SUPPLEMENT TO THE SPARTAN(registered trademark) SHORT-TERM INCOME FUND AND
SPARTAN(registered trademark) INVESTMENT GRADE BOND FUND PROSPECTUS
DATED NOVEMBER 20, 1995
On February 20, 1996 Spartan Short-Term Income Fund changed its name to
Spartan Short-Term Bond Fund.
The following information replaces the similar information found in the
"Key Facts" section on page 3.
SPARTAN SHORT-TERM BOND
STRATEGY: Invests normally in investment-grade debt securities while
normally maintaining an average maturity of three years or less.
SPARTAN INVESTMENT GRADE BOND
STRATEGY: Invests normally in investment-grade debt securities.
The following information replaces the similar information found in the
first three paragraphs of the "Investment Principles and Risks" section
found on page 10.
SPARTAN SHORT-TERM BOND seeks as high a level of current income as
is consistent with preservation of capital by investing in investment-grade
debt securities under normal conditions. 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 September 30, 1995, the fund's dollar-weighted average maturity was
2.3 years.
SPARTAN INVESTMENT GRADE BOND seeks a high level of current income by
investing in investment-grade debt securities under normal conditions.
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 five and 10 years. As of
September 30, 1995, the fund's dollar-weighted average maturity was 8.1
years.
EACH FUND focuses on U.S. dollar-denominated investment-grade debt
securities. Both funds may also invest in futures contracts and other
derivatives to adjust their investment exposure. Spartan Short-Term Bond
limits its average maturity to three years or less. Spartan Investment
Grade Bond has no stated maturity policy.
The following information replaces the similar information found in the
"Securities and Investment Practices" section beginning on page 11.
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.
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: Each 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 &
Phelps Credit Rating Co., or Fitch Investors Service, L.P., or is unrated
but judged by FMR to be of equivalent quality.
