FIDELITY
(REGISTERED TRADEMARK)
TARGET TIMELINE
FUNDS - 1999, 2001, 2003
ANNUAL REPORT
JULY 31, 1996
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the funds have done over time.
FUND TALK 13 The manager's review of the funds'
performance, strategy and outlook.
TARGET TIMELINE 1999 16 Investment Changes
17 Investments
21 Financial Statements
TARGET TIMELINE 2001 25 Investment Changes
26 Investments
29 Financial Statements
TARGET TIMELINE 2003 33 Investment Changes
34 Investments
37 Financial Statements
NOTES 41 Notes to the financial statements.
REPORT OF INDEPENDENT 45 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.
To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will begin eliminating duplicate
copies of most financial reports and prospectuses to most households, even
if they have more than one account in the fund. If additional copies of
financial reports, prospectuses or historical account information are
needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although stocks have managed to post solid returns through the first seven
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in both the stock and 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.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term. You also can help to manage some of the risks of investing
through diversification. A stock fund is already diversified because it
invests in many issues. You can diversify even further by placing some of
your money in several different types of stock funds or in other investment
categories, such as bonds.
If you have a short investment time horizon, you might want to consider
moving some of your investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
Finally, no matter what your investment horizon or portfolio diversity, it
makes good sense to follow a regular investment plan - investing a certain
amount of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
TARGET TIMELINE 1999
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 securities that have grown in value). You can also look at a fund's
income to measure performance. If Fidelity had not reimbursed certain
expenses, the total return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED JULY 31, 1996 LIFE OF
FUND
Target Timeline 1999 -1.58%
Lehman Brothers Aggregate Bond Index -1.43%
U.S. Treasury STRIPS (8/15/99 and 11/15/99) -1.40%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, since the fund started on February 8,
1996. For example, if you had 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 return to the Lehman Brothers Aggregate Bond
Index - a market value weighted performance benchmark for investment-grade
fixed-rate debt issues, including government, corporate, asset-backed, and
mortgage-backed securities, with maturities of at least one year. You can
also compare the fund to the average of the total returns of U.S. Treasury
STRIPS maturing on 8/15/99 and 11/15/99, which reflects the performance of
zero-coupon bonds with maturities similar to the fund's. These benchmarks
include reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS will appear once the fund is a year old.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19960731 19960823 110230 S00000000000001
Target Timeline 1999 LB Aggregate Bond FI Avg
US TreasStrip 1999
00379 LB001 F0092
1996/02/08 10000.00 10000.00
10000.00
1996/02/29 9843.43 9842.84
9874.78
1996/03/31 9769.72 9774.42
9792.89
1996/04/30 9723.18 9719.45
9739.86
1996/05/31 9708.18 9699.72
9719.35
1996/06/30 9814.54 9829.98
9822.33
1996/07/31 9841.86 9856.88
9859.67
IMATRL PRASUN SHR__CHT 19960731 19960823 110232 R00000000000009
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Target Timeline 1999 on February 8, 1996, when the fund
started. As the chart shows, by July 31, 1996, the value of the investment
would be $9,842 - a 1.58% decrease on the initial investment. For
comparison, look at how the Lehman Brothers Aggregate Bond Index did over
the same period. With dividends and capital gains, if any, reinvested, the
same $10,000 investment would be $9,857 - a 1.43% decrease. If $10,000 was
put in U.S. Treasury STRIPS (8/15/99 and 11/15/99), it would be valued at
$9,860 - a 1.40% decrease.
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
FEBRUARY 8, 1996
(COMMENCEMENT OF
OPERATIONS) TO
JULY 31, 1996
Dividend return 3.12%
Capital appreciation return -4.70%
Total return -1.58%
DIVIDEND returns and capital appreciation returns are both part of a 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
PERIOD ENDED JULY 31, 1996 PAST LIFE OF
MONTH FUND
Dividends per share 5.66(cents) 30.99(cents)
Annualized dividend rate 7.01% 6.74%
30-day annualized yield 6.60% -
DIVIDENDS per share show the income paid by the fund for a set period. The
annualized dividend rate is based on an average net asset value of $9.51
over the past month, and $9.65 over the life of fund. 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.
If Fidelity had not reimbursed certain expenses, the yield would have been
4.11%.
TARGET TIMELINE 2001
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 securities that have grown in value). You can also look at a fund's
income to measure performance. If Fidelity had not reimbursed certain
expenses, the total return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED JULY 31, 1996 LIFE OF
FUND
Target Timeline 2001 -2.88%
Lehman Brothers Aggregate Bond Index -1.43%
U.S. Treasury STRIPS (8/15/01 and 11/15/01) -3.44%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, since the fund started on February 8,
1996. For example, if you had 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 return to the Lehman Brothers Aggregate Bond
Index - a market value weighted performance benchmark for investment-grade
fixed-rate debt issues, including government, corporate, asset-backed, and
mortgage-backed securities, with maturities of at least one year. You can
also compare the fund to the average of the total returns of U.S. Treasury
STRIPS maturing on 8/15/01 and 11/15/01, which reflects the performance of
zero-coupon bonds with maturities similar to the fund's. These benchmarks
include reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS will appear once the fund is a year old.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19960731 19960819 110712 S00000000000001
Target Timeline 2001 LB Aggregate Bond FI Avg
US TreasStrip 2001
00381 LB001 F0093
1996/02/08 10000.00 10000.00
10000.00
1996/02/29 9763.03 9842.84
9803.00
1996/03/31 9659.03 9774.42
9653.25
1996/04/30 9582.85 9719.45
9550.03
1996/05/31 9558.77 9699.72
9511.57
1996/06/30 9695.97 9829.98
9652.59
1996/07/31 9711.59 9856.88
9655.95
IMATRL PRASUN SHR__CHT 19960731 19960819 110713 R00000000000009
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Target Timeline 2001 on February 8, 1996, when the fund
started. As the chart shows, by July 31, 1996, the value of the investment
would be $9,712 - a 2.88% decrease on the initial investment. For
comparison, look at how the Lehman Brothers Aggregate Bond Index did over
the same period. With dividends and capital gains, if any, reinvested, the
same $10,000 investment would be $9,857 - a 1.43% decrease. If $10,000 was
put in U.S. Treasury STRIPS (8/15/01 and 11/15/01), it would be valued at
$9,656 - a 3.44% decrease.
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
FEBRUARY 8, 1996
(COMMENCEMENT OF
OPERATIONS) TO
JULY 31, 1996
Dividend return 3.12%
Capital appreciation return -6.00%
Total return -2.88%
DIVIDEND returns and capital appreciation returns are both part of a 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
PERIOD ENDED JULY 31, 1996 PAST LIFE OF
MONTH FUND
Dividends per share 5.52(cents) 30.97(cents)
Annualized dividend rate 6.94% 6.82%
30-day annualized yield 6.83% -
DIVIDENDS per share show the income paid by the fund for a set period. The
annualized dividend rate is based on an average net asset value of $9.37
over the past month, and $9.53 over the life of fund. 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.
If Fidelity had not reimbursed certain expenses, the yield would have been
4.04%.
TARGET TIMELINE 2003
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 securities that have grown in value). You can also look at a fund's
income to measure performance. If Fidelity had not reimbursed certain
expenses, the total return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED JULY 31, 1996 LIFE OF
FUND
Target Timeline 2003 -4.53%
Lehman Brothers Aggregate Bond Index -1.43%
U.S. Treasury STRIPS (8/15/03 and 11/15/03) -4.89%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, since the fund started on February 8,
1996. For example, if you had 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 return to the Lehman Brothers Aggregate Bond
Index - a market value weighted performance benchmark for investment-grade
fixed-rate debt issues, including government, corporate, asset-backed, and
mortgage-backed securities, with maturities of at least one year. You can
also compare the fund to the average of the total returns of U.S. Treasury
STRIPS maturing on 8/15/03 and 11/15/03, which reflects the performance of
zero-coupon bonds with maturities similar to the fund's. These benchmarks
include reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS will appear once the fund is a year old.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19960731 19960819 105741 S00000000000001
Target Timeline 2003 LB Aggregate Bond FI Avg
US TreasStrip 2003
00383 LB001 F0094
1996/02/08 10000.00 10000.00
10000.00
1996/02/29 9693.93 9842.84
9713.95
1996/03/31 9591.28 9774.42
9552.66
1996/04/30 9453.76 9719.45
9394.34
1996/05/31 9397.89 9699.72
9337.04
1996/06/30 9543.44 9829.98
9505.26
1996/07/31 9546.95 9856.88
9511.36
IMATRL PRASUN SHR__CHT 19960731 19960819 105743 R00000000000009
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Target Timeline 2003 on February 8, 1996, when the fund
started. As the chart shows, by July 31, 1996, the value of the investment
would be $9,547 - a 4.53% decrease on the initial investment. For
comparison, look at how the Lehman Brothers Aggregate Bond Index did over
the same period. With dividends and capital gains, if any, reinvested, the
same $10,000 investment would be $9,857 - a 1.43% decrease. If $10,000 was
put in U.S. Treasury STRIPS (8/15/03 and 11/15/03), it would be valued at
$9,511 - a 4.89% decrease.
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
FEBRUARY 8, 1996
(COMMENCEMENT OF
OPERATIONS) TO
JULY 31, 1996
Dividend return 3.07%
Capital appreciation return -7.60%
Total return -4.53%
DIVIDEND returns and capital appreciation returns are both part of a 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
PERIOD ENDED JULY 31, 1996 PAST LIFE OF
MONTH FUND
Dividends per share 5.34(cents) 30.63(cents)
Annualized dividend rate 6.83% 6.82%
30-day annualized yield 6.95% -
DIVIDENDS per share show the income paid by the fund for a set period. The
annualized dividend rate is based on an average net asset value of $9.21
over the past month, and $9.42 over the life of fund. 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.
If Fidelity had not reimbursed certain expenses, the yield would have been
4.27%.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Bond markets stabilized in June
and July after
stronger-than-expected economic
statistics rattled them for much of
1996. This downdraft was a
contrast to 1995, when the bond
market posted steadily rising
returns in anticipation of
interest-rate decreases. To
illustrate, the Lehman Brothers
Aggregate Bond Index - a broad
measure of U.S. taxable bonds -
returned 18.5% in 1995 while
posting a -0.94% return
year-to-date in 1996. For the 12
months ended July 31, 1996, the
Lehman Brothers Aggregate Bond
Index returned 5.54%. Even
though in January the Federal
Reserve Board lowered its target
for the federal funds rate - the rate
banks charge each other on
overnight loans - from 5.50% to
5.25%, the move largely was
taken into account by the bond
market. Surprisingly robust
employment reports in March
reversed market sentiment,
causing the yield on the 30-year
Treasury bond to rise to over 7%
- - a level not seen in over a year.
By June, however, soothing
comments from Federal Reserve
Board Chairman Alan Greenspan
helped ease the market's fears of
Fed interest-rate increases, and
the 30-year yield dropped back
below 7%. Although
investment-grade
mortgage-backed securities
participated in the overall
downturn in bond prices, they
have performed well 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 5.99%
during the period.
An interview with Christine Thompson, Portfolio Manager of Fidelity Target
Timeline Funds 1999, 2001, 2003
Q. HOW DID THE FUNDS PERFORM, CHRIS?
A. Since inception on February 8, 1996, through July 31, 1996, the 1999,
2001 and 2003 funds had total returns of -1.58%, -2.88% and -4.53%,
respectively. While negative returns are always a disappointment, the
funds' performance is reflective of overall bond market performance. For
the same period, U.S. Treasury STRIPS maturing at approximately the same
time as the funds (August and November 1999, 2001, 2003) averaged -1.40%,
- -3.44% and -4.89%, respectively. Additionally, the Lehman Brothers
Aggregate Bond Index returned -1.43% for the period.
Q. WHAT'S YOUR EVALUATION OF THE FUNDS' PERFORMANCE SO FAR?
A. The funds' goals are to provide an average annual return that's within
0.50% of the funds' yield-to-maturity at the purchase date - assuming one
holds their investment to the funds' maturity and reinvests all dividends
and capital gains. Therefore, I gauge performance in terms of how closely
the funds are structured toward this goal.
Q. HOW ARE THE FUNDS STRUCTURED? HOW DO YOU TARGET A RANGE OF RETURN?
A. We apply a management technique called horizon immunization that
controls the investment exposure to interest rates over the investment
period. Let me explain. The funds' predicted range of return is based on
the portfolios' yield-to-maturity - a calculation that assumes that all
income received from bonds held in the funds will be reinvested at the
yield-to-maturity rate. However, in practice, if interest rates fall, the
income stream from securities must be reinvested at lower prevailing rates.
At the same time, lower interest rates cause the value of the underlying
securities to increase. The key to the technique used in managing these
funds is to combine securities so these two risks - reinvestment and price
risk - offset one another.
Q. HOW ARE THESE SECURITIES CHOSEN?
A. Ideally, all securities chosen for the funds have durations - a measure
of sensitivity to changes in interest rates - that approximate the time
remaining until each fund's maturity. Availability of these securities in
the marketplace, however, dictates how far the fund may deviate from this
ideal.
Q. HOW HAVE YOU ALLOCATED THE FUNDS' ASSETS?
A. I decided early on to emphasize securities with clearly defined cash
flows. This is a way to reduce the impact of interest-rate volatility on
the funds. Therefore, the funds avoided bonds that could be called in early
by their issuer and mortgage pass-through securities - which can be
prepaid. The risk in securities with uncertain cash flows is that - should
they be paid off early - the proceeds received may have to be reinvested at
a lower rate of return.
Q. CORPORATE BONDS ARE A SIGNIFICANT PART OF EACH FUND. WHY IS THAT?
A. Corporate bonds have performed relatively well as the economy remained
fairly strong and the credit quality of many issuers improved. Working with
Fidelity's research department, I attempt to identify bonds backed by
fundamentally sound issuers that have the potential to add to the funds'
return.
Q. IS THERE ONE AREA OF THE CORPORATE MARKET THAT YOU EMPHASIZED DURING THE
PERIOD?
A. The funds were heavily weighted in the banking sector. Five or six years
ago, the banking industry was undercapitalized, had inadequate loan-loss
reserves and was struggling as the quality of loan portfolios deteriorated.
Today, many banks are more than adequately capitalized, have strengthened
reserves and are enjoying strong performance in their loan portfolios.
During the period, these developments were positive for the banking
industry and the credit quality of its bonds.
Q. WHAT'S YOUR OUTLOOK?
A. This year has shown how unpredictable the bond market can be. In the
late winter and early spring the market was in the midst of a pretty
substantial sell-off. Today, it has all but recouped those losses. In my
opinion, the unpredictable nature of the market makes a compelling case for
a timeline-like type of investment. Going forward, I will be constantly
rebalancing the portfolios in order to help the funds meet their
objectives. Additionally, I will continue to seek under-valued securities
that structurally fit the objectives of the funds and have the potential to
provide additional returns.
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.
FUND FACTS
GOAL: definable return over
the life of funds by investing
mainly in investment-grade
quality debt securities whose
average duration is
approximately equal to each
fund's maturity.
START DATE: February 8, 1996
SIZE: as of July 31, 1996,
more than $7 million, 1999
fund; more than $6 million,
2001 fund; more than $6
million, 2003 fund
MANAGER: Christine
Thompson, since February
1996; manager, Fidelity
Intermediate Bond Fund,
since October 1995;
co-manager, Fidelity Global
Bond, since February 1996;
manager, Fidelity U.S. Bond
Index, since 1990; joined
Fidelity in 1985
(checkmark)
CHRIS THOMPSON ON HER
INVESTMENT PHILOSOPHY:
"Generally, I emphasize the
valuation of certain
fixed-income sectors versus
others in the market, as well as
the valuation of individual
securities within various
sectors of the bond market.
Sectors and individual
securities are measured
against historical and current
data. I rely heavily on our
internal research department
to analyze fundamental
factors about an issuer such as
credit quality - or the issuer's
ability to pay the bond's
interest and principle in a
timely fashion. My objective is
always to position the funds in
the areas of the bond market
that offer best relative value."
The following percentage of
dividends distributed during
the fiscal year were derived
from interest on U.S.
Government securities that is
generally exempt from state
income tax:
Target Timeline 1999 29.5%
Target Timeline 2001 32.1%
Target Timeline 2003 45.4%
The funds will notify
shareholders in January 1997
of the applicable percentage
for use in preparing 1996
income tax returns.
FIDELITY TARGET TIMELINE 1999
INVESTMENT CHANGES
QUALITY DIVERSIFICATION AS OF JULY 31, 1996
(MOODY'S RATINGS) % OF FUND'S
INVESTMENTS
Aaa 28.6
Aa 2.0
A 29.5
Baa 24.2
Ba 0.0
B 0.0
Not rated 0.0
TABLE EXCLUDES SHORT-TERM INVESTMENTS. SECURITIES RATED AS "BA" BY MOODY'S
WERE RATED INVESTMENT GRADE BY OTHER NATIONALLY RECOGNIZED RATING AGENCIES
OR ASSIGNED AN INVESTMENT GRADE RATING AT THE TIME OF ACQUISITION BY
FIDELITY.
AVERAGE YEARS TO MATURITY AS OF JULY 31, 1996
Years 3.1
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 JULY 31, 1996
Years 3.2
DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1% FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
ASSET ALLOCATION
AS OF JULY 31, 1996 *
27.3.3
Corporate bonds 51.9%
U.S. government and
agency obligations 28.6%
Foreign government
obligations 3.8%
Short-term
investments 15.7%
Row: 1, Col: 1, Value: 15.7
Row: 1, Col: 2, Value: 3.8
Row: 1, Col: 3, Value: 28.6
Row: 1, Col: 4, Value: 51.9
*
FOREIGN INVESTMENTS 6.4%
FIDELITY TARGET TIMELINE 1999
INVESTMENTS JULY 31, 1996
Showing Percentage of Total Value of Investment in Securities
NONCONVERTIBLE BONDS - 51.9%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
BASIC INDUSTRIES - 1.9%
CHEMICALS & PLASTICS - 1.9%
CBI Industries, Inc. 6 1/4%, 6/30/00 Baa2 $ 165,000 $ 161,834
DURABLES - 3.1%
AUTOS, TIRES, & ACCESSORIES - 1.9%
General Motors Corp. 9 5/8%, 12/1/00 A3 150,000 164,420
CONSUMER ELECTRONICS - 1.2%
Black & Decker Corp. 6 5/8%, 11/15/00 Baa3 100,000 98,462
TOTAL DURABLES 262,882
ENERGY - 6.4%
OIL & GAS - 6.4%
Coastal Corp. 10%, 2/01/01 Baa3 175,000 193,158
Occidental Petroleum Corp. 6 1/4%, 11/8/00 Baa3 101,000 98,043
Texas Eastern Transmission Corp.
10 3/8%, 11/15/00 Baa1 100,000 111,554
Union Oil Co. 9 3/4%, 12/1/00 Baa2 120,000 132,414
535,169
FINANCE - 30.4%
BANKS - 21.4%
Bank South Corp. 10.20%, 6/1/99 A3 200,000 216,918
Banponce Corp. 6.378%, 4/8/99 A3 150,000 147,735
Chase Manhattan Corp. 10%, 6/15/99 A2 38,000 41,100
First Hawaiian, Inc. 6 1/4%, 8/15/00 Baa1 165,000 159,948
Fleet Financial Group, Inc. 7 5/8%, 12/1/99 A3 75,000 76,674
Florida National Banks, Inc. 9 7/8%, 5/15/99 A2 34,000 36,611
Kansallis-Osake-Pankki 6 3/8%, 8/15/00 A2 165,000 160,679
Korea Development Bank 9.60%, 12/1/00 A1 200,000 218,420
Midlantic Corp. 9 1/4%, 9/1/99 A2 260,000 276,016
Provident Bank 6 1/8%, 12/15/00 A3 100,000 96,161
Republic of NY Corp. 9 3/4%, 12/1/00 A1 125,000 137,590
Shawmut National Corp. 8 5/8%, 12/15/99 A3 200,000 209,390
Signet Banking Corp. 9 5/8%, 6/1/99 Baa2 25,000 26,641
1,803,883
CREDIT & OTHER FINANCE - 9.0%
Aristar, Inc. 7 1/2%, 7/1/99 Baa1 200,000 203,672
Beneficial Corp. 10.10%, 11/27/00 A2 75,000 83,327
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
Greyhound Financial Corp. 6.65%, 1/19/00 Baa1 $ 165,000 $ 163,601
Southwestern Bell Capital Corp.:
6.86%, 7/26/99 A2 50,000 50,176
6 3/4%, 2/1/00 A2 100,000 99,827
US West Financial Services, Inc. 8.40%, 9/15/99 A2 150,000 156,402
757,005
TOTAL FINANCE 2,560,888
MEDIA & LEISURE - 1.8%
PUBLISHING - 1.8%
News America Holdings, Inc. 7 1/2%, 3/1/00 Baa3 150,000 151,796
NONDURABLES - 1.9%
TOBACCO - 1.9%
Philip Morris Companies, Inc. 9 1/4%, 2/15/00 A2 150,000 160,247
RETAIL & WHOLESALE - 1.8%
GENERAL MERCHANDISE STORES - 1.8%
Dayton Hudson Corp. 10%, 12/1/00 Baa1 140,000 153,912
TECHNOLOGY - 2.7%
COMPUTERS & OFFICE EQUIPMENT - 2.7%
Comdisco, Inc. 7 3/4%, 9/1/99 Baa2 224,000 228,402
UTILITIES - 1.9%
GAS - 1.9%
Columbia Gas System, Inc. 6.39%, 11/28/00 Baa3 163,000 159,199
TOTAL NONCONVERTIBLE BONDS
(Cost $4,497,884) 4,374,329
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 28.6%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
U.S. TREASURY OBLIGATIONS - 25.3%
7 3/4%, 12/31/99 Aaa $ 660,000 $ 685,780
8 1/2%, 2/15/00 Aaa 420,000 446,380
6 7/8%, 3/31/00 Aaa 985,000 997,007
2,129,167
U.S. GOVERNMENT AGENCY OBLIGATIONS - 3.3%
Private Export Funding Corp. secured notes
7.90%, 3/31/00 Aaa 100,000 103,622
State of Israel (guaranteed by U.S. government
through Agency for International Development)
7 3/4%, 11/15/99 Aaa 175,000 180,684
284,306
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS (Cost $2,427,540) 2,413,473
FOREIGN GOVERNMENT OBLIGATIONS - 3.8%
Manitoba Province 7.93%, 2/15/00 A1 150,000 154,794
Ontario Province global bond
6 1/8%, 6/28/00 Aa3 170,000 166,311
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $330,917) 321,105
REPURCHASE AGREEMENTS - 15.7%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.65%, dated
7/31/96 due 8/1/96 $ 1,319,207 1,319,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $8,575,341) $ 8,427,907
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 60.1% AAA, AA, A 51.9%
Baa 24.2% BBB 29.8%
Ba 0.0% BB 2.6%
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 0.0%.
Purchases and sales of securities, other than short-term securities,
aggregated $10,023,966 and $2,733,259 respectively, of which U.S.
government and government agency obligations aggregated $5,037,157 and
$2,580,121, respectively.
INCOME TAX INFORMATION
At July 31, 1996, the aggregate cost of investment securities for income
tax purposes was $8,579,906. Net unrealized (depreciation) aggregated
($151,999), of which $4,946 related to appreciated investment securities
and $156,945 related to depreciated investment securities.
At July 31, 1996, the fund had a capital loss carryforward of approximately
$31,000 which will expire on July 31, 2004.
FIDELITY TARGET TIMELINE 1999
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1996
ASSETS
Investment in securities, at value (including repurchase $ 8,427,907
agreements of $1,319,000) (cost $8,575,341) -
See accompanying schedule
Cash 270
Receivable for fund shares sold 36,550
Interest receivable 146,503
Prepaid expenses 14,432
Receivable from investment adviser for expense reductions 11,905
TOTAL ASSETS 8,637,567
LIABILITIES
Payable for investments purchased $ 1,307,224
Other payables and accrued expenses 8,535
TOTAL LIABILITIES 1,315,759
NET ASSETS $ 7,321,808
Net Assets consist of:
Paid in capital $ 7,503,318
Undistributed net investment income 290
Accumulated undistributed net realized gain (loss) (34,366)
on investments
Net unrealized appreciation (depreciation) on (147,434)
investments
NET ASSETS, for 768,348 shares outstanding $ 7,321,808
NET ASSET VALUE, offering price and redemption price $9.53
per share ($7,321,808 (divided by) 768,348 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 8, 1996 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1996
INVESTMENT INCOME $ 157,762
Interest
EXPENSES
Management fee $ 9,764
Transfer agent fees 3,718
Accounting fees and expenses 28,621
Non-interested trustees' compensation 7
Custodian fees and expenses 329
Registration fees 28,724
Audit 18,000
Legal 221
Miscellaneous 95
Total expenses before reductions 89,479
Expense reductions (82,147) 7,332
NET INVESTMENT INCOME 150,430
REALIZED AND UNREALIZED GAIN (LOSS) (34,366)
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) (147,434)
on investment securities
NET GAIN (LOSS) (181,800)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (31,370)
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C>
FEBRUARY 8, 1996
(COMMENCEMENT
OF OPERATIONS) TO
JULY 31, 1996
INCREASE (DECREASE) IN NET ASSETS
Operations $ 150,430
Net investment income
Net realized gain (loss) (34,366)
Change in net unrealized appreciation (depreciation) (147,434)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (31,370)
Distributions to shareholders from net investment income (150,140)
Share transactions 7,457,120
Net proceeds from sales of shares
Reinvestment of distributions 149,858
Cost of shares redeemed (103,717)
Redemption fees 57
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE 7,503,318
TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 7,321,808
NET ASSETS
Beginning of period -
End of period (including undistributed net investment income of $290) $ 7,321,808
OTHER INFORMATION
Shares
Sold 763,594
Issued in reinvestment of distributions 15,637
Redeemed (10,883)
Net increase (decrease) 768,348
</TABLE>
FINANCIAL HIGHLIGHTS
FEBRUARY 8, 1996
(COMMENCEMENT
OF OPERATIONS) TO
JULY 31, 1996
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.000
Income from Investment Operations .310
Net investment income
Net realized and unrealized gain (loss) (.470)
Total from investment operations (.160)
Less Distributions
From net investment income (.310)
Net asset value, end of period $ 9.530
TOTAL RETURN B, C (1.58)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 7,322
Ratio of expenses to average net assets .35% A,
D
Ratio of expenses to average net assets after expense reductions .34% A,
E
Ratio of net investment income to average net assets 6.88% A
Portfolio turnover rate 118% A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
D 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 (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
E 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 5 OF
NOTES TO FINANCIAL STATEMENTS).
FIDELITY TARGET TIMELINE 2001
INVESTMENT CHANGES
QUALITY DIVERSIFICATION AS OF JULY 31, 1996
(MOODY'S RATINGS) % OF FUND'S
INVESTMENTS
Aaa 42.4
Aa 4.4
A 16.9
Baa 23.7
Ba 0.0
B 0.0
Not rated 0.0
TABLE EXCLUDES SHORT-TERM INVESTMENTS. SECURITIES RATED AS "BA" BY MOODY'S
WERE RATED INVESTMENT GRADE BY OTHER NATIONALLY RECOGNIZED RATING AGENCIES
OR ASSIGNED AN INVESTMENT GRADE RATING AT THE TIME OF ACQUISITION BY
FIDELITY.
AVERAGE YEARS TO MATURITY AS OF JULY 31, 1996
Years 5.8
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF JULY 31, 1996
Years 5.2
DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1% FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
ASSET ALLOCATION
AS OF JULY 31, 1996 *
27.3.3
Corporate bonds 40.6%
U.S. government and
agency obligations 42.4%
Foreign government
obligations 4.4%
Short-term
investments 12.6%
Row: 1, Col: 1, Value: 12.6
Row: 1, Col: 2, Value: 4.4
Row: 1, Col: 3, Value: 42.4
Row: 1, Col: 4, Value: 40.6
*
FOREIGN INVESTMENTS 8.8%
FIDELITY TARGET TIMELINE 2001
INVESTMENTS JULY 31, 1996
Showing Percentage of Total Value of Investment in Securities
NONCONVERTIBLE BONDS - 40.6%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
BASIC INDUSTRIES - 2.9%
PAPER & FOREST PRODUCTS - 2.9%
Chesapeake Corp. 9 7/8%, 5/1/03 Baa3 $ 175,000 $ 197,010
ENERGY - 3.7%
ENERGY SERVICES - 2.1%
Petroliam Nasional BHD yankee
6 7/8%, 7/1/03 (a) A1 150,000 147,144
OIL & GAS - 1.6%
Coastal Corp. 9 3/4%, 8/1/03 Baa3 100,000 112,172
TOTAL ENERGY 259,316
FINANCE - 19.3%
BANKS - 16.3%
Bank of New York Co., Inc. 7 7/8%, 11/15/02 A2 136,000 140,328
BankAmerica Corp. 7 1/2%, 10/15/02 A2 25,000 25,396
Barnett Banks, Inc. 9.83%, 5/30/03 A2 160,000 181,285
Central Fidelity Banks, Inc. 8.15%, 11/15/02 Baa2 200,000 208,348
Huntington Bancshares, Inc. 7 7/8%, 11/15/02 Baa1 100,000 102,910
Kansallis-Osake-Pankki 10%, 5/1/02 A3 140,000 157,100
Korea Development Bank 7.90%, 2/1/02 A1 150,000 155,045
Wells Fargo & Co. 6 7/8%, 4/15/03 A2 160,000 156,490
1,126,902
CREDIT & OTHER FINANCE - 3.0%
Greyhound Financial Corp. 7.82%, 1/27/03 Baa1 100,000 102,225
Southwestern Bell Capital Corp. 7.36%, 5/1/02 A2 100,000 101,596
203,821
TOTAL FINANCE 1,330,723
MEDIA & LEISURE - 2.3%
PUBLISHING - 2.3%
News America Holdings, Inc. 8 5/8%, 2/1/03 Baa3 150,000 158,847
NONDURABLES - 2.1%
FOODS - 2.1%
Nabisco, Inc. 6.70%, 6/15/02 Baa2 150,000 145,833
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
RETAIL & WHOLESALE - 2.4%
GENERAL MERCHANDISE STORES - 2.4%
Dayton Hudson Corp. 6.40%, 2/15/03 Baa1 $ 175,000 $ 166,136
UTILITIES - 7.9%
GAS - 6.4%
Columbia Gas System, Inc. 6.61%, 11/28/02 Baa3 150,000 145,400
Enron Corp. 9 7/8%, 6/15/03 Baa2 110,000 124,706
Southwest Gas Corp. 9 3/4%, 6/15/02 Baa3 150,000 167,510
437,616
TELEPHONE SERVICES - 1.5%
GTE Corp. 9.10%, 6/1/03 A3 95,000 104,411
TOTAL UTILITIES 542,027
TOTAL NONCONVERTIBLE BONDS
(Cost $2,950,246) 2,799,892
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 42.4%
U.S. TREASURY OBLIGATIONS - 32.6%
6 1/4%, 2/15/03 Aaa 1,375,000 1,344,915
10 3/4%, 5/15/03 Aaa 350,000 426,563
7 7/8, 11/15/04 Aaa 443,000 474,010
2,245,488
U.S. GOVERNMENT AGENCY OBLIGATIONS - 9.8%
Farm Credit System Financial Assistance Corp.
9 3/8%, 7/21/03 Aaa 200,000 226,844
Federal Home Loan Bank 6.37%, 6/30/03 Aaa 180,000 174,431
Private Export Funding Corp. secured
8 3/4%, 6/30/03 Aaa 250,000 274,473
675,748
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS (Cost $2,934,142) 2,921,236
FOREIGN GOVERNMENT OBLIGATIONS - 4.4%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
Irish Republic 7.64%, 1/2/02 Aa2 $ 150,000 $ 153,551
Ontario Province yankee 7 3/8%, 1/27/03 Aa3 150,000 152,532
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $322,181) 306,083
REPURCHASE AGREEMENTS - 12.6%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.65%, dated
7/31/96 due 8/1/96 $ 868,136 868,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $7,074,569) $ 6,895,211
LEGEND
1. 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 $147,144 or 2.4% of net
assets.
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 63.7% AAA, AA, A 57.7%
Baa 23.7% BBB 28.1%
Ba 0.0% BB 1.6%
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 0.0%.
Purchases and sales of securities, other than short-term securities,
aggregated $8,164,435 and $1,911,934 respectively, of which U.S. government
and government agency obligations aggregated $4,892,008 and $1,911,934,
respectively.
INCOME TAX INFORMATION
At July 31, 1996, the aggregate cost of investment securities for income
tax purposes was $7,075,597. Net unrealized (depreciation) aggregated
($180,386), of which $7,633 related to appreciated investment securities
and $188,019 related to depreciated investment securities.
At July 31, 1996, the fund had a capital loss carryforward of approximately
$45,000 which will expire on July 31, 2004.
FIDELITY TARGET TIMELINE 2001
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1996
ASSETS
Investment in securities, at value (including repurchase $ 6,895,211
agreements of $868,000) (cost $7,074,569) -
See accompanying schedule
Cash 8,660
Interest receivable 124,356
Prepaid expenses 14,433
Receivable from investment adviser for expense 11,222
reductions
TOTAL ASSETS 7,053,882
LIABILITIES
Payable for investments purchased $ 865,702
Other payables and accrued expenses 7,805
TOTAL LIABILITIES 873,507
NET ASSETS $ 6,180,375
Net Assets consist of:
Paid in capital $ 6,405,466
Undistributed net investment income 199
Accumulated undistributed net realized gain (loss) (45,932)
on investments
Net unrealized appreciation (depreciation) on (179,358)
investments
NET ASSETS, for 657,664 shares outstanding $ 6,180,375
NET ASSET VALUE, offering price and redemption price $9.40
per share ($6,180,375 (divided by) 657,664 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 8, 1996 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1996
INVESTMENT INCOME $ 143,969
Interest
EXPENSES
Management fee $ 8,849
Transfer agent fees 2,712
Accounting fees and expenses 28,621
Non-interested trustees' compensation 7
Custodian fees and expenses 249
Registration fees 28,416
Audit 18,000
Legal 219
Miscellaneous 5
Total expenses before reductions 87,078
Expense reductions (80,393) 6,685
NET INVESTMENT INCOME 137,284
REALIZED AND UNREALIZED GAIN (LOSS) (45,932)
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) (179,358)
on investment securities
NET GAIN (LOSS) (225,290)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (88,006)
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C>
FEBRUARY 8, 1996
(COMMENCEMENT
OF OPERATIONS) TO
JULY 31, 1996
INCREASE (DECREASE) IN NET ASSETS
Operations $ 137,284
Net investment income
Net realized gain (loss) (45,932)
Change in net unrealized appreciation (depreciation) (179,358)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (88,006)
Distributions to shareholders from net investment income (137,085)
Share transactions 6,293,340
Net proceeds from sales of shares
Reinvestment of distributions 137,042
Cost of shares redeemed (24,923)
Redemption fees 7
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE 6,405,466
TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 6,180,375
NET ASSETS
Beginning of period -
End of period (including undistributed net investment income of $199) $ 6,180,375
OTHER INFORMATION
Shares
Sold 645,819
Issued in reinvestment of distributions 14,488
Redeemed (2,643)
Net increase (decrease) 657,664
</TABLE>
FINANCIAL HIGHLIGHTS
FEBRUARY 8, 1996
(COMMENCEMENT
OF OPERATIONS) TO
JULY 31, 1996
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.000
Income from Investment Operations .310
Net investment income
Net realized and unrealized gain (loss) (.600)
Total from investment operations (.290)
Less Distributions
From net investment income (.310)
Net asset value, end of period $ 9.400
TOTAL RETURN B, C (2.88)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 6,180
Ratio of expenses to average net assets .35% A,
D
Ratio of expenses to average net assets after expense reductions .34% A,
E
Ratio of net investment income to average net assets 6.93% A
Portfolio turnover rate 93% A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
D 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 (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
E 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 5 OF
NOTES TO FINANCIAL STATEMENTS).
FIDELITY TARGET TIMELINE 2003
INVESTMENT CHANGES
QUALITY DIVERSIFICATION AS OF JULY 31, 1996
(MOODY'S RATINGS) % OF FUND'S
INVESTMENTS
Aaa 52.6
Aa 2.1
A 8.2
Baa 19.8
Ba 0.0
B 0.0
Not rated 2.6
TABLE EXCLUDES SHORT-TERM INVESTMENTS. SECURITIES RATED AS "BA" BY MOODY'S
WERE RATED INVESTMENT GRADE BY OTHER NATIONALLY RECOGNIZED RATING AGENCIES
OR ASSIGNED AN INVESTMENT GRADE RATING AT THE TIME OF ACQUISITION BY
FIDELITY.
AVERAGE YEARS TO MATURITY AS OF JULY 31, 1996
Years 9.8
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF JULY 31, 1996
Years 7.2
DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1% FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
ASSET ALLOCATION
AS OF JULY 31, 1996 *
27.3.3
Corporate bonds 32.6%
U.S. government and
agency obligations 50.6%
Foreign government
obligations 2.1%
Short-term
investments 14.7%
Row: 1, Col: 1, Value: 14.7
Row: 1, Col: 2, Value: 2.1
Row: 1, Col: 3, Value: 50.6
Row: 1, Col: 4, Value: 32.6
*
FOREIGN INVESTMENTS 5.3%
FIDELITY TARGET TIMELINE 2003
INVESTMENTS JULY 31, 1996
Showing Percentage of Total Value of Investment in Securities
NONCONVERTIBLE BONDS - 32.6%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
ENERGY - 2.0%
OIL & GAS - 2.0%
Union Oil Co. of California 9 1/8%, 2/15/06 Baa2 $ 145,000 $ 160,309
FINANCE - 18.5%
BANKS - 12.7%
Banponce Corp. 6 3/4%, 12/15/05 Baa1 150,000 140,594
First Security Corp. 7%, 7/15/05 Baa1 150,000 144,879
First Tennessee National Corp. 6 3/4%, 11/15/05 Baa1 200,000 189,046
Korea Development Bank yankee
6 3/4%, 12/1/05 A1 100,000 94,379
Merita Bank Ltd. yankee 6 1/2%, 1/15/06 A3 150,000 138,915
Midland Bank PLC yankee 7 5/8%, 6/15/06 A1 20,000 20,139
Sovran Financial Corp. 9 1/4%, 6/15/06 A2 125,000 140,030
Union Planters Corp. 6 3/4%, 11/1/05 Baa3 150,000 141,618
1,009,600
CREDIT & OTHER FINANCE - 3.2%
Secured Finance, Inc. secured 9.05%, 12/15/04 Aaa 140,000 153,254
Southwestern Bell Capital Corp. 7.13%, 6/1/05 A2 100,000 98,962
252,216
INSURANCE - 2.6%
URC Holdings Corp. 7 7/8%, 6/30/06 (a) A- 200,000 201,946
TOTAL FINANCE 1,463,762
MEDIA & LEISURE - 5.8%
PUBLISHING - 2.0%
News America Holdings, Inc. 8 1/2%, 2/15/05 Baa3 150,000 157,011
RESTAURANTS - 3.8%
Darden Restaurants, Inc. 6 3/8%, 2/1/06 A3 175,000 160,575
Wendy's International, Inc. 6.35%, 12/15/05 Baa1 150,000 138,999
299,574
TOTAL MEDIA & LEISURE 456,585
NONDURABLES - 2.7%
FOODS - 2.7%
Nabisco, Inc. 6.85%, 6/15/05 Baa2 225,000 214,367
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
UTILITIES - 3.6%
GAS - 3.6%
Columbia Gas System, Inc. 6.80%, 11/28/05 Baa3 $ 150,000 $ 142,545
InterNorth, Inc. 9 5/8%, 3/15/06 Baa2 125,000 142,642
285,187
TOTAL NONCONVERTIBLE BONDS
(Cost $2,738,566) 2,580,210
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 50.6%
U.S. TREASURY OBLIGATIONS - 49.3%
6 7/8%, 5/15/06 Aaa 2,420,000 2,433,600
11 3/4%, 11/15/2014 Aaa 1,047,000 1,473,653
3,907,253
U.S. GOVERNMENT AGENCY OBLIGATIONS - 1.3%
Federal Home Loan Mortgage
Corporation 8%, 1/26/05 Aaa 100,000 106,016
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS (Cost $4,072,613) 4,013,269
FOREIGN GOVERNMENT OBLIGATIONS - 2.1%
Ontario Province 6%, 2/21/06
(Cost $172,163) Aa3 185,000 168,805
REPURCHASE AGREEMENTS - 14.7%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.65%, dated
7/31/96 due 8/1/96 $ 1,162,182 1,162,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $8,145,342) $ 7,924,284
LEGEND
1. 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 $201,946 or 2.9% of net
assets.
2. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
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 62.9% AAA, AA, A 61.7%
Baa 19.8% BBB 23.6%
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%
The percentage not rated by either S&P or Moody's amounted to 0.0%.
Purchases and sales of securities, other than short-term securities,
aggregated $10,904,257 and $3,858,074 respectively, of which U.S.
government and government agency obligations aggregated $7,830,623 and
$3,697,280, respectively.
INCOME TAX INFORMATION
At July 31, 1996, the aggregate cost of investment securities for income
tax purposes was $8,145,801. Net unrealized (depreciation) aggregated
($221,517), of which $11,413 related to appreciated investment securities
and $232,930 related to depreciated investment securities.
At July 31, 1996, the fund had a capital loss carryforward of approximately
$63,000 which will expire on July 31, 2004.
FIDELITY TARGET TIMELINE 2003
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JULY 31, 1996
ASSETS
Investment in securities, at value (including repurchase $ 7,924,284
agreements of $1,162,000) (cost $8,145,342) -
See accompanying schedule
Cash 252
Receivable for investments sold 1,909,039
Receivable for fund shares sold 54,278
Interest receivable 109,007
Prepaid expenses 14,433
Receivable from investment adviser for expense 11,573
reductions
TOTAL ASSETS 10,022,866
LIABILITIES
Payable for investments purchased $ 3,037,178
Other payables and accrued expenses 8,251
TOTAL LIABILITIES 3,045,429
NET ASSETS $ 6,977,437
Net Assets consist of:
Paid in capital $ 7,261,113
Undistributed net investment income 468
Accumulated undistributed net realized gain (loss) (63,086)
on investments
Net unrealized appreciation (depreciation) on (221,058)
investments
NET ASSETS, for 754,807 shares outstanding $ 6,977,437
NET ASSET VALUE, offering price and redemption price $9.24
per share ($6,977,437 (divided by) 754,807 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 8, 1996 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1996
INVESTMENT INCOME $ 147,961
Interest
EXPENSES
Management fee $ 9,085
Transfer agent fees 2,971
Accounting fees and expenses 28,621
Non-interested trustees' compensation 7
Custodian fees and expenses 247
Registration fees 28,714
Audit 18,000
Legal 227
Miscellaneous 80
Total expenses before reductions 87,952
Expense reductions (81,082) 6,870
NET INVESTMENT INCOME 141,091
REALIZED AND UNREALIZED GAIN (LOSS) (62,841)
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) (221,058)
on investment securities
NET GAIN (LOSS) (283,899)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (142,808)
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C>
FEBRUARY 8, 1996
(COMMENCEMENT
OF OPERATIONS) TO
JULY 31, 1996
INCREASE (DECREASE) IN NET ASSETS
Operations $ 141,091
Net investment income
Net realized gain (loss) (62,841)
Change in net unrealized appreciation (depreciation) (221,058)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (142,808)
Distributions to shareholders from net investment income (140,867)
Share transactions 7,206,977
Net proceeds from sales of shares
Reinvestment of distributions 140,506
Cost of shares redeemed (86,628)
Redemption fees 257
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE 7,261,112
TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 6,977,437
NET ASSETS
Beginning of period -
End of period (including undistributed net investment income of $468) $ 6,977,437
OTHER INFORMATION
Shares
Sold 749,084
Issued in reinvestment of distributions 15,058
Redeemed (9,335)
Net increase (decrease) 754,807
</TABLE>
FINANCIAL HIGHLIGHTS
FEBRUARY 8, 1996
(COMMENCEMENT
OF OPERATIONS) TO
JULY 31, 1996
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.000
Income from Investment Operations .307
Net investment income
Net realized and unrealized gain (loss) (.762)
Total from investment operations (.455)
Less Distributions
From net investment income (.306)
Redemption fees added to paid in capital .001
Net asset value, end of period $ 9.240
TOTAL RETURN B, C (4.53)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 6,977
Ratio of expenses to average net assets .35% A,
D
Ratio of expenses to average net assets after expense reductions .34% A,
E
Ratio of net investment income to average net assets 6.93% A
Portfolio turnover rate 180% A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
D 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 (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
E 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 5 OF
NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Target Timeline 1999, Fidelity Target Timeline 2001 and Fidelity
Target Timeline 2003 (the funds) are funds of Fidelity Boston Street Trust
(the trust). 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. Each fund is
authorized to issue an unlimited number of shares. 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 funds:
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. The funds intend to qualify as regulated investment companies
under Subchapter M of the Internal Revenue Code. By so qualifying, the
funds will not be subject to income taxes to the extent that they
distribute substantially all of their taxable income for their fiscal year.
The schedule of investments includes information regarding income taxes
under the caption "Income Tax Information."
INVESTMENT INCOME. Interest income, which includes accretion of original
issue discount, is accrued as earned.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS.
Distributions are declared daily and paid monthly from net investment
income. Distributions from realized gains, if any, are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for 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). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments may
include temporary book and tax basis differences which will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end
is distributed in the following year.
REDEMPTION FEES. Shares held in the fund less than 90 days are subject to a
redemption fee equal to .50% of the proceeds of the redeemed shares. The
fee, which is retained by the fund, is accounted for as an addition to paid
in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the funds, 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 for U.S. Treasury or Federal
Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the funds, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the funds'
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
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
2. OPERATING POLICIES - CONTINUED
RESTRICTED SECURITIES - CONTINUED
from registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations and
expense, and prompt sale at an acceptable price may be difficult. At the
end of the period, the fund had no investments in restricted securities
(excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Information regarding purchases and sales of securities (other than
short-term securities), the market value of future contracts opened and
closed, and written options is included under the caption "Other
Information" at the end of each applicable fund's schedule of investments.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each 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 each 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 annualized
rate of .45% of average net assets for each fund.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the funds' 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 annualized rate of
.17%, .14% and .15% of the average net assets of Fidelity Target Timeline
1999, Fidelity Target Timeline 2001 and Fidelity Target Timeline 2003,
respectively.
ACCOUNTING FEES. FSC maintains the funds' accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse the funds' operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) above an annual rate of .35% of average net assets. For the
period, the the reimbursement reduced expenses by $81,828, $80,145 and
$80,836 for Fidelity Target Timeline 1999, Fidelity Target Timeline 2001
and Fidelity Target Timeline 2003 funds, respectively.
5. EXPENSE REDUCTIONS - CONTINUED
In addition, each fund has entered into an arrangement with its custodian
whereby interest earned on uninvested cash balances was used to offset a
portion of each fund's expenses. During the period, the custodian fees were
reduced by $319, $248 and $246 for Fidelity Target Timeline 1999, Fidelity
Target Timeline 2001, and Fidelity Target Timeline 2003 funds,
respectively, under this arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates were record owners of more
than 5% of the outstanding shares of the following funds:
BENEFICIAL INTEREST
FUND % OWNERSHIP
Fidelity Target Timeline 1999 47.6%
Fidelity Target Timeline 2001 55.3%
Fidelity Target Timeline 2003 47.9%
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Boston Street Trust and the Shareholders of
Fidelity Target Timeline 1999, Fidelity Target Timeline 2001 and Fidelity
Target Timeline 2003:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments (except for Moody's ratings), and
the related statements of operations and of changes in net assets and the
financial highlights present fairly, in all material respects, the
financial position of Fidelity Target Timeline 1999, Fidelity Target
Timeline 2001 and Fidelity Target Timeline 2003 (funds of Fidelity Boston
Street Trust) at July 31, 1996, and the results of each of their operations
and the changes in each of their net assets and the financial highlights
for the period February 8, 1996 (commencement of operations) through July
31, 1996, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to
as "financial statements") are the responsibility of the Fidelity Boston
Street Trust's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of
these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of securities at July 31, 1996
by correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
September 10, 1996
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call -
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios(registered trademark).
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and send
you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
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 *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Bank of New York
New York, NY
FIDELITY'S TAXABLE BOND FUNDS
Capital & Income Fund
Ginnie Mae Fund
Global Bond Fund
Government Securities Fund
Intermediate Bond Fund
Investment Grade Bond Fund
Mortgage Securities Fund
New Markets Income Fund
Short-Intermediate Government Fund
Short-Term Bond Fund
Short-Term World Bond Fund
Spartan(registered trademark) Ginnie Mae Fund
Spartan Government Income Fund
Spartan High Income Fund
Spartan Investment Grade Bond Fund
Spartan Limited Maturity
Government Fund
Spartan Short-Intermediate Government Fund
Spartan Short-Term Bond Fund
Target Timeline Funds
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
