FIDELITY
TARGET TIMELINE SM
FUNDS - 1999, 2001, 2003
ANNUAL REPORT
JULY 31, 1999
(Fidelity logo graphics)(registered trademark)
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
22 Financial Statements
TARGET TIMELINE 2001 26 Investment Changes
27 Investments
33 Financial Statements
TARGET TIMELINE 2003 37 Investment Changes
38 Investments
44 Financial Statements
NOTES 48 Notes to the financial
statements.
REPORT OF INDEPENDENT 52 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 53
OF SPECIAL NOTE 54
Standard & Poor's, S&P and S&P 500 are registered service marks of The
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Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
(recycle logo)This report is printed on recycled paper using soy-based
inks.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE
FUNDS. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS IN THE FUNDS 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 FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)
DEAR SHAREHOLDER:
In July, the steadily growing U.S. economy again sparked fears of
inflation and posed the threat of another Federal Reserve Board
interest-rate hike at its August policy meeting. Despite rising
profits and continued productivity gains at many U.S. corporations,
stock and bond markets sold off sharply toward the month's end.
Renewed jitters about inflation were sparked by a government report
that showed a larger-than-expected increase in the employment-cost
index.
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 less 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 an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
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. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-8888, or visit our
web site at www.fidelity.com. 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 its yield, to measure performance. If Fidelity had not
reimbursed certain expenses, the total returns and dividends would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JULY 31, 1999 PAST 1 YEAR LIFE OF FUND
TARGET TIMELINE 1999 5.64% 19.36%
LB Aggregate Bond 2.49% 20.66%
U.S. Treasury Strips (8/15/99 5.64% 19.21%
and 11/15/99)
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on 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 index
of investment-grade fixed-rate debt issues, including government,
corporate, asset-backed, and mortgage-backed securities, with
maturities of one year or more. 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 reflect
reinvestment of dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1999 PAST 1 YEAR LIFE OF FUND
TARGET TIMELINE 1999 5.64% 5.22%
LB Aggregate Bond 2.49% 5.55%
U.S. Treasury Strips (8/15/99 5.64% 5.18%
and 11/15/99)
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
$10,000 OVER LIFE OF FUND
Target Timeline 1999 Avg US TreasStrip 1999 LB Aggregate Bond
00379 F0092 LB001
1996/02/08 10000.00 10000.00 10000.00
1996/02/29 9843.43 9854.02 9838.79
1996/03/31 9769.72 9772.31 9769.92
1996/04/30 9723.18 9719.40 9715.21
1996/05/31 9708.18 9698.92 9695.78
1996/06/30 9814.54 9801.69 9825.70
1996/07/31 9841.86 9838.95 9852.23
1996/08/31 9849.03 9846.73 9835.48
1996/09/30 9980.40 9972.89 10006.62
1996/10/31 10147.46 10138.67 10228.77
1996/11/30 10271.38 10254.06 10403.68
1996/12/31 10218.33 10216.80 10306.92
1997/01/31 10261.47 10260.67 10338.87
1997/02/28 10277.69 10275.66 10364.72
1997/03/31 10245.55 10237.18 10249.67
1997/04/30 10340.73 10334.51 10403.42
1997/05/31 10416.89 10413.21 10502.25
1997/06/30 10502.40 10491.90 10627.23
1997/07/31 10645.36 10631.33 10914.16
1997/08/31 10644.63 10629.48 10821.39
1997/09/30 10731.20 10717.82 10981.55
1997/10/31 10820.68 10806.15 11140.78
1997/11/30 10840.11 10824.79 11192.03
1997/12/31 10906.08 10898.70 11305.07
1998/01/31 11018.13 11006.86 11449.77
1998/02/28 11032.85 11014.65 11440.61
1998/03/31 11077.20 11059.71 11479.51
1998/04/30 11131.38 11117.36 11539.21
1998/05/31 11187.82 11175.04 11648.83
1998/06/30 11241.97 11230.90 11747.65
1998/07/31 11298.77 11284.96 11772.58
1998/08/31 11394.20 11394.97 11964.19
1998/09/30 11497.42 11491.11 12244.29
1998/10/31 11542.74 11547.59 12179.70
1998/11/30 11574.08 11569.18 12248.68
1998/12/31 11620.41 11616.65 12285.51
1999/01/31 11679.24 11660.50 12373.26
1999/02/28 11692.80 11683.89 12157.22
1999/03/31 11751.11 11739.78 12224.68
1999/04/30 11806.17 11786.63 12263.43
1999/05/31 11848.95 11829.27 12155.51
1999/06/30 11892.08 11875.53 12116.69
1999/07/30 11936.23 11921.19 12065.80
IMATRL PRASUN SHR__CHT 19990731 19990811 143741 R00000000000045
</TABLE>
$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 July 31, 1999, the value of
the investment would be $11,936 - a 19.36% 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 $12,066 - a
20.66% increase. If $10,000 was put in U.S. Treasury Strips (8/15/99
and 11/15/99), it would be valued at $11,921 - a 19.21% increase.
(checkmark)
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.
TOTAL RETURN COMPONENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEARS ENDED JULY 31, FEBRUARY 8, 1996
(COMMENCEMENT OF OPERATIONS)
TO JULY 31,
1999 1998 1997 1996
Dividend returns 7.01% 7.39% 7.64% 3.12%
Capital returns -1.37% -1.25% 0.52% -4.70%
Total returns 5.64% 6.14% 8.16% -1.58%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
fund. A capital 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, if
any, paid by the fund are reinvested.
DIVIDENDS AND YIELD
PERIODS ENDED JULY 31, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 4.47(cents) 30.44(cents) 64.91(cents)
Annualized dividend rate 5.64% 6.55% 6.89%
30-day annualized yield 5.06% - -
DIVIDENDS per share show the income paid by the fund for a set period.
If you annualize this number, based on an average share price of $9.33
over the past one month, $9.37 over the past six months and $9.42 over
the past one year, you can compare the fund's income over these three
periods. The 30-day annualized YIELD is a standard formula for all
bond funds based on the yields of the bonds in the fund, averaged over
the past 30 days. This figure shows you the yield characteristics of
the fund's investments at the end of the period. It also helps you
compare funds from different companies on an equal basis. If Fidelity
had not reimbursed certain expenses, the yield would have been 4.12%.
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 its yield, to measure performance. If Fidelity had not
reimbursed certain expenses, the total returns and dividends would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JULY 31, 1999 PAST 1 YEAR LIFE OF FUND
TARGET TIMELINE 2001 4.81% 19.80%
LB Aggregate Bond 2.49% 20.66%
U.S. Treasury Strips (8/15/01 5.14% 19.37%
and 11/15/01)
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on 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 index
of investment-grade fixed-rate debt issues, including government,
corporate, asset-backed, and mortgage-backed securities, with
maturities of one year or more. 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 reflect
reinvestment of dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1999 PAST 1 YEAR LIFE OF FUND
TARGET TIMELINE 2001 4.81% 5.33%
LB Aggregate Bond 2.49% 5.55%
U.S. Treasury Strips (8/15/01 5.14% 5.22%
and 11/15/01)
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
$10,000 OVER LIFE OF FUND
Target Timeline 2001 Avg US TreasStrip 2001 LB Aggregate Bond
00381 F0093 LB001
1996/02/08 10000.00 10000.00 10000.00
1996/02/29 9763.03 9793.77 9838.79
1996/03/31 9659.03 9644.16 9769.92
1996/04/30 9582.85 9541.04 9715.21
1996/05/31 9558.77 9502.61 9695.78
1996/06/30 9695.97 9643.50 9825.70
1996/07/31 9711.59 9646.86 9852.23
1996/08/31 9687.10 9625.31 9835.48
1996/09/30 9868.61 9810.59 10006.62
1996/10/31 10105.68 10048.52 10228.77
1996/11/30 10290.56 10225.78 10403.68
1996/12/31 10162.27 10090.29 10306.92
1997/01/31 10193.78 10132.73 10338.87
1997/02/28 10199.18 10123.94 10364.72
1997/03/31 10092.01 10008.01 10249.67
1997/04/30 10241.62 10144.85 10403.42
1997/05/31 10328.56 10236.50 10502.25
1997/06/30 10435.11 10332.84 10627.23
1997/07/31 10708.33 10598.38 10914.16
1997/08/31 10615.90 10508.74 10821.39
1997/09/30 10755.43 10650.93 10981.55
1997/10/31 10886.16 10800.54 11140.78
1997/11/30 10890.55 10803.23 11192.03
1997/12/31 10998.62 10907.70 11305.07
1998/01/31 11174.41 11089.66 11449.77
1998/02/28 11138.91 11053.93 11440.61
1998/03/31 11178.45 11084.93 11479.51
1998/04/30 11227.63 11136.81 11539.21
1998/05/31 11314.08 11224.42 11648.83
1998/06/30 11387.71 11297.19 11747.65
1998/07/31 11429.77 11353.77 11772.58
1998/08/31 11566.81 11610.55 11964.19
1998/09/30 11833.07 11845.80 12244.29
1998/10/31 11814.33 11903.04 12179.70
1998/11/30 11817.68 11848.44 12248.68
1998/12/31 11883.11 11882.81 12285.51
1999/01/31 11948.70 11926.63 12373.26
1999/02/28 11836.21 11790.46 12157.22
1999/03/31 11939.49 11886.14 12224.68
1999/04/30 11991.61 11926.58 12263.43
1999/05/31 11933.88 11873.95 12155.51
1999/06/30 11961.91 11909.00 12116.69
1999/07/30 11979.78 11937.28 12065.80
IMATRL PRASUN SHR__CHT 19990731 19990812 120207 R00000000000045
</TABLE>
$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 July 31, 1999, the value of
the investment would be $11,980 - a 19.80% 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 $12,066 - a
20.66% increase. If $10,000 was put in U.S. Treasury Strips (8/15/01
and 11/15/01), it would be valued at $11,937 - a 19.37% increase.
(checkmark)
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.
TOTAL RETURN COMPONENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEARS ENDED JULY 31, FEBRUARY 8, 1996
(COMMENCEMENT OF OPERATIONS)
TO JULY 31,
1999 1998 1997 1996
Dividend returns 6.68% 6.95% 7.71% 3.12%
Capital returns -1.87% -0.21% 2.55% -6.00%
Total returns 4.81% 6.74% 10.26% -2.88%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
fund. A capital 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, if
any, paid by the fund are reinvested.
DIVIDENDS AND YIELD
PERIODS ENDED JULY 31, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 5.42(cents) 31.43(cents) 63.72(cents)
Annualized dividend rate 6.73% 6.63% 6.60%
30-day annualized yield 6.10% - -
DIVIDENDS per share show the income paid by the fund for a set period.
If you annualize this number, based on an average share price of $9.48
over the past one month, $9.56 over the past six months and $9.65 over
the past one year, you can compare the fund's income over these three
periods. The 30-day annualized YIELD is a standard formula for all
bond funds based on the yields of the bonds in the fund, averaged over
the past 30 days. This figure shows you the yield characteristics of
the fund's investments at the end of the period. It also helps you
compare funds from different companies on an equal basis. If Fidelity
had not reimbursed certain expenses, the yield would have been 5.35%.
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 its yield, to measure performance. If Fidelity had not
reimbursed certain expenses, the total returns and dividends would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JULY 31, 1999 PAST 1 YEAR LIFE OF FUND
TARGET TIMELINE 2003 2.76% 18.60%
LB Aggregate Bond 2.49% 20.66%
U.S. Treasury Strips (8/15/03 3.88% 19.67%
and 11/15/03)
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, one year or since the fund
started on 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 index
of investment-grade fixed-rate debt issues, including government,
corporate, asset-backed, and mortgage-backed securities, with
maturities of one year or more. 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 reflect
reinvestment of dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JULY 31, 1999 PAST 1 YEAR LIFE OF FUND
TARGET TIMELINE 2003 2.76% 5.03%
LB Aggregate Bond 2.49% 5.55%
U.S. Treasury Strips (8/15/03 3.88% 5.30%
and 11/15/03)
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
$10,000 OVER LIFE OF FUND
Target Timeline 2003 Avg US TreasStrip 2003 LB Aggregate Bond
00383 F0094 LB001
1996/02/08 10000.00 10000.00 10000.00
1996/02/29 9693.93 9708.73 9838.79
1996/03/31 9591.28 9547.53 9769.92
1996/04/30 9453.76 9389.28 9715.21
1996/05/31 9397.89 9332.02 9695.78
1996/06/30 9543.44 9500.15 9825.70
1996/07/31 9546.95 9506.25 9852.23
1996/08/31 9499.53 9458.85 9835.48
1996/09/30 9710.09 9672.82 10006.62
1996/10/31 9996.20 9990.76 10228.77
1996/11/30 10250.02 10224.62 10403.68
1996/12/31 10063.50 10045.81 10306.92
1997/01/31 10067.43 10049.62 10338.87
1997/02/28 10076.73 10059.55 10364.72
1997/03/31 9908.59 9860.12 10249.67
1997/04/30 10083.36 10032.03 10403.42
1997/05/31 10173.92 10155.86 10502.25
1997/06/30 10318.60 10276.60 10627.23
1997/07/31 10686.53 10641.95 10914.16
1997/08/31 10537.32 10487.54 10821.39
1997/09/30 10729.76 10674.78 10981.55
1997/10/31 10925.09 10878.10 11140.78
1997/11/30 10951.69 10894.91 11192.03
1997/12/31 11083.92 11030.18 11305.07
1998/01/31 11251.45 11256.41 11449.77
1998/02/28 11231.70 11186.85 11440.61
1998/03/31 11264.21 11213.62 11479.51
1998/04/30 11317.47 11270.93 11539.21
1998/05/31 11419.40 11376.38 11648.83
1998/06/30 11519.78 11486.42 11747.65
1998/07/31 11541.62 11520.01 11772.58
1998/08/31 11705.74 11934.30 11964.19
1998/09/30 12096.03 12302.67 12244.29
1998/10/31 12009.27 12298.77 12179.70
1998/11/30 12028.63 12227.72 12248.68
1998/12/31 12105.52 12275.11 12285.51
1999/01/31 12188.53 12356.19 12373.26
1999/02/28 11907.32 12035.93 12157.22
1999/03/31 12003.47 12120.76 12224.68
1999/04/30 12060.23 12162.78 12263.43
1999/05/31 11893.88 11986.98 12155.51
1999/06/30 11888.26 11996.94 12116.69
1999/07/30 11859.95 11967.08 12065.80
IMATRL PRASUN SHR__CHT 19990731 19990813 102144 R00000000000045
</TABLE>
$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 July 31, 1999, the value of
the investment would be $11,860 - a 18.60% 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 $12,066 - a
20.66% increase. If $10,000 was put in U.S. Treasury Strips (8/15/03
and 11/15/03), it would be valued at $11,967 - a 19.67% 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.
TOTAL RETURN COMPONENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEARS ENDED JULY 31, FEBRUARY 8, 1996
(COMMENCEMENT OF OPERATIONS)
TO JULY 31,
1999 1998 1997 1996
Dividend returns 6.99% 7.17% 7.29% 3.07%
Capital returns -4.23% 0.83% 4.65% -7.60%
Total returns 2.76% 8.00% 11.94% -4.53%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
fund. A capital 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, if
any, paid by the fund are reinvested.
DIVIDENDS AND YIELD
PERIODS ENDED JULY 31, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 5.77(cents) 33.55(cents) 68.50(cents)
Annualized dividend rate 7.26% 7.09% 7.05%
30-day annualized yield 6.37% - -
DIVIDENDS per share show the income paid by the fund for a set period.
If you annualize this number, based on an average share price of $9.36
over the past one month, $9.54 over the past six months and $9.71 over
the past one year, you can compare the fund's income over these three
periods. The 30-day annualized YIELD is a standard formula for all
bond funds based on the yields of the bonds in the fund, averaged over
the past 30 days. This figure shows you the yield characteristics of
the fund's investments at the end of the period. It also helps you
compare funds from different companies on an equal basis. If Fidelity
had not reimbursed certain expenses, the yield would have been 5.70%.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
The taxable-bond market had little
to show for its efforts during the
12-month period that ended July 31,
1999. The Lehman Brothers
Aggregate Bond Index - a popular
measure of taxable-bond
performance - returned 2.49% for
this period. The massive flight-to-safety
that resulted from the credit crisis of the
late summer and early fall sent
Treasuries soaring and spread sectors
- - corporates, mortgages and the
like - plummeting, resulting in a
historic widening in yield spreads.
The Federal Reserve Board's three
interest-rate cuts later in the fall
helped bond and equity markets
alike get back on their feet, and
sparked a sustained rally in spread
sectors in the first quarter of 1999,
as investors favored higher-yielding
alternatives to Treasuries. Strong
debt issuance and investors' fears of
an interest-rate hike, though, halted
the rally in spread sectors during
the last three months of the period.
The bond market shrugged off the
widely anticipated quarter-point
rate hike on June 30 and
applauded the emergence of a
neutral Fed policy. In July, yield
spreads widened again as investors
ignored signs of moderating
economic growth and surrendered to
concerns over higher labor costs and
fears of further Fed tightening. The
Lehman Brothers Treasury Index
returned 2.70%, while the Lehman
Brothers Corporate Bond Index and
the Lehman Brothers
Mortgage-Backed Securities Index
had returns of 1.42% and 2.78%,
respectively, during the 12-month
period.
(photograph of Ford O'Neil)
An interview with Ford O'Neil, Portfolio Manager of Fidelity Target
Timeline Funds 1999, 2001 and 2003
Q. HOW DID THE FUNDS PERFORM, FORD?
A. For the 12-month period that ended July 31, 1999, Target Timeline
1999, 2001 and 2003 had total returns of 5.64%, 4.81% and 2.76%,
respectively. For the same period, U.S. Treasury Strips maturing at
approximately the same times as the funds (August and November 1999,
2001 and 2003) averaged 5.64%, 5.14% and 3.88%, respectively. The
Lehman Brothers Aggregate Bond Index had a 12-month return of 2.49%.
Q. WHAT STRATEGIES DID YOU EMPLOY TO ENSURE THAT THE FUNDS' GOALS WERE
MET?
A. The objective is to generate a predictable return, slightly greater
than the index net of fees, for buy-and-hold investors over each
fund's lifetime. In general, the funds attempt to deliver a slight
yield advantage over U.S. Treasury Strips, or zero-coupon bonds, over
the life of the fund, assuming that they are held to maturity. The
important thing to remember is that it's difficult to measure these
funds on a six- or 12-month time horizon; instead, they should be
measured at maturity. The funds are managed according to a technique
known as horizon immunization, which requires that the duration, or
overall interest-rate sensitivity, of the funds be maintained at a
level consistent with the remaining investment time horizon. This is
achieved by investing in securities within a very tight duration range
that, in aggregate, equals the duration of the benchmark. In order to
maximize expected returns within the constraints imposed, the funds
typically emphasize corporate bonds. As the time to maturity shortens,
the funds' allocation to the corporate bond sector generally
increases; shorter duration corporate bonds generally exhibit less
yield-spread volatility - movement in relation to Treasury yields -
than longer duration securities, making them an attractive investment
alternative to similar duration Treasury and agency securities. The
hope is that if we can have a yield advantage greater than expenses,
the funds will have an added advantage, independent of market-related
factors, versus the benchmark. In addition, if we can find corporates
with the potential for spread tightening - having their prices rise as
their yields fall - we may be able to generate capital gains from
them, thereby adding additional value to the funds.
Q. HOW DID THE INVESTMENT ENVIRONMENT OVER THE PAST 12 MONTHS AFFECT
THE FUNDS' PERFORMANCE?
A. The overall investment-grade spread sectors, including federal
agency obligations and corporate bonds, lagged Treasuries during the
period. Short-duration corporate bonds were the one exception,
slightly outperforming Treasuries. The 2003 fund was hurt during the
period by the underperformance of intermediate-term corporate bonds
relative to Treasuries. In contrast, the shorter-duration 1999 and
2001 funds benefited from the modest outperformance of short-term
corporate bonds. Although a tightening of yield spreads in corporate
bonds from the late fall through the early spring contributed to their
outperformance, investors' concerns about the possibility of an
interest-rate hike, as well as the strong inflow of supply into the
marketplace, halted their rally during the last three months of the
period.
Q. WHAT'S THE STORY BEHIND THE RECENT FLOOD OF SUPPLY INTO THE
CORPORATE MARKETPLACE?
A. With respect to supply, many firms are issuing debt earlier than
they had planned, to avoid coming to market at the end of the year
because of concerns about the Year 2000 changeover, which has put
pressure on corporate spreads, causing them to widen. On the positive
side, a number of companies that historically have been issuers of
commercial paper - such as short-term promissory notes - have recently
been issuing bonds. This allows us to add some new names to draw on,
which enables us to improve the diversification of the portfolio
without sacrificing yield.
Q. WHAT'S YOUR OUTLOOK?
A. I'm optimistic about the long term. But I'm also cautious about the
near term as negativity pervades the market, fueled by fear of another
interest-rate hike along with the flood of supply into the market. The
longer-term picture looks a little brighter, since corporates remain
relatively cheap at current levels, and I still haven't seen any signs
of inflation in any of the corporate sectors, with the exception of
energy. Therefore, I don't expect any significant increases in
interest rates in the foreseeable future. I remain positive on spread
products in general, and I may even consider adding some more federal
agencies to the mix, given the cheapening of U.S. agency paper. This
would allow for a more defensive way to augment yield without adding
to the spread volatility of corporate bonds.
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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)
FUND FACTS
GOAL: definable returns over
the life of the funds by
investing mainly in
investment-grade quality debt
securities whose average
duration is approximately
equal to the each fund's
maturity
FUND NUMBER: 379 (1999),
381 (2001), 383 (2003)
TRADING SYMBOL: FTTAX
(1999), FTTBX (2001),
FTARX (2003)
START DATE: February 8, 1996
SIZE: as of July 31, 1999,
more than $13 million, 1999
fund; more than $17 million,
2001 fund; more than
$23 million, 2003 fund
MANAGER: Ford O'Neil, since
1998; manager, various
Fidelity bond funds; joined
Fidelity in 1990
(checkmark)
FORD O'NEIL ON INVESTING
UNTIL MATURITY:
"These funds should be purchased
only if there is a high probability
that you will hold them until
maturity. They should not be
purchased as short-term trading
opportunities. For instance, you
shouldn't sell the funds before
maturity on the basis that the
Federal Reserve Board may raise
interest rates. Nor should you
stock up on the funds in
anticipation of corporate spreads
tightening. This is not what the
funds are designed for. There are
many other investment options
out there that are better equipped
to meet those objectives. I can't
stress enough the importance of
holding these investments until
maturity. Just give the funds time
and let them do the work for you."
(solid bullet) Target Timeline 1999 will reach
its target maturity on September 30,
1999. Fidelity anticipates
liquidating the fund on October 4,
1999. There are several options
available to you as detailed in a
letter mailed to all shareholders of
the funds in August. If you have any
questions or would like to discuss
your options further, please call a
Fidelity Representative at
1-800-544-8888.
FIDELITY TARGET TIMELINE 1999
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
QUALITY DIVERSIFICATION AS OF
JULY 31, 1999
(MOODY'S RATINGS) % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS 6
MONTHS AGO
Aaa 51.1 18.1
Aa 3.8 8.8
A 9.5 49.8
Baa 2.3 18.2
</TABLE>
TABLE EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P (registered trademark) RATINGS.
SECURITIES RATED AS BA OR BELOW 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, 1999
6 MONTHS AGO
Years 0.2 0.8
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME REMAINING UNTIL
PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS,
WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF JULY 31, 1999
6 MONTHS AGO
Years 0.1 0.7
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
AS OF JULY 31, 1999*
Corporate Bonds 11.8%
U.S. Government and
Government Agency
Obligations 51.1%
Foreign Government &
Government Agency
Obligations 3.8%
Other Investments 0.0%
Short-Term Investments 33.3%
* FOREIGN INVESTMENTS 7.7%
AS OF JANUARY 31, 1999**
Corporate Bonds 71.3%
U.S. Government and
Government Agency
Obligations 12.7%
Foreign Government &
Government Agency
Obligations 6.1%
Other Investments 4.8%
Short-Term Investments 5.1%
** FOREIGN INVESTMENTS 18.9%
Row: 1, Col: 1, Value: 11.8
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 51.1
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 3.8
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 33.3
Row: 1, Col: 1, Value: 71.3
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 12.7
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 6.1
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 4.8
Row: 1, Col: 8, Value: 5.1
FIDELITY TARGET TIMELINE 1999
INVESTMENTS JULY 31, 1999
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
NONCONVERTIBLE BONDS - 11.8%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
FINANCE - 9.5%
BANKS - 8.0%
Bank of Nova Scotia N Y A1 $ 500,000 $ 502,730
Agency 9% 10/1/99
Citicorp 9.75% 8/1/99 A1 225,000 225,000
Midlantic Corp. 9.25% 9/1/99 A2 318,000 318,875
1,046,605
INSURANCE - 1.5%
Travelers Property Casualty A2 205,000 205,205
Corp. 6.75% 9/1/99
TOTAL FINANCE 1,251,810
UTILITIES - 2.3%
GAS - 2.3%
Sonat, Inc. 9.5% 8/15/99 Baa1 300,000 300,369
TOTAL NONCONVERTIBLE BONDS 1,552,179
(Cost $1,618,949)
U.S. GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS - 51.1%
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 3.7%
Financing Corp. stripped Aaa 311,000 310,705
principal 0% 8/8/99
State of Israel (guaranteed Aaa 175,000 176,183
by U.S. Government through
Agency for International
Development) 7.75% 11/15/99
TOTAL U.S. GOVERNMENT AGENCY 486,888
OBLIGATIONS
U.S. TREASURY OBLIGATIONS -
47.4%
U.S. Treasury Notes:
5.75% 9/30/99 Aaa 5,000,000 5,006,846
6% 8/15/99 Aaa 780,000 780,238
8.5% 2/15/00 Aaa 425,000 432,370
TOTAL U.S. TREASURY 6,219,454
OBLIGATIONS
TOTAL U.S. GOVERNMENT AND 6,706,342
GOVERNMENT AGENCY OBLIGATIONS
(Cost $6,709,983)
FOREIGN GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS (B) - 3.8%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
Export Development Corp. Aa2 $ 500,000 $ 500,255
yankee 8.125% 8/10/99 (Cost
$516,955)
</TABLE>
COMMERCIAL PAPER - 31.0%
Associates First Capital 500,000 496,026
Corp. 4.82% 9/27/99
Daimler-Chrysler North 500,000 495,813
America Corp. yankee 5.15%
9/30/99
Falcon Asset Securitization 500,000 496,238
5.13% 9/24/99
General Electric Capital 500,000 495,908
Corp. 4.83% 9/29/99
General Motors Acceptance 500,000 495,884
Corp. 5.16% 9/29/99
Goldman Sachs Group L.P. 400,000 397,065
4.86% 9/23/99
Household Finance Corp. 4.83% 400,000 397,161
9/21/99
Monsanto Co. 4.84% 8/24/99 400,000 398,756
Morgan (JP) & Co., Inc. 4.87% 400,000 397,404
9/17/99
TOTAL COMMERCIAL PAPER 4,070,255
(Cost $4,069,915)
CASH EQUIVALENTS - 2.3%
MATURITY AMOUNT
Investments in repurchase $ 299,128 299,000
agreements (U.S. Government
obligations), in a joint
trading account at 5.12%,
dated 7/30/99 due 8/2/99
(Cost $299,000)
TOTAL INVESTMENT IN $ 13,128,031
SECURITIES - 100%
(Cost $13,214,802)
LEGEND
(a) Standard & Poor's(registered trademark) credit ratings are used in
the absence of a rating by Moody's Investors Service, Inc.
(b) For foreign government obligations not individually rated by S&P
or Moody's, the ratings listed have been assigned by FMR, the fund's
investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 64.4% AAA, AA, A 64.4%
Baa 2.3% BBB 2.3%
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%
Purchases and sales of securities, other than short-term securities,
aggregated $9,403,426 and $10,203,724, respectively, of which
long-term U.S. government and government agency obligations aggregated
$5,016,602 and $0, respectively.
INCOME TAX INFORMATION
At July 31, 1999, the aggregate cost of investment securities for
income tax purposes was $13,215,119. Net unrealized depreciation
aggregated $87,088, of which $32,308 related to appreciated investment
securities and $119,396 related to depreciated investment securities.
At July 31, 1999, the fund had a capital loss carryforward of
approximately $111,000 of which $44,000, $42,000 and $25,000 will
expire on July 31, 2005, 2006 and 2007, respectively.
The fund intends to elect to defer to its next fiscal year
approximately $294,000 of losses recognized during the period November
1, 1998 to July 31, 1999.
FIDELITY TARGET TIMELINE 1999
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1999
ASSETS
Investment in securities, at $ 13,128,031
value (including repurchase
agreements of $299,000)
(cost $13,214,802) - See
accompanying schedule
Cash 387
Receivable for fund shares 14,566
sold
Interest receivable 212,351
Receivable from investment 5,603
adviser for expense
reductions
TOTAL ASSETS 13,360,938
LIABILITIES
Payable for fund shares $ 17,570
redeemed
Distributions payable 3,782
Other payables and accrued 30,804
expenses
TOTAL LIABILITIES 52,156
NET ASSETS $ 13,308,782
Net Assets consist of:
Paid in capital $ 13,795,778
Undistributed net investment 4,697
income
Accumulated undistributed net (404,922)
realized gain (loss) on
investments
Net unrealized appreciation (86,771)
(depreciation) on investments
NET ASSETS, for 1,426,443 $ 13,308,782
shares outstanding
NET ASSET VALUE, offering $9.33
price and redemption price
per share ($13,308,782
(divided by) 1,426,443
shares)
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1999
INVESTMENT INCOME $ 1,016,227
Interest
EXPENSES
Management fee $ 60,783
Transfer agent fees 25,240
Accounting fees and expenses 60,589
Non-interested trustees' 51
compensation
Custodian fees and expenses 2,204
Registration fees 16,606
Audit 31,991
Legal 1,314
Miscellaneous 115
Total expenses before 198,893
reductions
Expense reductions (149,768) 49,125
NET INVESTMENT INCOME 967,102
REALIZED AND UNREALIZED GAIN (293,116)
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized 94,995
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (198,121)
NET INCREASE (DECREASE) IN $ 768,981
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION
Expense reductions Custodian $ 128
credits
FMR reimbursement 149,640
$ 149,768
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JULY 31, 1999 YEAR ENDED JULY 31, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 967,102 $ 948,087
income
Net realized gain (loss) (293,116) (24,050)
Change in net unrealized 94,995 (139,051)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 768,981 784,986
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (970,975) (947,475)
from net investment income
Share transactions Net 1,997,312 4,112,241
proceeds from sales of shares
Reinvestment of distributions 890,281 931,263
Cost of shares redeemed (3,583,806) (2,871,463)
NET INCREASE (DECREASE) IN (696,213) 2,172,041
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 210 388
TOTAL INCREASE (DECREASE) (897,997) 2,009,940
IN NET ASSETS
NET ASSETS
Beginning of period 14,206,779 12,196,839
End of period (including $ 13,308,782 $ 14,206,779
undistributed net investment
income of $4,697 and $8,112,
respectively)
OTHER INFORMATION
Shares
Sold 211,332 432,026
Issued in reinvestment of 94,522 97,918
distributions
Redeemed (380,420) (301,519)
Net increase (decrease) (74,566) 228,425
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED JULY 31, 1999 1998 1997 1996 G
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 9.460 $ 9.580 $ 9.530 $ 10.000
period
Income from Investment .648 D .687 D .724 D .310
Operations Net investment
income
Net realized and unrealized (.129) (.118) .027 (.470)
gain (loss)
Total from investment .519 .569 .751 (.160)
operations
Less Distributions
From net investment income (.649) (.689) (.702) (.310)
Redemption fees added to paid .000 .000 .001 .000
in capital
Net asset value, end of period $ 9.330 $ 9.460 $ 9.580 $ 9.530
TOTAL RETURN B, C 5.64% 6.14% 8.16% (1.58)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 13,309 $ 14,207 $ 12,197 $ 7,322
(000 omitted)
Ratio of expenses to average .35% E .35% E .35% E .35%A, E
net assets
Ratio of expenses to average .35% .35% .34% F .34%A, F
net assets after expense
reductions
Ratio of net investment 6.87% 7.24% 7.38% 6.88% A
income to average net assets
Portfolio turnover rate 83% 43% 80% 118% A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E 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.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
G FOR THE PERIOD FEBRUARY 8, 1996 (COMMENCEMENT OF OPERATIONS) TO JULY
31, 1996.
FIDELITY TARGET TIMELINE 2001
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
QUALITY DIVERSIFICATION AS OF
JULY 31, 1999
(MOODY'S RATINGS) % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS 6
MONTHS AGO
Aaa 16.9 17.8
Aa 18.5 19.8
A 30.9 32.8
Baa 31.9 26.5
Ba and Below 0.0 1.0
</TABLE>
TABLE EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS. SECURITIES RATED AS BA OR BELOW
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, 1999
6 MONTHS AGO
Years 2.5 3.1
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME REMAINING UNTIL
PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS,
WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF JULY 31, 1999
6 MONTHS AGO
Years 2.2 2.7
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES.
IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A FIVE-YEAR DURATION IS
LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS ALSO CAN INFLUENCE
A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY, A BOND FUND'S
ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
AS OF JULY 31, 1999 *
Corporate Bonds 69.9%
U.S. Government and
Government Agency
Obligations 15.1%
Foreign Government &
Government Agency
Obligations 10.9%
Other Investments 2.3%
Short-Term Investments 1.8%
* FOREIGN INVESTMENTS 21.0%
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
AS OF JANUARY 31, 1999 **
Corporate Bonds 68.0%
U.S. Government and
Government Agency
Obligations 15.8%
Foreign Government &
Government Agency
Obligations 11.5%
Other Investments 2.6%
Short-Term Investments 2.1%
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
* FOREIGN INVESTMENTS 21.0% ** FOREIGN INVESTMENTS 21.7%
</TABLE>
Row: 1, Col: 1, Value: 69.90000000000001
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 15.1
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 10.9
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 2.3
Row: 1, Col: 8, Value: 1.8
Row: 1, Col: 1, Value: 68.0
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 15.8
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 11.5
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 2.6
Row: 1, Col: 8, Value: 2.1
FIDELITY TARGET TIMELINE 2001
INVESTMENTS JULY 31, 1999
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
NONCONVERTIBLE BONDS - 69.9%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.2%
Lockheed Martin Corp. 6.85% Baa1 $ 200,000 $ 201,410
5/15/01
BASIC INDUSTRIES - 1.4%
CHEMICALS & PLASTICS - 1.4%
Monsanto Co. 5.375% 12/1/01 A2 250,000 245,715
(b)
CONSTRUCTION & REAL ESTATE -
0.9%
REAL ESTATE INVESTMENT TRUSTS
- - 0.9%
Equity Office Properties Baa1 150,000 147,437
Trust 6.375% 1/15/02
DURABLES - 1.2%
AUTOS, TIRES, & ACCESSORIES -
1.2%
TRW, Inc. 6.5% 6/1/02 (b) Baa1 200,000 198,256
ENERGY - 1.8%
OIL & GAS - 1.8%
Coastal Corp. (The) 8.125% Baa2 110,000 114,363
9/15/02
Petro-Canada yankee 8.6% A3 190,000 196,441
10/15/01
310,804
FINANCE - 40.4%
BANKS - 27.1%
Bank of New York Co., Inc. A2 136,000 141,233
7.875% 11/15/02
BankAmerica Corp. 7.5% Aa3 25,000 25,575
10/15/02
BanPonce Financial Corp. 7.3% A3 400,000 400,944
6/5/02
Barclays Bank PLC yankee A1 100,000 99,001
5.95% 7/15/01
Capital One Bank 6.28% 2/20/01 Baa2 150,000 149,813
Central Fidelity Banks, Inc. A1 200,000 207,726
8.15% 11/15/02
Chase Manhattan Corp. 9.75% A1 250,000 267,463
11/1/01
Citicorp 5.625% 2/15/01 Aa3 300,000 297,636
Firstar Corp. 6.35% 7/13/01 A2 200,000 199,776
Huntington Bancshares, Inc. Baa1 100,000 102,128
7.875% 11/15/02
Integra Financial Corp. 8.5% A2 350,000 365,715
5/15/02
Kansallis-Osake-Pankki (NY A2 355,000 382,026
Branch) yankee 10% 5/1/02
Korea Development Bank:
6.625% 11/21/03 Baa3 70,000 65,836
7.125% 9/17/01 Baa3 90,000 88,267
Mellon Financial Co. 9.25% A3 200,000 210,096
8/15/01
National Westminster Bank PLC Aa3 250,000 263,210
9.45% 5/1/01
NationsBank Corp. 5.75% Aa2 200,000 198,660
3/15/01
NONCONVERTIBLE BONDS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
FINANCE - CONTINUED
BANKS - CONTINUED
Skandinaviska Enskilda Banken A3 $ 300,000 $ 309,273
yankee 8.45% 5/15/02
Summit Bancorp 8.625% 12/10/02 BBB+ 250,000 262,438
US Bank NA 5.25% 6/4/03 Aa3 250,000 240,043
Wells Fargo & Co. 6.875% A1 160,000 161,098
4/15/03
Westpac Banking Corp. 7.875% A1 200,000 205,828
10/15/02
4,643,785
CREDIT & OTHER FINANCE - 8.6%
Aristar, Inc. 7.75% 6/15/01 A3 200,000 204,548
Associates Corp. of North Aa3 250,000 246,110
America 5.875% 7/15/02
Countrywide Funding Corp. Baa1 250,000 260,423
8.25% 7/15/02
Finova Capital Corp. 7.125% Baa1 174,000 176,158
5/1/02
Ford Motor Credit Co. 5.125% A1 200,000 194,340
10/15/01
Greyhound Financial Corp. Baa1 100,000 103,508
7.82% 1/27/03
Southwestern Bell Capital A2 100,000 102,398
Corp. 7.36% 5/1/02
TXU Eastern Funding 6.15% Baa1 200,000 196,828
5/15/02 (b)
1,484,313
INSURANCE - 1.2%
Sun America, Inc. 6.58% Baa1 200,000 200,428
1/15/02
SAVINGS & LOANS - 2.1%
Great Western Financial Corp. A3 100,000 104,186
8.6% 2/1/02
Long Island Savings Bank FSB Baa3 250,000 249,453
7% 6/13/02
353,639
SECURITIES INDUSTRY - 1.4%
Merrill Lynch & Co., Inc. Aa3 250,000 245,642
5.71% 1/15/02
TOTAL FINANCE 6,927,807
INDUSTRIAL MACHINERY &
EQUIPMENT - 1.4%
Tyco International Group SA Baa1 250,000 248,173
yankee 6.125% 6/15/01
MEDIA & LEISURE - 1.5%
BROADCASTING - 1.5%
Continental Cablevision, Inc. Baa3 250,000 259,043
8.5% 9/15/01
NONCONVERTIBLE BONDS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
NONDURABLES - 1.4%
BEVERAGES - 1.4%
Seagram JE & Sons, Inc. 6.25% Baa3 $ 250,000 $ 246,750
12/15/01
RETAIL & WHOLESALE - 6.8%
GENERAL MERCHANDISE STORES -
6.8%
Dayton Hudson Corp.:
6.4% 2/15/03 A3 245,000 241,171
9.75% 7/1/02 A3 150,000 162,795
Federated Department Stores, Baa2 400,000 415,104
Inc. 8.125% 10/15/02
Penney (J.C.) Co., Inc. 7.25% A3 350,000 352,856
4/1/02
1,171,926
TECHNOLOGY - 1.4%
COMPUTERS & OFFICE EQUIPMENT
- - 1.4%
Comdisco, Inc. 5.95% 4/30/02 Baa1 250,000 243,803
TRANSPORTATION - 1.9%
AIR TRANSPORTATION - 1.9%
Delta Air Lines, Inc. 8.5% Baa3 311,000 321,490
3/15/02
UTILITIES - 8.6%
ELECTRIC UTILITY - 2.4%
Niagara Mohawk Power Corp. Baa2 115,000 115,472
6.875% 3/1/01
Philadelphia Electric Co. Baa1 295,000 297,425
7.125% 9/1/02
412,897
GAS - 4.8%
Columbia Gas System, Inc. A3 150,000 148,509
6.61% 11/28/02
El Paso Energy Corp. 6.625% Baa3 200,000 199,500
7/15/01 (b)
Enron Corp. 9.875% 6/15/03 Baa2 210,000 231,002
Southwest Gas Corp. 9.75% Baa2 225,000 240,579
6/15/02
819,590
TELEPHONE SERVICES - 1.4%
GTE Corp. 9.1% 6/1/03 Baa1 95,000 101,675
NONCONVERTIBLE BONDS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
MCI WorldCom, Inc. 6.125% A3 $ 100,000 $ 99,389
8/15/01
Telecomunicaciones de P R, Baa2 35,000 34,535
Inc. 6.15% 5/15/02 (b)
235,599
TOTAL UTILITIES 1,468,086
TOTAL NONCONVERTIBLE BONDS 11,990,700
(Cost $12,290,100)
U.S. GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS - 15.1%
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 1.6%
Financing Corp. stripped Aaa 300,000 270,009
principal 0% 5/2/01
U.S. TREASURY OBLIGATIONS -
13.5%
U.S. Treasury Notes 7.875% Aaa 2,230,000 2,322,669
8/15/01
TOTAL U.S. GOVERNMENT AND 2,592,678
GOVERNMENT AGENCY OBLIGATIONS
(Cost $2,611,719)
FOREIGN GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS (C) - 10.9%
Canadian Government 6.125% Aa2 400,000 398,080
7/15/02
Irish Republic:
7.64% 1/2/02 Aaa 210,000 215,846
yankee 8.625% 4/15/01 Aaa 85,000 88,188
Manitoba Province yankee 8% Aa3 400,000 415,040
4/15/02
Nova Scotia Province yankee A3 275,000 294,429
9.375% 7/15/02
Ontario Province yankee:
global 7.75% 6/4/02 Aa3 150,000 154,649
7.375% 1/27/03 Aa3 150,000 153,617
Swedish Kingdom yankee 0%, Aa2 174,000 156,348
4/1/01
TOTAL FOREIGN GOVERNMENT AND 1,876,197
GOVERNMENT AGENCY OBLIGATIONS
(Cost $1,907,072)
SUPRANATIONAL OBLIGATIONS -
2.3%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
African Development Bank Aa1 $ 375,000 $ 387,383
yankee 7.7% 7/15/02 (Cost
$390,137)
</TABLE>
CASH EQUIVALENTS - 1.8%
MATURITY AMOUNT
Investments in repurchase $ 307,131 307,000
agreements (U.S. Government
obligations), in a joint
trading account at 5.12%,
dated 7/30/99 due 8/2/99
(Cost $307,000)
TOTAL INVESTMENT IN $ 17,153,958
SECURITIES - 100%
(Cost $17,506,028)
LEGEND
(a) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(b) 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 $874,834 or 5.0% of net assets.
(c) For foreign government obligations not individually rated by S&P
or Moody's, the ratings listed have been assigned by FMR, the fund's
investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 66.3% AAA, AA, A 66.8%
Baa 30.4% BBB 31.4%
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%
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States of America 79.0%
Canada 9.3
Sweden 2.7
Multi-National 2.3
Finland 2.2
Ireland 1.8
Australia 1.2
Others (individually less 1.5
than 1%)
100.0%
Purchases and sales of securities, other than short-term securities,
aggregated $7,003,849 and $2,445,833, respectively, of which long-term
U.S. government and government agency obligations aggregated
$1,061,531 and $1,355,962, respectively.
INCOME TAX INFORMATION
At July 31, 1999, the aggregate cost of investment securities for
income tax purposes was $17,506,027. Net unrealized depreciation
aggregated $352,069, of which $42,260 related to appreciated
investment securities and $394,329 related to depreciated investment
securities.
At July 31, 1999, the fund had a capital loss carryforward of
approximately $26,000, all of which will expire on July 31, 2005.
FIDELITY TARGET TIMELINE 2001
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1999
ASSETS
Investment in securities, at $ 17,153,958
value (including repurchase
agreements of $307,000)
(cost $17,506,028) - See
accompanying schedule
Cash 338
Receivable for fund shares 7,910
sold
Interest receivable 311,457
Receivable from investment 4,008
adviser for expense
reductions
TOTAL ASSETS 17,477,671
LIABILITIES
Payable for fund shares $ 3,269
redeemed
Distributions payable 7,974
Other payables and accrued 31,908
expenses
TOTAL LIABILITIES 43,151
NET ASSETS $ 17,434,520
Net Assets consist of:
Paid in capital $ 17,829,040
Undistributed net investment 3,455
income
Accumulated undistributed net (45,905)
realized gain (loss) on
investments
Net unrealized appreciation (352,070)
(depreciation) on investments
NET ASSETS, for 1,847,757 $ 17,434,520
shares outstanding
NET ASSET VALUE, offering $9.44
price and redemption price
per share ($17,434,520
(divided by) 1,847,757
shares)
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1999
INVESTMENT INCOME $ 1,092,010
Interest
EXPENSES
Management fee $ 67,873
Transfer agent fees 27,361
Accounting fees and expenses 60,694
Non-interested trustees' 47
compensation
Custodian fees and expenses 2,058
Registration fees 17,602
Audit 29,785
Legal 1,218
Miscellaneous 38
Total expenses before 206,676
reductions
Expense reductions (151,901) 54,775
NET INVESTMENT INCOME 1,037,235
REALIZED AND UNREALIZED GAIN (19,781)
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized (356,371)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (376,152)
NET INCREASE (DECREASE) IN $ 661,083
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION
Expense reductions Custodian $ 246
credits
FMR reimbursement 151,655
$ 151,901
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JULY 31, 1999 YEAR ENDED JULY 31, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 1,037,235 $ 789,851
income
Net realized gain (loss) (19,781) 35,186
Change in net unrealized (356,371) (53,731)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 661,083 771,306
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,038,591) (789,859)
from net investment income
Share transactions Net 7,318,267 3,790,981
proceeds from sales of shares
Reinvestment of distributions 983,793 777,361
Cost of shares redeemed (3,604,403) (1,815,356)
NET INCREASE (DECREASE) IN 4,697,657 2,752,986
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,961 273
TOTAL INCREASE (DECREASE) 4,322,110 2,734,706
IN NET ASSETS
NET ASSETS
Beginning of period 13,112,410 10,377,704
End of period (including $ 17,434,520 $ 13,112,410
undistributed net investment
income of $3,455 and $4,621,
respectively)
OTHER INFORMATION
Shares
Sold 757,745 393,791
Issued in reinvestment of 102,111 80,843
distributions
Redeemed (374,885) (188,774)
Net increase (decrease) 484,971 285,860
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED JULY 31, 1999 1998 1997 1996 G
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 9.620 $ 9.640 $ 9.400 $ 10.000
period
Income from Investment .634 D .648 D .690 D .310
Operations Net investment
income
Net realized and unrealized (.178) (.019) .240 (.600)
gain (loss)
Total from investment .456 .629 .930 (.290)
operations
Less Distributions
From net investment income (.637) (.649) (.690) (.310)
Redemption fees added to paid .001 .000 .000 .000
in capital
Net asset value, end of period $ 9.440 $ 9.620 $ 9.640 $ 9.400
TOTAL RETURN B, C 4.81% 6.74% 10.26% (2.88)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 17,435 $ 13,112 $ 10,378 $ 6,180
(000 omitted)
Ratio of expenses to average .35% E .35% E .35% E .35% A, E
net assets
Ratio of expenses to average .35% .35% .34% F .34% A, F
net assets after expense
reductions
Ratio of net investment 6.60% 6.75% 7.31% 6.93% A
income to average net assets
Portfolio turnover rate 16% 47% 97% 93% A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E 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.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
G FOR THE PERIOD FEBRUARY 8, 1996 (COMMENCEMENT OF OPERATIONS) TO JULY
31, 1996.
FIDELITY TARGET TIMELINE 2003
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
QUALITY DIVERSIFICATION AS OF
JULY 31, 1999
(MOODY'S RATINGS) % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS 6
MONTHS AGO
Aaa 39.1 43.7
Aa 6.8 7.3
A 20.6 19.3
Baa 32.7 28.0
Ba and Below 0.0 1.1
</TABLE>
TABLE EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS. SECURITIES RATED AS BA OR BELOW
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, 1999
6 MONTHS AGO
Years 5.2 5.9
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME REMAINING UNTIL
PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS,
WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF JULY 31, 1999
6 MONTHS AGO
Years 4.1 4.6
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
AS OF JULY 31, 1999 *
Corporate Bonds 57.3%
U.S. Government and
Government Agency
Obligations 38.3%
Foreign Government &
Government Agency
Obligations 3.6%
Short-Term Investments 0.8%
* FOREIGN INVESTMENTS 12.6%
AS OF JANUARY 31, 1999 **
Corporate Bonds 52.8%
U.S. Government and
Government Agency
Obligations 42.8%
Foreign Government &
Government Agency
Obligations 3.8%
Short-Term Investments 0.6%
** FOREIGN INVESTMENTS 13.5%
Row: 1, Col: 1, Value: 57.3
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 38.3
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 3.6
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 0.8
Row: 1, Col: 1, Value: 52.8
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 42.8
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 3.8
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 0.6000000000000001
FIDELITY TARGET TIMELINE 2003
INVESTMENTS JULY 31, 1999
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
NONCONVERTIBLE BONDS - 57.3%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
AEROSPACE & DEFENSE - 2.1%
DEFENSE ELECTRONICS - 2.1%
Raytheon Co. 6.5% 7/15/05 Baa1 $ 500,000 $ 488,885
BASIC INDUSTRIES - 0.6%
PAPER & FOREST PRODUCTS - 0.6%
Fort James Corp. 6.625% Baa2 150,000 147,773
9/15/04
CONSTRUCTION & REAL ESTATE -
1.0%
REAL ESTATE - 0.2%
Cabot Industrial Property LP Baa2 40,000 38,908
7.125% 5/1/04
REAL ESTATE INVESTMENT TRUSTS
- - 0.8%
Equity Office Properties Baa1 200,000 192,580
Trust 6.5% 1/15/04
TOTAL CONSTRUCTION & REAL 231,488
ESTATE
DURABLES - 0.2%
AUTOS, TIRES, & ACCESSORIES -
0.2%
Delphi Automotive Systems Baa2 55,000 52,930
Corp. 6.125% 5/1/04
ENERGY - 1.1%
ENERGY SERVICES - 0.8%
Baker Hughes, Inc. 5.8% A2 200,000 193,740
2/15/03 (b)
OIL & GAS - 0.3%
Conoco, Inc. 5.9% 4/15/04 A3 75,000 72,345
TOTAL ENERGY 266,085
FINANCE - 31.9%
BANKS - 19.5%
Bank of Montreal 6.1% 9/15/05 A1 125,000 118,010
Bank One Corp. 7.25% 8/15/04 A1 395,000 400,364
Bayerische Landesbank Aaa 200,000 194,532
Gironzentrale yankee 6.375%
10/15/05
Capital One Bank 6.375% Baa2 250,000 242,890
2/15/03
First National Bank Boston NA A2 325,000 337,038
8% 9/15/04
First Security Corp. 7% Baa1 375,000 369,281
7/15/05
First Tennessee National Baa1 200,000 195,294
Corp. 6.75% 11/15/05
Korea Development Bank:
6.625% 11/21/03 Baa3 10,000 9,405
7.375% 9/17/04 Baa3 150,000 143,250
NONCONVERTIBLE BONDS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
FINANCE - CONTINUED
BANKS - CONTINUED
Korea Development Bank: -
continued
yankee 6.5% 11/15/02 Baa3 $ 100,000 $ 95,250
Meridian Bank Pennsylvania A1 250,000 248,475
6.625% 3/15/03
Merita Bank Ltd. yankee 6.5% A2 150,000 143,024
1/15/06
Signet Bank 7.8% 9/15/06 A1 250,000 257,683
Society National Bank 7.25% A1 500,000 502,575
6/1/05
Sovran Financial Corp. 9.25% Aa3 125,000 138,973
6/15/06
St. George Bank Ltd. yankee Baa1 500,000 489,265
7.15% 10/15/05 (b)
Swiss Bank Corp. 6.75% 7/15/05 Aa2 500,000 489,535
Union Planters Corp. 6.75% Baa2 150,000 147,852
11/1/05
4,522,696
CREDIT & OTHER FINANCE - 8.2%
Abbey National PLC 6.69% Aa3 300,000 292,464
10/17/05
Associates Corp. of North Aa3 400,000 387,152
America 5.75% 11/1/03
Finova Capital Corp. 6.12% Baa1 300,000 295,941
5/28/02
Fleet Financial Group, Inc. A3 375,000 373,084
7.125% 4/15/06
PNC Funding Corp. 7.75% 6/1/04 A3 220,000 227,801
Southwestern Bell Capital A2 100,000 102,140
Corp. 7.13% 6/1/05
Sprint Capital Corp. 5.7% Baa1 250,000 238,888
11/15/03
1,917,470
INSURANCE - 0.9%
Western National Corp. 7.125% A2 200,000 201,178
2/15/04
SAVINGS & LOANS - 3.1%
Ahmanson (H.F.) & Co. 7.875% Baa1 700,000 715,890
9/1/04
SECURITIES INDUSTRY - 0.2%
Amvescap PLC yankee 6.6% A3 50,000 48,098
5/15/05
TOTAL FINANCE 7,405,332
MEDIA & LEISURE - 5.4%
BROADCASTING - 1.3%
Cox Communications, Inc. 6.5% Baa2 200,000 196,620
11/15/02
Time Warner, Inc. 7.75% Baa3 111,000 113,415
6/15/05
310,035
NONCONVERTIBLE BONDS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MEDIA & LEISURE - CONTINUED
ENTERTAINMENT - 0.9%
Viacom, Inc. 6.75% 1/15/03 Baa3 $ 200,000 $ 196,348
PUBLISHING - 3.2%
News America Holdings, Inc. Baa3 710,000 740,516
8.5% 2/15/05
TOTAL MEDIA & LEISURE 1,246,899
NONDURABLES - 3.6%
BEVERAGES - 1.0%
Seagram JE & Sons, Inc. 6.4% Baa3 250,000 242,750
12/15/03
TOBACCO - 2.6%
Philip Morris Companies, Inc. A2 500,000 494,985
7% 7/15/05
RJR Nabisco, Inc. 7.375% Baa2 100,000 98,233
5/15/03 (b)
593,218
TOTAL NONDURABLES 835,968
RETAIL & WHOLESALE - 1.7%
GENERAL MERCHANDISE STORES -
1.7%
Dayton Hudson Corp. 7.5% A3 375,000 382,628
7/15/06
TRANSPORTATION - 4.7%
AIR TRANSPORTATION - 0.8%
Delta Air Lines, Inc. 8.5% Baa3 174,000 179,869
3/15/02
RAILROADS - 3.9%
Canadian National Railway Co. Baa2 300,000 297,888
7% 3/15/04
Norfolk Southern Corp. 7.875% Baa1 400,000 414,804
2/15/04
Union Pacific 6.34% 11/25/03 Baa3 200,000 194,180
906,872
TOTAL TRANSPORTATION 1,086,741
UTILITIES - 5.0%
ELECTRIC UTILITY - 2.0%
Niagara Mohawk Power Corp. Baa2 200,000 203,154
7.375% 8/1/03
Philadelphia Electric Co. Baa1 270,000 267,932
6.625% 3/1/03
471,086
NONCONVERTIBLE BONDS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
UTILITIES - CONTINUED
GAS - 3.0%
CMS Panhandle Holding Co. Baa3 $ 100,000 $ 96,250
6.125% 3/15/04 (b)
Columbia Gas System, Inc. A3 150,000 146,705
6.8% 11/28/05
Enserch Corp. 6.25% 1/1/03 Baa2 190,000 186,092
InterNorth, Inc. 9.625% Baa2 245,000 270,789
3/15/06
699,836
TOTAL UTILITIES 1,170,922
TOTAL NONCONVERTIBLE BONDS 13,315,651
(Cost $13,672,367)
U.S. GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS - 38.3%
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 5.7%
Federal Farm Credit Bank:
7.26% 5/2/05 Aaa 500,000 515,780
7.35% 3/24/05 Aaa 150,000 155,274
Federal Home Loan Bank:
4.96% 10/7/05 Aaa 410,000 376,109
9.5% 2/25/04 Aaa 150,000 167,484
Freddie Mac 8% 1/26/05 Aaa 100,000 106,391
TOTAL U.S. GOVERNMENT AGENCY 1,321,038
OBLIGATIONS
U.S. TREASURY OBLIGATIONS -
32.6%
U.S. Treasury Bonds:
10.75% 5/15/03 Aaa 200,000 232,124
10.75% 8/15/05 Aaa 2,250,000 2,778,386
11.625% 11/15/04 Aaa 1,945,000 2,431,561
11.875% 11/15/03 Aaa 1,750,000 2,133,093
TOTAL U.S. TREASURY 7,575,164
OBLIGATIONS
TOTAL U.S. GOVERNMENT AND 8,896,202
GOVERNMENT AGENCY OBLIGATIONS
(Cost $9,424,234)
FOREIGN GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS (C) - 3.6%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
Korean Republic yankee 8.75% Baa3 $ 20,000 $ 20,358
4/15/03
Ontario Province 7%, 8/4/05 Aa3 275,000 277,885
Saskatchewan Province yankee A2 500,000 527,600
8% 7/15/04
TOTAL FOREIGN GOVERNMENT AND 825,843
GOVERNMENT AGENCY OBLIGATIONS
(Cost $853,786)
</TABLE>
CASH EQUIVALENTS - 0.8%
MATURITY AMOUNT
Investments in repurchase $ 180,077 180,000
agreements (U.S. Government
obligations), in a joint
trading account at 5.12%,
dated 7/30/99 due 8/2/99
(Cost $180,000)
TOTAL INVESTMENT IN $ 23,217,696
SECURITIES - 100%
(Cost $24,130,387)
LEGEND
(a) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(b) 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 $877,488 or 3.7% of net assets.
(c) For foreign government obligations not individually rated by S&P
or Moody's, the ratings listed have been assigned by FMR, the fund's
investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 66.6% AAA, AA, A 61.5%
Baa 32.7% BBB 32.8%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States of America 87.4%
Canada 5.3
Switzerland 2.1
Australia 2.1
United Kingdom 1.4
Korea (South) 1.1
Others (individually less 0.6
than 1%)
100.0%
Purchases and sales of securities, other than short-term securities,
aggregated $9,086,906 and $3,999,508, respectively, of which long-term
U.S. government and government agency obligations aggregated
$3,554,266 and $1,863,079, respectively.
INCOME TAX INFORMATION
At July 31, 1999, the aggregate cost of investment securities for
income tax purposes was $24,143,268. Net unrealized depreciation
aggregated $925,572, of which $39,492 related to appreciated
investment securities and $965,064 related to depreciated investment
securities.
The fund hereby designates approximately $61,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
FIDELITY TARGET TIMELINE 2003
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1999
ASSETS
Investment in securities, at $ 23,217,696
value (including repurchase
agreements of $180,000)
(cost $24,130,387) - See
accompanying schedule
Cash 819
Receivable for fund shares 43,312
sold
Interest receivable 501,769
Receivable from investment 3,662
adviser for expense
reductions
TOTAL ASSETS 23,767,258
LIABILITIES
Payable for fund shares $ 8,820
redeemed
Distributions payable 8,013
Other payables and accrued 33,660
expenses
TOTAL LIABILITIES 50,493
NET ASSETS $ 23,716,765
Net Assets consist of:
Paid in capital $ 24,656,645
Undistributed net investment 13,804
income
Accumulated undistributed net (40,993)
realized gain (loss) on
investments
Net unrealized appreciation (912,691)
(depreciation) on investments
NET ASSETS, for 2,553,886 $ 23,716,765
shares outstanding
NET ASSET VALUE, offering $9.29
price and redemption price
per share ($23,716,765
(divided by) 2,553,886
shares)
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1999
INVESTMENT INCOME $ 1,705,559
Interest
EXPENSES
Management fee $ 99,774
Transfer agent fees 40,862
Accounting fees and expenses 60,646
Non-interested trustees' 80
compensation
Custodian fees and expenses 2,609
Registration fees 20,483
Audit 32,011
Legal 1,821
Miscellaneous 56
Total expenses before 258,342
reductions
Expense reductions (177,129) 81,213
NET INVESTMENT INCOME 1,624,346
REALIZED AND UNREALIZED GAIN (14,251)
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized (1,113,533)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (1,127,784)
NET INCREASE (DECREASE) IN $ 496,562
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION
Expense reductions
FMR reimbursement $ 177,129
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JULY 31, 1999 YEAR ENDED JULY 31, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 1,624,346 $ 1,138,446
income
Net realized gain (loss) (14,251) 170,856
Change in net unrealized (1,113,533) (69,477)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 496,562 1,239,825
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (1,639,211) (1,138,249)
From net investment income
From net realized gain (90,269) -
In excess of net realized (15,284) -
gain
TOTAL DISTRIBUTIONS (1,744,764) (1,138,249)
Share transactions Net 12,280,874 11,946,066
proceeds from sales of shares
Reinvestment of distributions 1,671,487 1,120,445
Cost of shares redeemed (8,768,624) (6,605,867)
NET INCREASE (DECREASE) IN 5,183,737 6,460,644
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 4,022 3,551
TOTAL INCREASE (DECREASE) 3,939,557 6,565,771
IN NET ASSETS
NET ASSETS
Beginning of period 19,777,208 13,211,437
End of period (including $ 23,716,765 $ 19,777,208
undistributed net investment
income of $13,804 and
$28,669, respectively)
OTHER INFORMATION
Shares
Sold 1,260,185 1,226,446
Issued in reinvestment of 172,491 115,195
distributions
Redeemed (907,278) (678,796)
Net increase (decrease) 525,398 662,845
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED JULY 31, 1999 1998 1997 1996 G
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 9.750 $ 9.670 $ 9.240 $ 10.000
period
Income from Investment .677 D .670 D .634 D .307
Operations Net investment
income
Net realized and unrealized (.404) .078 .428 (.762)
gain (loss)
Total from investment .273 .748 1.062 (.455)
operations
Less Distributions
From net investment income (.685) (.670) (.634) (.306)
From net realized gain (.043) - - -
In excess of net realized gain (.007) - - -
Total distributions (.735) (.670) (.634) (.306)
Redemption fees added to paid .002 .002 .002 .001
in capital
Net asset value, end of period $ 9.290 $ 9.750 $ 9.670 $ 9.240
TOTAL RETURN B, C 2.76% 8.00% 11.94% (4.53)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 23,717 $ 19,777 $ 13,211 $ 6,977
(000 omitted)
Ratio of expenses to average .35% E .35% E .35% E .35% A, E
net assets
Ratio of expenses to average .35% .35% .34% F .34% A, F
net assets after expense
reductions
Ratio of net investment 7.00% 6.92% 6.76% 6.93% A
income to average net assets
Portfolio turnover rate 18% 67% 83% 180% A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E 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.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
G FOR THE PERIOD FEBRUARY 8, 1996 (COMMENCEMENT OF OPERATIONS) TO JULY
31, 1996.
NOTES TO FINANCIAL STATEMENTS
For the period ended July 31, 1999
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, 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 require management to make certain
estimates and assumptions at the date of the financial statements. The
target dates for Fidelity Target Timeline 1999, Fidelity Target
Timeline 2001 and Fidelity Target Timeline 2003 are September 30,
1999, 2001 and 2003, respectively. On those dates, the respective
funds will mature. Fidelity Target Timeline 1999 has been closed to
new accounts as of the close of business of the New York Stock
Exchange on September 25, 1998. Current shareholders of Fidelity
Target Timeline 1999 are able to purchase shares in accounts existing
on that date. Fidelity Target Timeline 1999 will be liquidated shortly
after its targeted maturity date of September 30, 1999. The funds'
Board of Trustees anticipates closing Fidelity Target Timeline 2001
and Fidelity Target Timeline 2003 to new accounts approximately one
year prior to the target date of each fund and expects to liquidate
each fund within one month after the fund's target date. 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.
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.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among 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.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
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 and excise tax regulations. The fund also
utilized earnings and profits distributed to shareholders on
redemption of shares as a part of the dividends paid deduction for
income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income 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.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the funds less
than 90 days are subject to a short-term trading fee equal to 0.50% 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 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. Certain 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 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, no funds had 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. The annual individual fund fee rate is .30%. 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. For the period, the management
fees were equivalent to an annual rate of .43% of average net assets
for each fund.
SUB-ADVISER FEE. FMR, on behalf of each fund, has entered into a
sub-advisory agreement (effective January 1, 1999) with Fidelity
Investments Money Management, Inc. (FIMM), a wholly owned subsidiary
of FMR. For its services, FIMM receives a fee from FMR of 50% of the
management fee payable to FMR. The fee is paid prior to any voluntary
expense reimbursements which may be in effect.
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 annual rate of .18% of the average net assets for
each fund.
ACCOUNTING FEES. FSC, an affiliate of FMR, 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, certain securities lending fees, brokerage
commissions and extraordinary expenses, if any) above an annual rate
of .35% of average net assets.
In addition, certain funds have entered into an arrangement with their
custodian whereby credits realized on uninvested cash balances were
used to offset a portion of each applicable funds' expenses.
For the period, the reductions under these arrangements are shown
under the caption "Other Information" on each applicable fund's
Statement of Operations.
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 31.24%
Fidelity Target Timeline 2001 24.17%
Fidelity Target Timeline 2003 17.58%
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholders of Fidelity Target Timeline 1999,
Fidelity Target Timeline 2001 and Fidelity Target Timeline 2003:
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments of Fidelity Target Timeline
1999, Fidelity Target Timeline 2001 and Fidelity Target Timeline 2003
as of July 31, 1999 and the related statements of operations, changes
in net assets and financial highlights for the year then ended. These
financial statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion
on these financial statements and financial highlights based on our
audits. The statements of changes in net assets for the year ended
July 31, 1998 and the financial highlights for each of the years in
the three-year period ended July 31, 1998 were audited by other
auditors whose report, dated September 10, 1998 expressed an
unqualified opinion on those statements and financial highlights.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of the securities owned at July 31, 1999, by
correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and 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 at July 31, 1999, the results of their
operations, the changes in their net assets, and their financial
highlights for the year then ended in conformity with generally
accepted accounting principles.
/s/DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 13, 1999
DISTRIBUTIONS
A percentage of the dividends distributed during the fiscal year for
the following funds was derived from interest on U.S. Government
securities which is generally exempt from state income tax:
Target Timeline 1999 10.64%
Target Timeline 2001 17.02%
Target Timeline 2003 43.33%
The funds will notify shareholders in January 2000 of amounts for use
in preparing 1999 income tax returns.
OF SPECIAL NOTE
INTRODUCING FIDELITY'S NEW, REORGANIZED PROSPECTUS
Recently, the SEC issued new disclosure requirements for all mutual
fund prospectuses. While Fidelity could have complied by simply
following the new requirements, we saw a different opportunity. We saw
the chance to create a brand new prospectus: one that is better
organized, easier to use and more informative than ever.
The new format of the Fidelity mutual fund prospectus puts the
information you need to make informed investment decisions right at
your fingertips. In the opening pages, you will find the SEC-mandated
summary that highlights the fund's investment objectives, strategies
and risks. There's also an easy-to-read performance chart and fee
table right up front.
Inside, you will find additional features we've introduced to make the
fund prospectus a more useful tool. In our new Shareholder Information
section, for example, we have provided practical, beneficial
information - from how to buy or sell shares, key contact information,
investment services, ways to set up your account and more - all in one
convenient location.
We invite you to spend a moment and review our new prospectus. It is
designed to help make your investment decision easier, no matter which
of the Fidelity funds you invest in.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity Automated Service Telephone provides a single toll-free
number to access account balances, positions, quotes and trading. It's
easy to navigate the service, and on your first call, the system will
help you create a personal identification number (PIN) for security.
(PHONE_GRAPHIC)
FIDELITY AUTOMATED
SERVICE TELEPHONE (FAST SM)
1-800-544-5555
PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(COMPUTER_GRAPHIC)
FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE
WILL ALSO VARY. THIS MEANS THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU
SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY MARKET FUNDS WILL
BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY
MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc. London, England
Fidelity Management & Research
(Far East) Inc. Tokyo, Japan
Fidelity Investments Money Management, Inc. (FIMM)
Merrimack, NH
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
Stanley N. Griffith,
Assistant Vice President
Ford E. O'Neil, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
Abigail P. Johnson
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
Bank of New York
New York, NY
FIDELITY'S TAXABLE BOND FUNDS
Capital & Income Fund
Ginnie Mae Fund
Government Income Fund
High Income Fund
Intermediate Bond Fund
Intermediate Government
Income Fund
International Bond Fund
Investment Grade Bond Fund
New Markets Income Fund
Short-Term Bond Fund
Spartan(registered trademark) Government Income Fund
Spartan Investment Grade Bond Fund
Strategic Income Fund
Target Timeline SM 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)
Fidelity Automated Service
Telephone (FAST SM) (AUTOMATED GRAPHIC) 1-800-544-5555
(AUTOMATED GRAPHIC) AUTOMATED LINE FOR QUICKEST SERVICE
TTI-ANN-0999 83739
1.536376.102
(FIDELITY LOGO GRAPHIC)(REGISTERED TRADEMARK)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
