FIDELITY
(REGISTERED TRADEMARK)
TARGET TIMELINE
FUNDS - 1999, 2001, 2003
SEMIANNUAL REPORT
JANUARY 31, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the funds have done over time.
FUND TALK 15 The manager's review of the funds'
performance, strategy and outlook.
TARGET TIMELINE 1999 18 Investment Changes
19 Investments
23 Financial Statements
TARGET TIMELINE 2001 27 Investment Changes
28 Investments
32 Financial Statements
TARGET TIMELINE 2003 36 Investment Changes
37 Investments
40 Financial Statements
NOTES 44 Notes to the financial statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND MONEY.
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
(PHOTO_OF_EDWARD_C_JOHNSON_3D)DEAR SHAREHOLDER:
As 1997 begins, the stock and bond markets generally have continued on the
course they followed during the past year. Through January, stocks
maintained their unprecedented climb, with the large companies still
setting the pace. With low, stable interest rates, the bond market has
tended to mirror its historical returns in the mid-single digits.
While it's impossible to predict the future direction of the markets with
any degree of certainty, there are certain basic principles that can help
investors plan for their future needs.
The longer your investment time frame, the more likely it is that you will
be affected by short-term market volatility. A 10-year investment horizon
appropriate for saving for a college education, for example, enables you to
weather market cycles in a long-term fund, which may have a higher risk
potential, but also has a higher potential rate of return.
An intermediate-length fund could make sense if your investment horizon is
two to four years, while 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. These funds seek
income and a stable share price by investing in high-quality, short-term
investments. Of course, it's important to remember that there is no
assurance that a money market fund will achieve its goal of maintaining a
stable net asset value of $1.00 per share, and that these types of funds
are neither insured nor guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it makes
good sense to follow a regular investment plan, investing a certain amount
of money in a fund at the same time each month or quarter and periodically
reviewing your overall portfolio. By doing so, you won't get caught up in
the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy - known as dollar cost averaging -
won't assure a profit or protect you from a loss in a declining market, it
should help you lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are available
24 hours a day, seven days a week to provide you the information you need
to make the investments that are right for you.
Best regards,
Edward C. Johnson 3d
FIDELITY 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. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). You can also look at a fund's
income, as reflected in the fund's yield, to measure performance. If
Fidelity had not reimbursed certain expenses, the total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED JANUARY 31, 1997 PAST 6 LIFE OF
MONTHS FUND
Fidelity Target Timeline 1999 4.26% 2.61%
Lehman Brothers Aggregate Bond Index 4.94% 3.44%
U.S. Treasury STRIPS (8/15/99 and 11/15/99) 4.29% 2.82%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months or 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
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show
what would have happened if the fund performed at a constant rate each
year.
Average annual total returns will appear once the fund is a year old.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19970131 19970218 164401 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
1996/08/31 9849.03 9840.36
9867.47
1996/09/30 9980.40 10011.84
9993.89
1996/10/31 10147.46 10233.62
10160.02
1996/11/30 10271.38 10408.91
10275.65
1996/12/31 10218.33 10312.13
10238.31
1997/01/31 10261.47 10343.70
10282.28
IMATRL PRASUN SHR__CHT 19970131 19970218 164403 R00000000000015
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Target Timeline 1999 on February 8, 1996, when the
fund started. As the chart shows, by January 31, 1997, the value of the
investment would be $10,261 - a 2.61% increase 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 $10,344 - a 3.44% increase. If $10,000
was put in U.S. Treasury STRIPS (8/15/99 and 11/15/99), it would be valued
at $10,282 - a 2.82% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means
if you sell your shares during
a market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
SIX MONTHS FEBRUARY 8, 1996
ENDED (COMMENCEMENT
JANUARY 31, OF OPERATIONS) TO
1997 JULY 31,
1996
Dividend return 3.74% 3.12%
Capital appreciation return 0.52% -4.70%
Total return 4.26% -1.58%
TOTAL RETURN COMPONENTS include both dividend returns and capital
appreciation returns. 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 JANUARY 31, 1997 PAST PAST 6 LIFE OF
MONTH MONTHS FUND
Dividends per share 6.05(cents) 35.15(cents) 66.14(cents)
Annualized dividend rate 7.44% 7.26% 7.01%
30-day annualized yield 6.23% - -
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 $9.57
over the past month, $9.60 over the past six months, and $9.61 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 4.88%.
FIDELITY 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. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). You can also look at a fund's
income, as reflected in the fund's yield, to measure performance. If
Fidelity had not reimbursed certain expenses, the total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED JANUARY 31, 1997 PAST 6 LIFE OF
MONTHS FUND
Fidelity Target Timeline 2001 4.97% 1.94%
Lehman Brothers Aggregate Bond Index 4.94% 3.44%
U.S. Treasury STRIPS (8/15/01 and 11/15/01) 5.04% 1.42%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months or 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
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show
what would have happened if the fund performed at a constant rate each
year.
Average annual total returns will appear once the fund is a year old.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19970131 19970226 143625 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
1996/08/31 9687.10 9840.36
9634.38
1996/09/30 9868.61 10011.84
9819.83
1996/10/31 10105.68 10233.62
10057.99
1996/11/30 10290.56 10408.91
10235.42
1996/12/31 10162.27 10312.13
10099.80
1997/01/31 10193.78 10343.70
10142.28
IMATRL PRASUN SHR__CHT 19970131 19970226 143626 R00000000000015
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Target Timeline 2001 on February 8, 1996, when the
fund started. As the chart shows, by January 31, 1997, the value of the
investment would be $10,194 - a 1.94% increase 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 $10,344 - a 3.44% increase. If $10,000
was put in U.S. Treasury STRIPS (8/15/01 and 11/15/01), it would be valued
at $10,142 - a 1.42% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means
if you sell your shares during
a market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
SIX MONTHS FEBRUARY 8, 1996
ENDED (COMMENCEMENT
JANUARY 31, OF OPERATIONS) TO
1997 JULY 31,
1996
Dividend return 3.69% 3.12%
Capital appreciation return 1.28% -6.00%
Total return 4.97% -2.88%
TOTAL RETURN COMPONENTS include both dividend returns and capital
appreciation returns. 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 capital gains paid
by the fund are reinvested.
DIVIDENDS AND YIELD
PERIOD ENDED JANUARY 31, 1997 PAST PAST 6 LIFE OF
MONTH MONTHS FUND
Dividends per share 5.96(cents) 34.19(cents) 65.16(cents)
Annualized dividend rate 7.39% 7.11% 6.98%
30-day annualized yield 6.51% - -
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 $9.50
over the past month, $9.53 over the past six months, and $9.52 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 5.13%.
FIDELITY 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. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). You can also look at a fund's
income, as reflected in the fund's yield, to measure performance. If
Fidelity had not reimbursed certain expenses, the total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED JANUARY 31, 1997 PAST 6 LIFE OF
MONTHS FUND
Fidelity Target Timeline 2003 5.45% 0.67%
Lehman Brothers Aggregate Bond Index 4.94% 3.44%
U.S. Treasury STRIPS (8/15/03 and 11/15/03) 5.72% 0.55%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months or 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
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show
what would have happened if the fund performed at a constant rate each
year.
Average annual total returns will appear once the fund is a year old.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19970131 19970225 134430 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
1996/08/31 9499.53 9840.36
9463.94
1996/09/30 9710.09 10011.84
9678.03
1996/10/31 9996.20 10233.62
9996.13
1996/11/30 10250.02 10408.91
10230.13
1996/12/31 10063.50 10312.13
10051.21
1997/01/31 10067.43 10343.70
10055.03
IMATRL PRASUN SHR__CHT 19970131 19970225 134432 R00000000000015
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Target Timeline 2003 on February 8, 1996, when the
fund started. As the chart shows, by January 31, 1997, the value of the
investment would be $10,067 - a 0.67% increase 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 $10,344 - a 3.44% increase. If $10,000
was put in U.S. Treasury STRIPS (8/15/03 and 11/15/03), it would be valued
at $10,055 - a 0.55% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means
if you sell your shares during
a market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
SIX MONTHS FEBRUARY 8, 1996
ENDED (COMMENCEMENT
JANUARY 31, OF OPERATIONS) TO
1997 JULY 31,
1996
Dividend return 3.50% 3.07%
Capital appreciation return 1.95% -7.60%
Total return 5.45% -4.53%
TOTAL RETURN COMPONENTS include both dividend returns and capital
appreciation returns. 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 capital gains paid
by the fund are reinvested.
DIVIDENDS AND YIELD
PERIOD ENDED JANUARY 31, 1997 PAST PAST 6 LIFE OF
MONTH MONTHS FUND
Dividends per share 5.37(cents) 31.91(cents) 62.54(cents)
Annualized dividend rate 6.74% 6.73% 6.78%
30-day annualized yield 6.66% - -
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 $9.38
over the past month, $9.42 over the past six months, and $9.40 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 5.27%.
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Christine Thompson, Portfolio Manager of Fidelity Target
Timeline Funds 1999, 2001, 2003
Q. CHRIS, HOW DID THE FUNDS PERFORM?
A. For the six months that ended January 31, 1997, the 1999, 2001 and 2003
funds provided total returns of 4.26%, 4.97% and 5.45%, respectively. For
the same period, U.S. Treasury STRIPS maturing at approximately the same
time as the funds (August and November 1999, 2001 and 2003) averaged 4.29%,
5.04% and 5.72%, respectively. The Lehman Brothers Aggregate Bond Index had
a six-month return of 4.94% as of January 31, 1997. From February 8, 1996 -
when the funds began - through January 31, 1997, the 1999, 2001 and 2003
funds have returned 2.61%, 1.94% and 0.67%, respectively. The U.S. Treasury
STRIPS had returns of 2.82%, 1.42% and 0.55% over the same period, while
the Lehman Brothers Aggregate Bond Index returned 3.44%.
Q. CAN YOU HIGHLIGHT THE FACTORS THAT INFLUENCED THE FUNDS' PERFORMANCE?
A. With respect to the bond market as a whole, the six-month period was
marked by general uncertainty concerning Federal Reserve Board monetary
policy. As a result, shifting investor perceptions concerning the direction
of interest rates played a leading role in the market's performance. It's
important to point out the unique goal of these funds: to achieve a
targeted rate of return for investors who hold the fund to maturity and
reinvest all distributions. With that objective in mind, the funds adhere
to a fairly tight portfolio structure with regards to interest rate
sensitivity. I look at relative performance versus the aforementioned
STRIPS to monitor adherence to our targeted structure. It's important to
recognize that because the funds hold corporate securities as a way to add
yield, there may be periodic differences in total return, especially over
short time periods. Overall, the funds are very much on track for meeting
their goals.
Q. WHAT ARE THE KEY CHARACTERISTICS YOU CONSIDER WHEN DEEMING A SECURITY
APPROPRIATE FOR THE FUNDS?
A. In managing the funds, I look for securities with attractive valuations,
improving credit potential and perhaps most importantly, solid cash flow
structures. In seeking to achieve a predictable rate of return over a
defined period of time, it's critical that I understand the cash flow
characteristics of any individual investment. I generally favor
non-callable bonds while avoiding both callable bonds and mortgage-backed
securities. With callable bonds, an issuer can elect to pay the bond's
principal before the stated maturity date. Mortgage-related securities, on
the other hand, are generally subject to prepayment risk, which takes an
element of cash flow certainty away from the investor.
Q. AS YOU MENTIONED, MANAGING THE FUNDS' INTEREST RATE SENSITIVITY IS
IMPORTANT IN ACHIEVING A PREDICTABLE RANGE OF RETURN. CAN YOU EXPLAIN HOW
YOU DO THIS?
A. To achieve the goal of providing a relatively predictable return
consistent with the stated yield to maturity of the funds, I use a
management technique called "horizon immunization." This technique helps
control interest rate risk exposure over the life of the funds. If rates
fall, the prices of the bonds in the funds rise, as does the potential
return for investors. At the same time, the coupon payments from the bonds
have to be invested at the new, lower interest rate levels which can lower
the potential return to investors. Through horizon immunization, I combine
securities in the funds to balance these factors. By offsetting the impact
of price changes and reinvestment rate changes to the funds, I aim to
provide returns in a predictable range.
Q. CORPORATE BONDS MAKE UP SIGNIFICANT PORTIONS OF EACH FUND'S PORTFOLIO.
HOW DID CORPORATES PERFORM DURING THE PERIOD?
A. Corporate bonds performed well for a variety of reasons. The overall
economic picture of stable, moderate growth and low inflation has helped
corporations improve profitability by cutting costs and streamlining their
businesses. This facilitated a strengthening of corporate balance sheets
and has resulted in better overall credit quality in the corporate bond
market. At the same time, we've also seen a favorable balance between
supply and demand within the corporate sector.
Q. THE FUNDS' POSITIONS IN FINANCIAL SECTOR BONDS INCREASED DURING THE
PERIOD. WHAT WAS THEIR APPEAL?
A. In searching for securities that have good valuations and improving
credit potential, I've found the finance sector to be particularly
attractive. Banks' profitability, capitalization and asset quality measures
were at very healthy levels. We've also seen an increase in mergers,
particularly in the regional bank area, that generally has led to improved
credit quality within the sector. These factors contributed to the strong
showing by financial issues during the period, a situation that should
continue going forward.
Q. WHAT'S YOUR OUTLOOK FOR THE MONTHS AHEAD?
A. My focus will continue to be on identifying and purchasing securities
with above-average valuations. I expect to continue to look to the
corporate market for bonds that can provide both yield and potential return
advantages. With many corporates approaching historically rich levels, I'll
continue to draw on Fidelity's credit research team in selecting bonds that
will perform well in any economic
environment. I'll continue to maintain the strict structural framework of
each fund in order to achieve their objectives.
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
FUND NUMBERS: 379 (1999),
381 (2001), 383 (2003)
TRADING SYMBOLS: TAR 1999,
TAR 2001, TAR 2003
START DATE: February 8, 1996
SIZE: as of January 31,
1997, more than $9 million,
1999 fund; more than $8
million, 2001 fund; more than
$10 million, 2003 fund
MANAGER: Christine
Thompson, since inception;
manager, Fidelity
Intermediate Bond Fund, since
1995; co-manager Fidelity
Global Bond Fund, since
February 1996; manager,
Fidelity U.S. Bond Index,
since 1990; joined Fidelity in
1985
(checkmark)
CHRIS THOMPSON DISCUSSES
TWO UNIQUE CHARACTERISTICS OF
THE TARGET TIMELINE FUNDS:
"Staying invested in the funds
until their respective maturity
dates is essential to realizing
their goal - achieving a
predictable range of return. In
addition, to achieve this
objective, all distributions and
capital gains must be
reinvested in the portfolios.
While investors always have
the opportunity to choose to
sell their shares prior to
maturity, doing so will change
the return profile earned and,
depending on interest rate
moves, could result in a
realized return lower or higher
than the range predicted at
the time of purchase.
"While the funds combine the
characteristics of individual
bonds with those of bond
mutual funds, there are key
differences. When you own
an individual bond and
choose to sell prior to
maturity, you can incur high
transaction costs. With the
funds, you have generally low
transaction costs and get the
benefits of a professionally
managed mutual fund."
FIDELITY TARGET TIMELINE 1999
INVESTMENT CHANGES
QUALITY DIVERSIFICATION AS OF JANUARY 31, 1997
(MOODY'S RATINGS) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS 6 MONTHS AGO
Aaa 23.3 28.6
Aa 3.4 2.0
A 41.1 29.5
Baa 30.3 24.2
Ba 1.1 0.0
B 0.0 0.0
Not rated 0.0 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 JANUARY 31, 1997
6 MONTHS AGO
Years 3.0 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 JANUARY 31, 1997
6 MONTHS AGO
Years 2.6 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 JANUARY 31, 1997 * AS OF JULY 31, 1996 **
Row: 1, Col: 1, Value: 1.8
Row: 1, Col: 2, Value: 8.5
Row: 1, Col: 3, Value: 19.8
Row: 1, Col: 4, Value: 40.9
Row: 1, Col: 5, Value: 29.0
Corporate bonds 51.9%
U.S. government
and agency
obligations 28.6%
Other investments 3.8%
Short-term
investments 15.7%
FOREIGN
INVESTMENTS 6.4%
Corporate bonds 70.9%
U.S. government
and agency
obligations 19.8%
Other investments 8.5%
Short-term
investments 0.8%
FOREIGN
INVESTMENTS 10.9%
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: 31.9
Row: 1, Col: 5, Value: 20.0
*
**
FIDELITY TARGET TIMELINE 1999
INVESTMENTS JANUARY 31, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
NONCONVERTIBLE BONDS - 70.8%
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (NOTE 1)
BASIC INDUSTRIES - 3.8%
CHEMICALS & PLASTICS - 3.8%
CBI Industries, Inc. 6 1/4%, 6/30/00 A3 $ 365,000 $ 363,252
DURABLES - 2.8%
AUTOS, TIRES, & ACCESSORIES - 1.7%
General Motors Corp. 9 5/8%, 12/1/00 A3 150,000 164,910
CONSUMER ELECTRONICS - 1.1%
Black & Decker Corp. 6 5/8%, 11/15/00 Baa 100,000 99,763
TOTAL DURABLES 264,673
ENERGY - 6.2%
OIL & GAS - 6.2%
Occidental Petroleum Corp. 6 1/4%, 11/8/00 Baa 101,000 99,545
Texas Eastern Transmission Corp.
10 3/8%, 11/15/00 Baa 220,000 245,518
Union Oil Co. 9 3/4%, 12/1/00 Baa 220,000 242,722
587,785
FINANCE - 44.9%
BANKS - 28.9%
Bank South Corp. 10.20%, 6/1/99 A3 200,000 216,138
Banponce Corp. 6.378%, 4/8/99 A3 150,000 149,315
Chase Manhattan Corp. 10%, 6/15/99 A2 253,000 272,706
First Hawaiian, Inc. 6 1/4%, 8/15/00 Baa 165,000 162,223
First Interstate Bancorp 8 5/8%, 4/1/99 A2 362,000 378,724
Fleet Financial Group, Inc. 7 5/8%, 12/1/99 A3 75,000 77,268
Florida National Banks, Inc. 9 7/8%, 5/15/99 A2 54,000 57,925
Kansallis-Osake-Pankki
6 3/8%, 8/15/00 A2 250,000 247,370
Korea Development Bank 9.60%, 12/1/00 A1 200,000 219,360
Midlantic Corp. 9 1/4%, 9/1/99 A2 318,000 337,627
Republic of NY Corp. 9 3/4%, 12/1/00 A1 125,000 137,856
Shawmut National Corp. 8 5/8%, 12/15/99 A3 200,000 210,214
Signet Banking Corp. 9 5/8%, 6/1/99 Baa 255,000 271,254
2,737,980
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (NOTE 1)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 12.9%
Aristar, Inc. 7 1/2%, 7/1/99 Baa $ 299,000 $ 306,152
Beneficial Corp. 10.10%, 11/27/00 A2 75,000 83,744
Chrysler Financial Corp. 9 1/2%, 12/15/99 A3 183,000 197,342
Greyhound Financial Corp. 6.65%, 1/19/00 Baa 165,000 165,437
Heller Financial, Inc. 7 7/8%, 11/1/99 A2 105,000 108,878
Southwestern Bell Capital Corp.:
6.86%, 7/26/99 A2 50,000 50,616
6 3/4%, 2/1/00 A2 100,000 100,924
US West Financial Services, Inc.
8.40%, 9/15/99 A2 200,000 209,172
1,222,265
INSURANCE - 3.1%
SunAmerica, Inc. 6.20%, 10/31/99 Baa 300,000 298,434
TOTAL FINANCE 4,258,679
MEDIA & LEISURE - 2.7%
BROADCASTING - 1.1%
TCI Communication, Inc. 7 1/4%, 6/15/99 Ba1 100,000 100,852
PUBLISHING - 1.6%
News America Holdings, Inc. 7 1/2%, 3/1/00 Baa 150,000 153,548
TOTAL MEDIA & LEISURE 254,400
NONDURABLES - 1.7%
TOBACCO - 1.7%
Philip Morris Companies, Inc.
9 1/4%, 2/15/00 A2 150,000 160,551
RETAIL & WHOLESALE - 4.0%
GENERAL MERCHANDISE STORES - 4.0%
Dayton Hudson Corp. 10%, 12/1/00 Baa 340,000 377,322
TECHNOLOGY - 2.4%
COMPUTERS & OFFICE EQUIPMENT - 2.4%
Comdisco, Inc. 7 3/4%, 9/1/99 Baa 224,000 229,936
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (NOTE 1)
UTILITIES - 2.3%
GAS - 2.3%
Arkla, Inc. 8 7/8%, 7/15/99 Baa $ 210,000 $ 221,590
TOTAL NONCONVERTIBLE BONDS
(Cost $6,799,334) 6,718,188
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 19.8%
U.S. TREASURY OBLIGATIONS - 13.8%
8%, 8/15/99 Aaa 70,000 73,193
7 3/4%, 12/31/99 Aaa 809,000 844,523
8 1/2%, 2/15/00 Aaa 215,000 229,108
6 7/8%, 3/31/00 Aaa 160,000 163,426
1,310,250
U.S. GOVERNMENT AGENCY OBLIGATIONS - 6.0%
Federal Farm Credit Bank 9 3/8%, 5/02/00 Aaa 350,000 381,556
State of Israel (guaranteed by U.S. government
through Agency for International Development)
7 3/4%, 11/15/99 Aaa 175,000 181,626
563,182
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS (Cost $1,881,851) 1,873,432
FOREIGN GOVERNMENT OBLIGATIONS - 1.6%
Manitoba Province yankee 7.93%, 2/15/00
(Cost $163,110) A1 150,000 155,764
SUPRANATIONAL OBLIGATIONS - 7.0%
African Development Bank 9.30%, 7/01/00 Aa1 300,000 324,000
European Investment Bank
10 1/8%, 10/1/00 Aaa 300,000 335,433
TOTAL SUPRANATIONAL OBLIGATIONS
(Cost $659,152) 659,433
CASH EQUIVALENTS - 0.8%
MATURITY VALUE
AMOUNT (NOTE 1)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.55%, dated
1/31/97 due 2/3/97 $ 79,036 $ 79,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $9,582,447) $ 9,485,817
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 67.8% AAA, AA, A 52.6%
Baa 30.3% BBB 43.7%
Ba 1.1% BB 2.9%
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 both S&P and Moody's amounted to 0.0%.
Purchases and sales of securities, other than short-term securities,
aggregated $6,820,378 and $4,561,329 respectively, of which U.S. government
and government agency obligations aggregated $3,288,674 and $3,834,352,
respectively.
INCOME TAX INFORMATION
At January 31, 1997, the aggregate cost of investment securities for income
tax purposes was $9,582,543. Net unrealized (depreciation) aggregated
$96,726, of which $9,595 related to appreciated investment securities and
$106,321 related to depreciated investment securities.
The fund intends to elect to defer to its fiscal year ending July 31, 1997
approximately $31,000 of losses recognized during the period November 1,
1995 to July 31, 1996.
FIDELITY TARGET TIMELINE 1999
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JANUARY 31, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 9,485,817
agreements of $79,000) (cost $9,582,447) -
See accompanying schedule
Cash 292
Receivable for investments sold 107,342
Interest receivable 166,500
Receivable from investment adviser for expense 22,723
reductions
TOTAL ASSETS 9,782,674
LIABILITIES
Payable for investments purchased $ 104,411
Payable for fund shares redeemed 25,171
Distributions payable 269
Other payables and accrued expenses 14,433
TOTAL LIABILITIES 144,284
NET ASSETS $ 9,638,390
Net Assets consist of:
Paid in capital $ 9,780,292
Undistributed net investment income 1,036
Accumulated undistributed net realized gain (loss) on (46,308)
investments
Net unrealized appreciation (depreciation) on (96,630)
investments
NET ASSETS, for 1,005,653 shares outstanding $ 9,638,390
NET ASSET VALUE, offering price and redemption price per $9.58
share ($9,638,390 (divided by) 1,005,653 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JANUARY 31, 1997 (UNAUDITED)
INVESTMENT INCOME $ 333,156
Interest
EXPENSES
Management fee $ 19,165
Transfer agent fees 9,856
Accounting fees and expenses 30,019
Non-interested trustees' compensation 20
Custodian fees and expenses 635
Registration fees 30,082
Audit 10,000
Legal 946
Miscellaneous 16
Total expenses before reductions 100,739
Expense reductions (86,118) 14,621
NET INVESTMENT INCOME 318,535
REALIZED AND UNREALIZED GAIN (LOSS) (11,942)
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on 50,804
investment securities
NET GAIN (LOSS) 38,862
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 357,397
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS FEBRUARY 8, 1996
ENDED JANUARY (COMMENCEMENT
31, 1997 OF OPERATIONS) TO
(UNAUDITED) JULY 31
1996
INCREASE (DECREASE) IN NET ASSETS
Operations $ 318,535 $ 150,430
Net investment income
Net realized gain (loss) (11,942) (34,366)
Change in net unrealized appreciation (depreciation) 50,804 (147,434)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 357,397 (31,370)
FROM OPERATIONS
Distributions to shareholders from net investment income (317,789) (150,140)
Share transactions 2,606,108 7,457,120
Net proceeds from sales of shares
Reinvestment of distributions 316,201 149,858
Cost of shares redeemed (645,644) (103,717)
Redemption fees 309 57
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 2,276,974 7,503,318
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,316,582 7,321,808
NET ASSETS
Beginning of period 7,321,808 -
End of period (including undistributed net investment $ 9,638,390 $ 7,321,808
income of $1,036 and $290, respectively)
OTHER INFORMATION
Shares
Sold 271,501 763,594
Issued in reinvestment of distributions 32,944 15,637
Redeemed (67,140) (10,883)
Net increase (decrease) 237,305 768,348
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS FEBRUARY 8, 1996
ENDED JANUARY (COMMENCEMENT
31, 1997 OF OPERATIONS) TO
(UNAUDITED) JULY 31,
1996
<TABLE>
<CAPTION>
<S> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.530 $ 10.000
Income from Investment Operations .352 .310
Net investment income
Net realized and unrealized gain (loss) .049 (.470)
Total from investment operations .401 (.160)
Less Distributions
From net investment income (.351) (.310)
Net asset value, end of period $ 9.580 $ 9.530
TOTAL RETURN B, C 4.26% (1.58)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 9,638 $ 7,322
Ratio of expenses to average net assets .35% A, D .35% A,
D
Ratio of expenses to average net assets after .34% A, E .34% A,
expense reductions E
Ratio of net investment income to average net assets 7.31% A 6.88% A
Portfolio turnover rate 108% A 118% 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 (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 JANUARY 31, 1997
(MOODY'S RATINGS) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS 6 MONTHS AGO
Aaa 36.6 42.4
Aa 8.5 4.4
A 19.9 16.9
Baa 30.7 23.7
Ba 0.0 0.0
B 0.0 0.0
Not rated 3.3 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 JANUARY 31, 1997
6 MONTHS AGO
Years 5.8 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 JANUARY 31, 1997
6 MONTHS AGO
Years 4.5 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 JANUARY 31, 1997 * AS OF JULY 31, 1996 **
Row: 1, Col: 1, Value: 1.6
Row: 1, Col: 2, Value: 8.5
Row: 1, Col: 3, Value: 36.0
Row: 1, Col: 4, Value: 23.9
Row: 1, Col: 5, Value: 30.0
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: 20.6
Row: 1, Col: 5, Value: 20.0
Corporate bonds 53.9%
U.S. government
and agency
obligations 36.6%
Other investments 8.5%
Short-term
investments 1.0%
FOREIGN
INVESTMENTS 12.2%
Corporate bonds 40.6%
U.S. government
and agency
obligations 42.4%
Other investments 4.4%
Short-term
investments 12.6%
FOREIGN
INVESTMENTS 8.8%
*
**
FIDELITY TARGET TIMELINE 2001
INVESTMENTS JANUARY 31, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
NONCONVERTIBLE BONDS - 53.9%
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (NOTE 1)
BASIC INDUSTRIES - 6.1%
CHEMICALS & PLASTICS - 3.7%
Praxair, Inc. 6 3/4%, 3/1/03 A3 $ 300,000 $ 298,641
PAPER & FOREST PRODUCTS - 2.4%
Chesapeake Corp. 9 7/8%, 5/1/03 Baa 175,000 198,595
TOTAL BASIC INDUSTRIES 497,236
ENERGY - 5.3%
ENERGY SERVICES - 1.9%
Petroliam Nasional BHD yankee
6 7/8%, 7/1/03 (a) A1 150,000 149,961
OIL & GAS - 3.4%
Union Oil 9 1/4%, 2/1/03 Baa 250,000 279,023
TOTAL ENERGY 428,984
FINANCE - 26.1%
BANKS - 19.0%
Bank of New York Co., Inc.
7 7/8%, 11/15/02 A2 136,000 142,691
BankAmerica Corp. 7 1/2%, 10/15/02 A2 25,000 25,780
Barnett Banks, Inc. 9.83%, 5/30/03 A2 160,000 183,126
Central Fidelity Banks, Inc. 8.15%, 11/15/02 Baa 200,000 210,940
Huntington Bancshares, Inc.
7 7/8%, 11/15/02 Baa 100,000 104,342
Kansallis-Osake-Pankki
10%, 5/1/02 A3 255,000 290,037
Korea Development Bank 7.90%, 2/1/02 A1 150,000 157,067
Summit Bancorp. 8 5/8%, 12/10/02 BBB 250,000 269,938
Wells Fargo & Co. 6 7/8%, 4/15/03 A2 160,000 159,067
1,542,988
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (NOTE 1)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 5.8%
Countrywide Funding Corp. 8 1/8%, 7/15/02 Baa $ 250,000 $ 265,248
Greyhound Financial Corp. 7.82%, 1/27/03 Baa 100,000 103,845
Southwestern Bell Capital Corp.
7.36%, 5/1/02 A2 100,000 102,968
472,061
SAVINGS & LOANS - 1.3%
Great Western Financial Corp. 8.60%, 2/1/02 Baa 100,000 107,284
TOTAL FINANCE 2,122,333
MEDIA & LEISURE - 2.0%
PUBLISHING - 2.0%
News America Holdings, Inc. 8 5/8%, 2/1/03 Baa 150,000 161,070
RETAIL & WHOLESALE - 2.9%
GENERAL MERCHANDISE STORES - 2.9%
Dayton Hudson Corp. 6.40%, 2/15/03 Baa 245,000 238,091
TRANSPORTATION - 3.3%
AIR TRANSPORTATION - 3.3%
Delta Air Lines, Inc. 8 1/2%, 3/15/02 Baa 251,000 267,051
UTILITIES - 8.2%
GAS - 6.9%
Columbia Gas System, Inc. 6.61%, 11/28/02 Baa 150,000 148,769
Enron Corp. 9 7/8%, 6/15/03 Baa 210,000 240,671
Southwest Gas Corp. 9 3/4%, 6/15/02 Baa 150,000 168,500
557,940
TELEPHONE SERVICES - 1.3%
GTE Corp. 9.10%, 6/1/03 A3 95,000 105,442
TOTAL UTILITIES 663,382
TOTAL NONCONVERTIBLE BONDS
(Cost $4,484,095) 4,378,147
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 36.6%
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (NOTE 1)
U.S. TREASURY OBLIGATIONS - 34.4%
6 1/4%, 2/15/03 Aaa $ 485,000 $ 482,803
10 3/4%, 2/15/03 Aaa 790,000 961,451
10 3/4%, 5/15/03 Aaa 1,100,000 1,345,267
2,789,521
U.S. GOVERNMENT AGENCY OBLIGATIONS - 2.2%
Federal Home Loan Bank 6.37%, 6/30/03 Aaa 180,000 178,060
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS (Cost $2,963,423) 2,967,581
FOREIGN GOVERNMENT OBLIGATIONS - 4.6%
Irish Republic 7.64%, 1/2/02 Aa2 210,000 217,617
Ontario Province yankee 7 3/8%, 1/27/03 Aa3 150,000 155,109
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $384,979) 372,726
SUPRANATIONAL OBLIGATIONS - 3.9%
African Development Bank yankee
7.70%, 7/15/02 (Cost $312,987) Aa1 300,000 314,457
CASH EQUIVALENTS - 1.0%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.55%, dated
1/31/97 due 2/3/97 $ 84,038 84,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $8,229,484) $ 8,116,911
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 $149,961 or 1.8% 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 65.0% AAA, AA, A 59.0%
Baa 30.7% BBB 36.7%
Ba 0.0% BB 3.3%
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 both S&P and Moody's amounted to 0.0%.
Purchases and sales of securities, other than short-term securities,
aggregated $6,208,888 and $4,289,480 respectively, of which U.S. government
and government agency obligations aggregated $4,025,754 and $4,028,172,
respectively.
INCOME TAX INFORMATION
At January 31, 1997, the aggregate cost of investment securities for income
tax purposes was $8,229,484. Net unrealized (depreciation) aggregated
$112,573 of which $23,397 related to appreciated investment securities and
$135,970 related to depreciated investment securities.
The fund intends to elect to defer to its fiscal year ending July 31, 1997
approximately $45,000 of losses recognized during the period November 1,
1995 to July 31, 1996.
FIDELITY TARGET TIMELINE 2001
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JANUARY 31, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 8,116,911
agreements of $84,000) (cost $8,229,484) -
See accompanying schedule
Cash 719
Interest receivable 184,795
Receivable from investment adviser for expense 4,751
reductions
TOTAL ASSETS 8,307,176
LIABILITIES
Payable for fund shares redeemed $ 36,351
Distributions payable 373
Other payables and accrued expenses 14,182
TOTAL LIABILITIES 50,906
NET ASSETS $ 8,256,270
Net Assets consist of:
Paid in capital $ 8,394,994
Undistributed net investment income 274
Accumulated undistributed net realized gain (loss) (26,425)
on investments
Net unrealized appreciation (depreciation) on (112,573)
investments
NET ASSETS, for 867,017 shares outstanding $ 8,256,270
NET ASSET VALUE, offering price and redemption price per $9.52
share ($8,256,270 (divided by) 867,017 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JANUARY 31, 1997 (UNAUDITED)
INVESTMENT INCOME $ 275,885
Interest
EXPENSES
Management fee $ 16,231
Transfer agent fees 8,273
Accounting fees and expenses 30,016
Non-interested trustees' compensation 21
Custodian fees and expenses 909
Registration fees 27,504
Audit 10,000
Legal 801
Miscellaneous 29
Total expenses before reductions 93,784
Expense reductions (81,395) 12,389
NET INVESTMENT INCOME 263,496
REALIZED AND UNREALIZED GAIN (LOSS) 19,507
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on 66,785
investment securities
NET GAIN (LOSS) 86,292
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 349,788
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS FEBRUARY 8, 1996
ENDED JANUARY (COMMENCEMENT
31, 1997 OF OPERATIONS) TO
(UNAUDITED) JULY 31,
1996
INCREASE (DECREASE) IN NET ASSETS
Operations $ 263,496 $ 137,284
Net investment income
Net realized gain (loss) 19,507 (45,932)
Change in net unrealized appreciation (depreciation) 66,785 (179,358)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 349,788 (88,006)
FROM OPERATIONS
Distributions to shareholders from net investment income (263,421) (137,085)
Share transactions 2,154,330 6,293,340
Net proceeds from sales of shares
Reinvestment of distributions 261,042 137,042
Cost of shares redeemed (426,112) (24,923)
Redemption fees 268 7
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,989,528 6,405,466
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,075,895 6,180,375
NET ASSETS
Beginning of period 6,180,375 -
End of period (including undistributed net investment $ 8,256,270 $ 6,180,375
income of $274 and $199, respectively)
OTHER INFORMATION
Shares
Sold 226,539 645,819
Issued in reinvestment of distributions 27,384 14,488
Redeemed (44,570) (2,643)
Net increase (decrease) 209,353 657,664
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS FEBRUARY 8, 1996
ENDED (COMMENCEMENT
JANUARY 31, 1997 OF OPERATIONS) TO
(UNAUDITED) JULY 31,
1996
<TABLE>
<CAPTION>
<S> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.400 $ 10.000
Income from Investment Operations .342 .310
Net investment income
Net realized and unrealized gain (loss) .120 (.600)
Total from investment operations .462 (.290)
Less Distributions
From net investment income (.342) (.310)
Net asset value, end of period $ 9.520 $ 9.400
TOTAL RETURN B, C 4.97% (2.88)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 8,256 $ 6,180
Ratio of expenses to average net assets .35% A, D .35% A,
D
Ratio of expenses to average net assets after .34% A, E .34% A,
expense reductions E
Ratio of net investment income to average net assets 7.14% A 6.93% A
Portfolio turnover rate 119% A 93% 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 (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 JANUARY 31, 1997
(MOODY'S RATINGS) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS 6 MONTHS AGO
Aaa 54.7 52.6
Aa 1.6 2.1
A 13.4 8.2
Baa 29.3 19.8
Ba 0.0 0.0
B 0.0 0.0
Not rated 0.0 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 JANUARY 31, 1997
6 MONTHS AGO
Years 9.0 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 JANUARY 31, 1997
6 MONTHS AGO
Years 6.5 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 JANUARY 31, 1997 * AS OF JULY 31, 1996 **
Row: 1, Col: 1, Value: 1.9
Row: 1, Col: 2, Value: 2.6
Row: 1, Col: 3, Value: 50.1
Row: 1, Col: 4, Value: 45.4
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
Corporate bonds 46.4%
U.S. government
and agency
obligations 51.1%
Other investments 1.6%
Short-term
investments 0.9%
FOREIGN
INVESTMENTS 8.1%
Corporate bonds 32.6%
U.S. government
and agency
obligations 50.6%
Other investments 2.1%
Short-term
investments 14.7%
FOREIGN
INVESTMENTS 5.3%
*
**
FIDELITY TARGET TIMELINE 2003
INVESTMENTS JANUARY 31, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
NONCONVERTIBLE BONDS - 46.4%
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (NOTE 1)
DURABLES - 3.7%
TEXTILES & APPAREL - 3.7%
Levi Strauss & Co. 7%, 11/1/06 (a) Baa $ 400,000 $ 395,128
ENERGY - 5.1%
OIL & GAS - 5.1%
Husky Oil Ltd. yankee 7 1/8%, 11/15/06 Baa 250,000 247,670
Union Oil Co. of California 9 1/8%, 2/15/06 Baa 265,000 299,111
546,781
FINANCE - 27.9%
BANKS - 21.4%
First Security Corp. 7%, 7/15/05 Baa 375,000 369,330
First Tennessee National Corp.
6 3/4%, 11/15/05 Baa 200,000 193,416
First Union Corp. 7 1/2%, 7/15/06 A2 375,000 382,609
Fleet Financial Group, Inc.
7 1/8%, 4/15/06 A3 375,000 373,590
Merita Bank Ltd. yankee 6 1/2%, 1/15/06 A3 150,000 142,688
Midland Bank PLC yankee 7 5/8%, 6/15/06 A1 300,000 308,757
Signet Bank 7.80%, 9/15/06 Baa 250,000 257,815
Sovran Financial Corp. 9 1/4%, 6/15/06 A1 125,000 142,986
Union Planters Corp. 6 3/4%, 11/1/05 Baa 150,000 144,609
2,315,800
CREDIT & OTHER FINANCE - 4.6%
Secured Finance, Inc. sr. gtd. secured
9.05%, 12/15/04 Aaa 350,000 392,543
Southwestern Bell Capital Corp.
7.13%, 6/1/05 A2 100,000 101,319
493,862
INSURANCE - 1.9%
URC Holdings Corp.
7 7/8%, 6/30/06 (a) Baa 200,000 207,792
TOTAL FINANCE 3,017,454
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (NOTE 1)
MEDIA & LEISURE - 3.5%
PUBLISHING - 1.5%
News America Holdings, Inc. 8 1/2%, 2/15/05 Baa $ 150,000 $ 160,551
RESTAURANTS - 2.0%
Darden Restaurants, Inc. 6 3/8%, 2/1/06 Baa 85,000 78,413
Wendy's International, Inc. 6.35%, 12/15/05 Baa 150,000 142,098
220,511
TOTAL MEDIA & LEISURE 381,062
RETAIL & WHOLESALE - 3.5%
GENERAL MERCHANDISE STORES - 3.5%
Dayton Hudson Corp. 7 1/2%, 7/15/06 Baa 375,000 381,071
UTILITIES - 2.7%
GAS - 2.7%
Columbia Gas System, Inc. 6.80%, 11/28/05 Baa 150,000 146,747
InterNorth, Inc. 9 5/8%, 3/15/06 Baa 125,000 145,353
292,100
TOTAL NONCONVERTIBLE BONDS
(Cost $5,073,369) 5,013,596
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 51.1%
U.S. TREASURY OBLIGATIONS - 43.9%
10 3/4%, 8/15/05 Aaa 460,000 586,068
6 7/8%, 5/15/06 Aaa 4,055,000 4,155,118
4,741,186
U.S. GOVERNMENT AGENCY OBLIGATIONS - 7.2%
Federal Farm Credit Bank:
7.35%, 3/24/05 Aaa 150,000 155,224
7.26%, 5/02/05 Aaa 500,000 514,765
Federal Home Loan Mortgage
Corporation 8%, 1/26/05 Aaa 100,000 107,578
777,567
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS (Cost $5,545,419) 5,518,753
FOREIGN GOVERNMENT OBLIGATIONS - 1.6%
MOODY'S PRINCIPAL VALUE
RATINGS AMOUNT (NOTE 1)
Ontario Province 6%, 2/21/06
(Cost $172,163) Aa3 $ 185,000 $ 173,961
CASH EQUIVALENTS - 0.9%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.55%, dated
1/31/97 due 2/3/97 $ 98,045 98,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $10,888,951) $ 10,804,310
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 $602,920 or 5.5% 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 69.7% AAA, AA, A 62.1%
Baa 29.3% BBB 32.2%
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 both S&P and Moody's amounted to 0.0%.
Purchases and sales of securities, other than short-term securities,
aggregated $8,952,886 and $5,141,522 respectively, of which U.S. government
and government agency obligations aggregated $6,051,491 and $4,599,172,
respectively.
INCOME TAX INFORMATION
At January 31, 1997, the aggregate cost of investment securities for income
tax purposes was $10,888,951. Net unrealized (depreciation) aggregated
$84,641, of which $81,415 related to appreciated investment securities and
$166,056 related to depreciated investment securities.
The fund intends to elect to defer to its fiscal year ending July 31, 1997
approximately $63,000 of losses recognized during the period November 1,
1995 to July 31, 1996.
FIDELITY TARGET TIMELINE 2003
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JANUARY 31, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 10,804,310
agreements of $98,000) (cost $10,888,951) -
See accompanying schedule
Cash 919
Interest receivable 176,147
Receivable from investment adviser for expense 4,182
reductions
TOTAL ASSETS 10,985,558
LIABILITIES
Payable for fund shares redeemed $ 19,777
Distributions payable 447
Other payables and accrued expenses 14,628
TOTAL LIABILITIES 34,852
NET ASSETS $ 10,950,706
Net Assets consist of:
Paid in capital $ 11,102,131
Undistributed net investment income 59
Accumulated undistributed net realized gain (loss) on (66,843)
investments
Net unrealized appreciation (depreciation) on (84,641)
investments
NET ASSETS, for 1,163,062 shares outstanding $ 10,950,706
NET ASSET VALUE, offering price and redemption price per $9.42
share ($10,950,706 (divided by) 1,163,062 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JANUARY 31, 1997 (UNAUDITED)
INVESTMENT INCOME $ 343,311
Interest
EXPENSES
Management fee $ 21,364
Transfer agent fees 11,148
Accounting fees and expenses 30,020
Non-interested trustees' compensation 21
Custodian fees and expenses 561
Registration fees 30,859
Audit 10,000
Legal 925
Miscellaneous 12
Total expenses before reductions 104,910
Expense reductions (88,466) 16,444
NET INVESTMENT INCOME 326,867
REALIZED AND UNREALIZED GAIN (LOSS) (3,757)
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on 136,417
investment securities
NET GAIN (LOSS) 132,660
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 459,527
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS FEBRUARY 8, 1996
ENDED JANUARY (COMMENCEMENT
31, 1997 OF OPERATIONS) TO
(UNAUDITED) JULY 31,
1996
INCREASE (DECREASE) IN NET ASSETS
Operations $ 326,867 $ 141,091
Net investment income
Net realized gain (loss) (3,757) (62,841)
Change in net unrealized appreciation (depreciation) 136,417 (221,058)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 459,527 (142,808)
FROM OPERATIONS
Distributions to shareholders from net investment income (327,276) (140,867)
Share transactions 5,286,337 7,206,977
Net proceeds from sales of shares
Reinvestment of distributions 323,940 140,506
Cost of shares redeemed (1,770,418) (86,628)
Redemption fees 1,159 257
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 3,841,018 7,261,112
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 3,973,269 6,977,437
NET ASSETS
Beginning of period 6,977,437 -
End of period (including undistributed net investment $ 10,950,706 $ 6,977,437
income of $59 and $468, respectively)
OTHER INFORMATION
Shares
Sold 560,985 749,084
Issued in reinvestment of distributions 34,362 15,058
Redeemed (187,092) (9,335)
Net increase (decrease) 408,255 754,807
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS FEBRUARY 8, 1996
ENDED JANUARY (COMMENCEMENT
31, 1997 OF OPERATIONS) TO
(UNAUDITED) JULY 31,
1996
<TABLE>
<CAPTION>
<S> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.240 $ 10.000
Income from Investment Operations .319 .307
Net investment income
Net realized and unrealized gain (loss) .179 (.762)
Total from investment operations .498 (.455)
Less Distributions
From net investment income (.319) (.306)
Redemption fees added to paid in capital .001 .001
Net asset value, end of period $ 9.420 $ 9.240
TOTAL RETURN B, C 5.45% (4.53)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 10,951 $ 6,977
Ratio of expenses to average net assets .35% A, D .35% A, D
Ratio of expenses to average net assets after expense .34% A, E .34% A, E
reductions
Ratio of net investment income to average net assets 6.73% A 6.93% A
Portfolio turnover rate 109% A 180% 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 (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 January 31, 1997 (Unaudited)
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. Securities (including
restricted securities) for which market quotations are not readily
available are valued at their fair value as determined in good faith under
consistently applied procedures under the general supervision of the Board
of Trustees. Short-term securities with remaining maturities of sixty days
or less for which quotations are not readily available 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 funds 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. Income receipts
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions. Purchases and
sales of securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
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, 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, each fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
the fiscal year. The schedules of investments include 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 and losses deferred due to wash sales and excise tax regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). 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 funds are 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 funds 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), 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 .44% of average net assets for each fund.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (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
.23%, .22% and .23% of the average net assets of Fidelity Target Timeline
1999, Fidelity Target Timeline 2001 and Fidelity Target Timeline 2003,
respectively.
ACCOUNTING FEES. FSC maintains each fund's 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 reimbursement reduced expenses by $85,483, $80,864 and $87,905
for Fidelity Target Timeline 1999,
5. EXPENSE REDUCTIONS - CONTINUED
Fidelity Target Timeline 2001 and Fidelity Target Timeline 2003 funds,
respectively.
In addition, certain funds have entered into an arrangement with their
custodian whereby interest earned on uninvested cash balances was used to
offset a portion of each applicable fund's expenses. During
the period, the custodian fees were reduced by $635, $531 and $561 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 37.5%
Fidelity Target Timeline 2001 45.1%
Fidelity Target Timeline 2003 32.1%
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 *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
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 Company, Inc.
Boston, MA
CUSTODIAN
Bank of New York
New York, NY
* INDEPENDENT TRUSTEES
FIDELITY'S TAXABLE BOND FUNDS
Capital & Income Fund
Ginnie Mae Fund
Global Bond Fund
Government Securities Fund
Intermediate Bond Fund
Investment Grade Bond Fund
New Markets Income Fund
Short-Intermediate Government Fund
Short-Term 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 1999, 2001 & 2003
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
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)
TouchTone Xpress 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE
