregate price of shares redeemed or repurchased and previously
applied as a reduction to filing fees pursuant to
rule 24e-2 (if applicable): 0

(v)
Net aggregate price of securities sold and issued during the fiscal
year in reliance on rule 24f-2 [line (i), plus
line (ii), less line (iii), plus line (iv)] (if applicable): 235,158,808

(vi)
Multiplier prescribed by Section 6(b) of the Securities Act of 1933
or other applicable law or regulation (see
Instruction C.6): 1/2900

(vii)
Fee due [line (i) or line (v) muliplied by line (vi)]: 81,089.24

Instruction: Issuers should complete lines (ii), (iii), (iv), and
(v) only if the form is being filed within 60
days after the close of the issuer's fiscal year. See Instruction
C.3.
13.
Check box if fees are being remitted to the Commission's lockbox
depository as described in section 3a of the Commission's Rules of
Informal and Other Procedures (17 CFR 202.3a).
[n]
Date of mailing or wire transfer of filing fees to the Commission's
lockbox depository:
June 19, 1996
SIGNATURES
This report has been signed below by the following persons on behalf
of the issuer and in the capacities and on the dates indicated.
By (Signature and Title)* John H. Costello

Assistant Treasurer

Date June 27, 1996
* Please print the name and title of the signing officer below the
signature.
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 24F-2
Annual Notice of Securities Sold
Pursuant to Rule 24f-2
Read instructions at end of Form Before preparing Form.
Please print or type.
1.
Name and address of issuer: Fidelity Fixed Income Trust
82 Devonshire Street, Boston, MA, 02109
2.
Name of each series or class of funds for which this notice is filed:
Fidelity Short Term Bond Fund
3.
Investment Company Act File Number: 811-2105
Securities Act File Number: 2-41839
4.
Last day of fiscal year for which this notice is filed: April 30, 1996
5.
Check box if this notice is being filed more than 180 days after
the close of the issuer's fiscal year for purposes of reporting securities
sold after the close of the fiscal year but before termination of
the issuer's 24f-2 declaration:
[ ]
6.
Date of termination of issuer's declaration under rule 24f-2(a)(1),
if applicable (see Instruction A.6):
7.
Number and amount of securities of the same class or series which
had been registered under the Securites Act of 1933 other than pursuant
to rule 24f-2 in a prior fiscal year, but which remained unsold at
the beginning of the fiscal year:
Number of Shares: 5,171,934
Aggregate Price: 44,478,635
8.
Number and amount of securities registered during the fiscal year
other than pursuant to rule 24f-2:
Number of Shares: 76,572,693
Aggregate Price: 674,605,425
9.
Number and aggregate sale price of securities sold during the fiscal
year:
Number of Shares: 47,676,793
Aggregate Price: 420,997,410
10.
Number and aggregate sale price of securities sold during the fiscal
year in reliance upon registration pursuant to rule 24f-2:
Number of Shares: 47,676,793
Aggregate Price: 420,997,410
11.
Number and aggregate sale price of securities issued during the fiscal
year in connection with dividend reinvestment plans, if applicable
(see Instruction B.7):
12.
Calculation of registration fee:
(i)
Aggregate sale price of securities sold during the fiscal
year in reliance on rule 24f-2 (from Item 10): 420,997,410

(ii)
Aggregate price of shares issued in connection with
dividend reinvestment plans (from Item 11, if applicable): 0

(iii)
Aggregate price of shares redeemed or repurchased during
the fiscal year (if applicable): (420,997,410)

(iv)
Aggregate price of shares redeemed or repurchased and previously
applied as a reduction to filing fees pursuant to
rule 24e-2 (if applicable): 0

(v)
Net aggregate price of securities sold and issued during the fiscal
year in reliance on rule 24f-2 [line (i), plus
line (ii), less line (iii), plus line (iv)] (if applicable): 0

(vi)
Multiplier prescribed by Section 6(b) of the Securities Act of 1933
or other applicable law or regulation (see
Instruction C.6): 1/2900

(vii)
Fee due [line (i) or line (v) muliplied by line (vi)]: 0

Assistant Treasurer

Date June 27, 1996
* Please print the name and title of the signing officer below the
signature.
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 24F-2
Annual Notice of Securities Sold
Pursuant to Rule 24f-2
Read instructions at end of Form Before preparing Form.
Please print or type.
1.
Name and address of issuer: Fidelity Fixed Income Trust
82 Devonshire Street, Boston, MA, 02109
2.
Name of each series or class of funds for which this notice is filed:
Spartan Government Income Fund
3.
Investment Company Act File Number: 811-2105
Securities Act File Number: 2-41839
4.
Last day of fiscal year for which this notice is filed: April 30, 1996
5.
Check box if this notice is being filed more than 180 days after
the close of the issuer's fiscal year for purposes of reporting securities
sold after the close of the fiscal year but before termination of
the issuer's 24f-2 declaration:
[ ]
6.
Date of termination of issuer's declaration under rule 24f-2(a)(1),
if applicable (see Instruction A.6):
7.
Number and amount of securities of the same class or series which
had been registered under the Securites Act of 1933 other than pursuant
to rule 24f-2 in a prior fiscal year, but which remained unsold at
the beginning of the fiscal year:
Number of Shares: 22,314,426
Aggregate Price: 221,633,707
8.
Number and amount of securities registered during the fiscal year
other than pursuant to rule 24f-2:
Number of Shares: 5,932,338
Aggregate Price: 60,391,203
9.
Number and aggregate sale price of securities sold during the fiscal
year:
Number of Shares: 6,112,980
Aggregate Price: 63,465,783
10.
Number and aggregate sale price of securities sold during the fiscal
year in reliance upon registration pursuant to rule 24f-2:
Number of Shares: 6,112,980
Aggregate Price: 63,465,783
11.
Number and aggregate sale price of securities issued during the fiscal
year in connection with dividend reinvestment plans, if applicable
(see Instruction B.7):
12.
Calculation of registration fee:
(i)
Aggregate sale price of securities sold during the fiscal
year in reliance on rule 24f-2 (from Item 10): 63,465,783

(ii)
Aggregate price of shares issued in connection with
dividend reinvestment plans (from Item 11, if applicable): 0

(iii)
Aggregate price of shares redeemed or repurchased during
the fiscal year (if applicable): (63,465,783)

(iv)
Aggregate price of shares redeemed or repurchased and previously
applied as a reduction to filing fees pursuant to
rule 24e-2 (if applicable): 0

(v)
Net aggregate price of securities sold and issued during the fiscal
year in reliance on rule 24f-2 [line (i), plus
line (ii), less line (iii), plus line (iv)] (if applicable): 0

(vi)
Multiplier prescribed by Section 6(b) of the Securities Act of 1933
or other applicable law or regulation (see
Instruction C.6): 1/2900

(vii)
Fee due [line (i) or line (v) muliplied by line (vi)]: 0

Assistant Treasurer

Date June 27, 1996
* Please print the name and title of the signing officer below the
signature.
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 24F-2
Annual Notice of Securities Sold
Pursuant to Rule 24f-2
Read instructions at end of Form Before preparing Form.
Please print or type.
1.
Name and address of issuer: Fidelity Fixed Income Trust
82 Devonshire Street, Boston, MA, 02109
2.
Name of each series or class of funds for which this notice is filed:
Spartan High Income Fund
3.
Investment Company Act File Number: 811-2105
Securities Act File Number: 2-41839
4.
Last day of fiscal year for which this notice is filed: April 30, 1996
5.
Check box if this notice is being filed more than 180 days after
the close of the issuer's fiscal year for purposes of reporting securities
sold after the close of the fiscal year but before termination of
the issuer's 24f-2 declaration:
[ ]
6.
Date of termination of issuer's declaration under rule 24f-2(a)(1),
if applicable (see Instruction A.6):
7.
Number and amount of securities of the same class or series which
had been registered under the Securites Act of 1933 other than pursuant
to rule 24f-2 in a prior fiscal year, but which remained unsold at
the beginning of the fiscal year:
Number of Shares: 0
Aggregate Price: 0
8.
Number and amount of securities registered during the fiscal year
other than pursuant to rule 24f-2:
Number of Shares: 0
Aggregate Price: 0
9.
Number and aggregate sale price of securities sold during the fiscal
year:
Number of Shares: 62,710,769
Aggregate Price: 772,623,583
10.
Number and aggregate sale price of securities sold during the fiscal
year in reliance upon registration pursuant to rule 24f-2:
Number of Shares: 62,710,769
Aggregate Price: 772,623,583
11.
Number and aggregate sale price of securities issued during the fiscal
year in connection with dividend reinvestment plans, if applicable
(see Instruction B.7):
12.
Calculation of registration fee:
(i)
Aggregate sale price of securities sold during the fiscal
year in reliance on rule 24f-2 (from Item 10): 772,623,583

(ii)
Aggregate price of shares issued in connection with
dividend reinvestment plans (from Item 11, if applicable): 0

(iii)
Aggregate price of shares redeemed or repurchased during
the fiscal year (if applicable): (269,013,156)

(iv)
Aggregate price of shares redeemed or repurchased and previously
applied as a reduction to filing fees pursuant to
rule 24e-2 (if applicable): 0

(v)
Net aggregate price of securities sold and issued during the fiscal
year in reliance on rule 24f-2 [line (i), plus
line (ii), less line (iii), plus line (iv)] (if applicable): 503,610,427

(vi)
Multiplier prescribed by Section 6(b) of the Securities Act of 1933
or other applicable law or regulation (see
Instruction C.6): 1/2900

(vii)
Fee due [line (i) or line (v) muliplied by line (vi)]: 173,658.77

Assistant Treasurer

Date June 27, 1996
* Please print the name and title of the signing officer below the
signature.
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 24F-2
Annual Notice of Securities Sold
Pursuant to Rule 24f-2
Read instructions at end of Form Before preparing Form.
Please print or type.
1.
Name and address of issuer: Fidelity Fixed Income Trust
82 Devonshire Street, Boston, MA, 02109
2.
Name of each series or class of funds for which this notice is filed:
Spartan Short Intermediate Government Fund
3.
Investment Company Act File Number: 811-2105
Securities Act File Number: 2-41839
4.
Last day of fiscal year for which this notice is filed: April 30, 1996
5.
Check box if this notice is being filed more than 180 days after
the close of the issuer's fiscal year for purposes of reporting securities
sold after the close of the fiscal year but before termination of
the issuer's 24f-2 declaration:
[ ]
6.
Date of termination of issuer's declaration under rule 24f-2(a)(1),
if applicable (see Instruction A.6):
7.
Number and amount of securities of the same class or series which
had been registered under the Securites Act of 1933 other than pursuant
to rule 24f-2 in a prior fiscal year, but which remained unsold at
the beginning of the fiscal year:
Number of Shares: 0
Aggregate Price: 0
8.
Number and amount of securities registered during the fiscal year
other than pursuant to rule 24f-2:
Number of Shares: 0
Aggregate Price: 0
9.
Number and aggregate sale price of securities sold during the fiscal
year:
Number of Shares: 7,008,382
Aggregate Price: 67,114,540
10.
Number and aggregate sale price of securities sold during the fiscal
year in reliance upon registration pursuant to rule 24f-2:
Number of Shares: 7,008,382
Aggregate Price: 67,114,540
11.
Number and aggregate sale price of securities issued during the fiscal
year in connection with dividend reinvestment plans, if applicable
(see Instruction B.7):
12.
Calculation of registration fee:
(i)
Aggregate sale price of securities sold during the fiscal
year in reliance on rule 24f-2 (from Item 10): 67,114,540

(ii)
Aggregate price of shares issued in connection with
dividend reinvestment plans (from Item 11, if applicable): 0

(iii)
Aggregate price of shares redeemed or repurchased during
the fiscal year (if applicable): (67,114,540)

(iv)
Aggregate price of shares redeemed or repurchased and previously
applied as a reduction to filing fees pursuant to
rule 24e-2 (if applicable): 0

(v)
Net aggregate price of securities sold and issued during the fiscal
year in reliance on rule 24f-2 [line (i), plus
line (ii), less line (iii), plus line (iv)] (if applicable): 0

(vi)
Multiplier prescribed by Section 6(b) of the Securities Act of 1933
or other applicable law or regulation (see
Instruction C.6): 1/2900

(vii)
Fee due [line (i) or line (v) muliplied by line (vi)]: 0

Assistant Treasurer

Date June 27, 1996
* Please print the name and title of the signing officer below the
signature.
Fidelity
Investments
Fidelity Management & Research Co.
82 Devonshire Street
Boston, MA 02109
617 570 7000
June 19, 1996
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
RE: Rule 24f-2 Notice
Fidelity Fixed Income Trust
File No. 2-41839
Gentlemen:
Pursuant to Rule 24f-2(b)(1) under the Investment Company Act of
1940,
enclosed herewith on behalf of the above fund is a Rule 24f-2 Notice
for
the fiscal year ended April 30, 1996
. In accordance with Rule 24f-2(c), the
required filing fee of $254,748.01
was wired to Mellon Bank, in Pittsburgh,
Pennsylvania on June 19, 1996
.
Very truly yours,
Fidelity Fixed Income Trust
By John H. Costello
Assistant Treasurer
Enclosures
June 19, 1996
Mr. John Costello, Assistant Treasurer
Fidelity Fixed-Income Trust:
82 Devonshire Street
Boston, Massachusetts 02109
Dear Mr. Costello:
Fidelity Corporate Bond, Inc. was a corporation organized under
the laws of the Commonwealth of Massachusetts on June 25, 1970
under the name of Fidelity Bond Fund, Inc., which name was
change to Fidelity Bond-Debenture Fund Inc. on June 10, 1971, to
Fidelity Corporate Bond Fund on October 31, 1984 at the time of
its reorganization as a Massachusetts business trust (the "fund"),
and to Fidelity Flexible Bond Fund on October 25, 1985. An
amended Declaration of Trust changing the name of the fund from
Fidelity Flexible Bond Fund to Fidelity Fixed-Income Trust was
dated, executed and delivered in Boston, Massachusetts on
September 3, 1986. Supplements to the Declaration of Trust were
filed with the Secretary of the Commonwealth on December 4,
1987 and November 16, 1989. In addition, the Declaration of
Trust was amended and restated on March 17, 1994 and filed with
the Secretary of the Commonwealth on April 14, 1994.
I have conducted such legal and factual inquiry as I have deemed
necessary for the purpose of rendering this opinion.
Capitalized terms used herein, and not otherwise herein defined, are
used as defined in the Declaration of Trust.
Under Article III, Section 1, of the Declaration of Trust, the
beneficial interest in the Trust shall be divided into such transferable
Shares of one or more separate and distinct Series as the Trustees
shall from time to time create and establish. The number of Shares
is unlimited and each Share shall be without par value and shall be
fully paid and non assessable. The Trustees shall have full power
and authority, in their sole discretion and without obtaining any
prior authorization or vote of the Shareholders of the Trust to
create and establish (and to change in any manner) Shares with such
preferences, voting powers, rights, and privileges as the Trustees
may from time to time determine, to divide or combine the Shares
into a greater or lesser number, to classify or reclassify any issued
Shares into one or more Series of Shares, to abolish any one or
more Series of Shares, and to take such other action with respect to
the Shares as the Trustees may deem desirable.
Under Article III, Section 4, the Trustees shall accept investments
in the Trust from such persons and on such terms as they may from
time to time authorize. Such investments may be in the form of
cash or securities in which the appropriate Series is authorized to
invest, valued as provided in Article X, Section 3. After the date of
the initial contribution of capital, the number of Shares to represent
the initial contribution may in the Trustees' discretion be considered
as outstanding and the amount received by the Trustees on account
of the contribution shall be treated as an asset of the Trust.
Subsequent investments in the Trust shall be credited to each
Shareholder's account in the form of full Shares of the Trust at the
Net Asset Value per Share next determined after the investment is
received; provided, however, that the trustees may, in their sole
discretion, (a) impose a sales charge upon investments in the Trust
and (b) issue fractional Shares.
By a vote adopted on December 14, 1984 and amended on
February 22, 1985, the Board of Trustees authorized the issue and
sale, from time to time, of an unlimited number of shares of
beneficial interest of the trust in accordance with the terms included
in the current Registration Statement and subject to the limitations
of the Declaration of Trust and any amendments thereto.
I understand from you that, pursuant to Rule 24f-2 under the
Investment Company Act of 1940, the trust has registered an
indefinite amount of shares of beneficial interest under the
Securities Act of 1933. I further understand that, pursuant to the
provisions of Rule 24f-2, the trust intends to file with the
Securities and Exchange Commission a Notice making definite the
registration of 224,009,996 shares of the trust (the "Shares") sold in
reliance upon Rule 24f-2 during the fiscal year ended April 30,
1996.
I am of the opinion that all necessary trust action precedent to the
issue of Shares has been duly taken, and that all the Shares were
legally and validly issued, and are fully paid and non assessable,
except as described in the fund's Statements of Additional
Information under the heading "Shareholder and Trustee Liability."
In rendering this opinion, I rely on the representation by the trust
that it or its agent received consideration for the Shares in
accordance with the Declaration of Trust and I express no opinion
as to compliance with the Securities Act of 1933, the Investment
Company Act of 1940 or applicable state "Blue Sky" or securities
laws in connection with sales of the Shares.
I hereby consent to the filing of this opinion with the Securities and
Exchange Commission in connection with a Rule 24f-2 Notice
which you are about to file under the 1940 Act with said
commission.
Sincerely,
/s/ Arthur S. Loring
Arthur S. Loring
Vice President- Legal