FIDELITY
TARGET TIMELINE SM
FUNDS - 1999, 2001, 2003
SEMIANNUAL REPORT
JANUARY 31, 1999
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
24 Financial Statements
TARGET TIMELINE 2001 28 Investment Changes
29 Investments
34 Financial Statements
TARGET TIMELINE 2003 38 Investment Changes
39 Investments
44 Financial Statements
NOTES 48 Notes to the financial
statements.
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.
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.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)DEAR SHAREHOLDER:
After the first month of 1999, U.S. stock markets seem to have
maintained their momentum from 1998, as the S&P 500, the Dow and
NASDAQ all reached record highs in January. The technology sector, and
Internet stocks in particular, were the main contributors. In the bond
markets, domestic securities continued to trade at historically low
yields, while positive economic news helped credit-sensitive sectors
outperform Treasury bonds.
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 JANUARY 31, PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
1999
TARGET TIMELINE 1999 3.37% 6.00% 16.79%
LB Aggregate Bond 5.10% 8.08% 23.73%
U.S. Treasury Strips (8/15/99 3.33% 5.94% 16.60%
and 11/15/99)
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, 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, and exclude the
effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, PAST 1 YEAR LIFE OF FUND
1999
TARGET TIMELINE 1999 6.00% 5.35%
LB Aggregate Bond 8.08% 7.40%
U.S. Treasury Strips (8/15/99 5.94% 5.29%
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 LB Aggregate Bond Avg US TreasStrip 1999
00379 LB001 F0092
1996/02/08 10000.00 10000.00 10000.00
1996/02/29 9843.43 9838.79 9854.02
1996/03/31 9769.72 9769.92 9772.31
1996/04/30 9723.18 9715.21 9719.40
1996/05/31 9708.18 9695.78 9698.92
1996/06/30 9814.54 9825.70 9801.69
1996/07/31 9841.86 9852.23 9838.95
1996/08/31 9849.03 9835.48 9846.73
1996/09/30 9980.40 10006.62 9972.89
1996/10/31 10147.46 10228.77 10138.67
1996/11/30 10271.38 10403.68 10254.06
1996/12/31 10218.33 10306.92 10216.80
1997/01/31 10261.47 10338.87 10260.67
1997/02/28 10277.69 10364.72 10275.66
1997/03/31 10245.55 10249.67 10237.18
1997/04/30 10340.73 10403.42 10334.51
1997/05/31 10416.89 10502.25 10413.21
1997/06/30 10502.40 10627.23 10491.90
1997/07/31 10645.36 10914.16 10631.33
1997/08/31 10644.63 10821.39 10629.48
1997/09/30 10731.20 10981.55 10717.82
1997/10/31 10820.68 11140.78 10806.15
1997/11/30 10840.11 11192.03 10824.79
1997/12/31 10906.08 11305.07 10898.70
1998/01/31 11018.13 11449.77 11006.86
1998/02/28 11032.85 11440.61 11014.65
1998/03/31 11077.20 11479.51 11059.71
1998/04/30 11131.38 11539.21 11117.36
1998/05/31 11187.82 11648.83 11175.04
1998/06/30 11241.97 11747.84 11230.90
1998/07/31 11298.77 11772.51 11284.96
1998/08/31 11394.20 11964.40 11394.97
1998/09/30 11497.42 12244.37 11491.11
1998/10/31 11542.74 12179.48 11547.59
1998/11/30 11574.08 12248.90 11569.18
1998/12/31 11620.41 12285.65 11616.65
1999/01/29 11679.24 12372.87 11660.50
IMATRL PRASUN SHR__CHT 19990131 19990211 145020 R00000000000039
</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 January 31, 1999, the value
of the investment would be $11,679 - a 16.79% 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 $12,373 - a
23.73% increase. If $10,000 was put in U.S. Treasury Strips (8/15/99
and 11/15/99), it would be valued at $11,660 - a 16.60% 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>
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31, FEBRUARY 8, 1996
(COMMENCEMENT OF OPERATIONS)
TO JULY 31,
1999 1998 1997 1996
Dividend returns 3.69% 7.39% 7.64% 3.12%
Capital returns -0.32% -1.25% 0.52% -4.70%
Total returns 3.37% 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 JANUARY 31, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 5.78(cents) 34.47(cents) 68.41(cents)
Annualized dividend rate 7.22% 7.22% 7.22%
30-day annualized yield 4.94% - -
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 $9.43
over the past one month, $9.47 over the past six months and $9.48 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 4.06%.
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 JANUARY 31, PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
1999
TARGET TIMELINE 2001 4.54% 6.93% 19.49%
LB Aggregate Bond 5.10% 8.08% 23.73%
U.S. Treasury Strips (8/15/01 5.05% 7.55% 19.27%
and 11/15/01)
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, 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, and exclude the
effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, PAST 1 YEAR LIFE OF FUND
1999
TARGET TIMELINE 2001 6.93% 6.15%
LB Aggregate Bond 8.08% 7.40%
U.S. Treasury Strips (8/15/01 7.55% 6.09%
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 11747.84
1998/07/31 11429.77 11353.77 11772.51
1998/08/31 11566.81 11610.55 11964.40
1998/09/30 11833.07 11845.80 12244.37
1998/10/31 11814.33 11903.04 12179.48
1998/11/30 11817.68 11848.44 12248.90
1998/12/31 11883.11 11882.81 12285.65
1999/01/29 11948.70 11926.63 12372.87
IMATRL PRASUN SHR__CHT 19990131 19990212 143058 R00000000000039
</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 January 31, 1999, the value
of the investment would be $11,949 - a 19.49% 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 $12,373 - a
23.73% increase. If $10,000 was put in U.S. Treasury Strips (8/15/01
and 11/15/01), it would be valued at $11,927 - a 19.27% 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>
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31, FEBRUARY 8, 1996
(COMMENCEMENT OF OPERATIONS)
TO JULY 31,
1999 1998 1997 1996
Dividend returns 3.40% 6.95% 7.71% 3.12%
Capital returns 1.14% -0.21% 2.55% -6.00%
Total returns 4.54% 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 JANUARY 31, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 5.37(cents) 32.29(cents) 64.08(cents)
Annualized dividend rate 6.51% 6.58% 6.61%
30-day annualized yield 5.21% - -
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 $9.71
over the past one month, $9.73 over the past six months and $9.69 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 4.41%.
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 JANUARY 31, PAST 6 MONTHS PAST 1 YEAR LIFE OF FUND
1999
TARGET TIMELINE 2003 5.60% 8.33% 21.89%
LB Aggregate Bond 5.10% 8.08% 23.73%
U.S. Treasury Strips (8/15/03 7.26% 9.77% 23.56%
and 11/15/03)
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, 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, and exclude the
effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, PAST 1 YEAR LIFE OF FUND
1999
TARGET TIMELINE 2003 8.33% 6.86%
LB Aggregate Bond 8.08% 7.40%
U.S. Treasury Strips (8/15/03 9.77% 7.36%
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 LB Aggregate Bond Avg US TreasStrip 2003
00383 LB001 F0094
1996/02/08 10000.00 10000.00 10000.00
1996/02/29 9693.93 9838.79 9708.73
1996/03/31 9591.28 9769.92 9547.53
1996/04/30 9453.76 9715.21 9389.28
1996/05/31 9397.89 9695.78 9332.02
1996/06/30 9543.44 9825.70 9500.15
1996/07/31 9546.95 9852.23 9506.25
1996/08/31 9499.53 9835.48 9458.85
1996/09/30 9710.09 10006.62 9672.82
1996/10/31 9996.20 10228.77 9990.76
1996/11/30 10250.02 10403.68 10224.62
1996/12/31 10063.50 10306.92 10045.81
1997/01/31 10067.43 10338.87 10049.62
1997/02/28 10076.73 10364.72 10059.55
1997/03/31 9908.59 10249.67 9860.12
1997/04/30 10083.36 10403.42 10032.03
1997/05/31 10173.92 10502.25 10155.86
1997/06/30 10318.60 10627.23 10276.60
1997/07/31 10686.53 10914.16 10641.95
1997/08/31 10537.32 10821.39 10487.54
1997/09/30 10729.76 10981.55 10674.78
1997/10/31 10925.09 11140.78 10878.10
1997/11/30 10951.69 11192.03 10894.91
1997/12/31 11083.92 11305.07 11030.18
1998/01/31 11251.45 11449.77 11256.41
1998/02/28 11231.70 11440.61 11186.85
1998/03/31 11264.21 11479.51 11213.62
1998/04/30 11317.47 11539.21 11270.93
1998/05/31 11419.40 11648.83 11376.38
1998/06/30 11519.78 11747.84 11486.42
1998/07/31 11541.62 11772.51 11520.01
1998/08/31 11705.74 11964.40 11934.30
1998/09/30 12096.03 12244.37 12302.67
1998/10/31 12009.27 12179.48 12298.77
1998/11/30 12028.63 12248.90 12227.72
1998/12/31 12105.52 12285.65 12275.11
1999/01/29 12188.53 12372.87 12356.19
IMATRL PRASUN SHR__CHT 19990131 19990211 150825 R00000000000039
</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 January 31, 1999, the value
of the investment would be $12,189 - a 21.89% 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 $12,373 - a
23.73% increase. If $10,000 was put in U.S. Treasury Strips (8/15/03
and 11/15/03), it would be valued at $12,356 - a 23.56% 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>
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31, FEBRUARY 8, 1996
(COMMENCEMENT OF OPERATIONS)
TO JULY 31,
1999 1998 1997 1996
Dividend returns 3.64% 7.17% 7.29% 3.07%
Capital returns 1.96% 0.83% 4.65% -7.60%
Total returns 5.60% 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 JANUARY 31, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 5.78(cents) 34.95(cents) 68.86(cents)
Annualized dividend rate 6.91% 7.02% 7.01%
30-day annualized yield 5.19% - -
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 $9.85
over the past one month, $9.88 over the past six months and $9.82 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 4.59%.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Like the U.S. equity markets, taxable
fixed-income spread sectors
experienced their share of volatility
during the six-month period ending
January 31, 1999. For the period,
the Lehman Brothers Aggregate Bond
Index - a broad measure of the
U.S. taxable investment-grade bond
market - returned 5.10%. Overall,
U.S. Treasuries posted the strongest
performance, as investors shunned
credit risk in a flight-to-quality from
economic and financial instability in
Asia and Russia. This caused a
dramatic widening in yield spreads
and, coupled with significant
hedge-fund liquidations in October,
contributed to a major reduction in
liquidity among spread sectors,
placing further pressure on yield
spreads. During the six-month
period, the Lehman Brothers
Treasury Index returned 6.04%. In the
last three months of the period,
however, other fixed-income spread
sectors - agencies, corporate bonds,
mortgage and asset-backed
securities - outperformed
comparable duration Treasuries, as
investors capitalized on historically
attractive yield spread levels. This
narrowing of yield spreads was
spurred by the Federal Reserve Board's
three cuts in key interest rates, which
helped boost market confidence and
restore some measure of liquidity to
the fixed-income markets. The
Lehman Brothers Corporate Bond Index
returned 5.38% for the six-month
period, while the Lehman Brothers
Mortgage Backed Securities Index
return was 3.67%.
(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 six-month period that ended January 31, 1999, Target
Timeline 1999, 2001 and 2003 had total returns 3.37%, 4.54% and 5.60%,
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 3.33%, 5.05% and 7.26%, respectively. The
Lehman Brothers Aggregate Bond Index had a six-month return of 5.10%.
For the 12-month period that ended January 31, 1999, Target Timeline
1999, 2001 and 2003 returned 6.00%, 6.93% and 8.33%, respectively. The
U.S. Treasury Strips had respective returns of 5.94%, 7.55% and 9.77%
during the 12-month period, while the Lehman Brothers Aggregate Bond
Index returned 8.08%.
Q. CAN YOU START BY REVIEWING THE FUNDS' GOALS AND HOW THEY ARE
MANAGED?
A. Sure. Each fund is structured so that its interest-rate
sensitivity, and therefore return patterns, will closely resemble that
of a zero coupon bond. A "zero," as it is known, is a security that
doesn't make periodic interest payments as most bonds do. Rather, a
zero is sold at a discount to what its value will be at maturity. The
average rate of return for a zero will approximate its yield at the
time of purchase when it is held to maturity. Likewise, Target
Timeline funds are managed so that their average rate of return is
approximately the yield of the Target Timeline portfolios at the time
of purchase. My goal is to generate a predictable return - generated
over each fund's lifetime, not on a year-by-year basis - for investors
who hold their fund shares until maturity and reinvest all
distributions.
Q. HOW DO YOU GAUGE THE FUNDS' PERFORMANCE RELATIVE TO THE LEHMAN
BROTHERS AGGREGATE BOND INDEX?
A. The investment objective of the funds is to control interest-rate
sensitivity over each fund's maturity date. Each fund's duration - or
interest-rate sensitivity - is managed to decline over time as the
funds approach their maturity dates. The Lehman Brothers Aggregate
Bond Index, on the other hand, is an indication of the performance of
the overall investment-grade bond market, which by design is
rebalanced monthly to include securities with more than one year to
maturity. That's why, over time, the funds' duration characteristics
and return patterns may not resemble the Lehman Brothers Aggregate
Bond Index.
Q. HOW DID CORPORATE BONDS - WHICH MADE UP THE BULK OF ALL THREE FUNDS
- - FARE OVER THE PAST SIX MONTHS?
A. It was a tough period for corporate bonds, although their recent
performance has improved. Early in the period, investors from around
the world became increasingly worried that economic and fiscal
challenges in Asia, Latin America and Russia would curtail U.S.
corporate earnings. What ensued from those growing concerns was a
global "flight to quality" in which the only type of bond that did
particularly well was U.S. Treasuries, the traditional haven from
global uncertainty. Corporate bonds also posted gains, although they
weren't able to keep pace with Treasuries. Corporate bonds performed
better than Treasuries as interest rates rose during the past three
and one-half months or so on news that the U.S. economy was growing at
a much quicker-than-expected pace and corporate earnings were solid as
a result. Even after factoring in their recent comeback, however,
corporate bonds generally weren't able to recoup all the
underperformance - relative to Treasuries - they incurred in the
summer and early fall. Longer-duration corporate bonds performed the
worst, which explains why the Target Timeline 2003 fund lagged its
relevant U.S. Treasury Strip by a much bigger margin than the Target
Timeline 2001 fund.
Q. WHAT'S YOUR OUTLOOK?
A. The U.S. has been an economic oasis, posting strong growth even
while Asia and Latin America suffer recessions and Europe shows signs
of a slowdown. Given the ongoing economic strength here at home, I'm
satisfied for now with the fund's emphasis on corporate bonds, which I
feel represent a good value relative to other segments of the
fixed-income markets.
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.
(checkmark)FUND FACTS
GOAL: definable return over
the life of the funds by
investing mainly in
investment-grade quality debt
securities whose average
duration is approximately
equal to 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 January 31,
1999, more than $14 million,
1999 fund; more than $15
million, 2001 fund; more
than $24 million, 2003 fund
MANAGER: Ford O'Neil, since
July 1998; manager, various
Fidelity and Spartan
government and mortgage
funds; joined Fidelity in 1990
FORD O'NEIL ON HIS
INVESTMENT STRATEGY:
"In managing Target Timeline funds,
I use an investment technique
known as `horizon immunization.'
The strategy offsets two
countervailing risks -
reinvestment risk and price risk.
Here's how it works: The funds'
predicted range of returns is based
on their yield-to-maturity - a
calculation that assumes that all
income received for the funds'
bond holdings will be reinvested at
the yield-to-maturity rate. In theory,
at least, that strategy works out
well. In practice, however, falling
interest rates usually mean that
the income stream from the funds'
holdings must be reinvested at low
prevailing rates. On the other hand,
lower interest rates cause the value
of the underlying securities to
increase. The goal of horizon
immunization is to identify a
combination of securities so that
these reinvestment and price risks
offset one another over the life of
the investment."
FIDELITY TARGET TIMELINE 1999
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
QUALITY DIVERSIFICATION AS OF
JANUARY 31, 1999
(MOODY'S RATINGS) % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS 6
MONTHS AGO
Aaa 18.1 16.0
Aa 8.8 6.0
A 49.8 55.2
Baa 18.2 21.7
</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 ATTHE TIME OF
ACQUISITION BY FIDELITY.
AVERAGE YEARS TO MATURITY AS
OF JANUARY 31, 1999
6 MONTHS AGO
Years 0.8 1.3
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, 1999
6 MONTHS AGO
Years 0.7 1.2
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 JANUARY 31, 1999 *
Row: 1, Col: 1, Value: 71.3
Row: 1, Col: 2, Value: 12.7
Row: 1, Col: 3, Value: 6.1
Row: 1, Col: 4, Value: 4.8
Row: 1, Col: 5, Value: 5.1
Corporate bonds 71.3%
U.S. government
and agency
obligations 12.7%
Foreign government
obligations 6.1%
Other 4.8%
Short-term
investments 5.1%
* FOREIGN INVESTMENTS 18.9%
AS OF JULY 31, 1998 **
Row: 1, Col: 1, Value: 73.5
Row: 1, Col: 2, Value: 13.7
Row: 1, Col: 3, Value: 4.8
Row: 1, Col: 4, Value: 6.4
Row: 1, Col: 5, Value: 1.6
Corporate bonds 74.0%
U.S. government
and agency
obligations 13.7%
Foreign government
obligations 4.8%
Other 6.4%
Short-term
investments 1.1%
** FOREIGN INVESTMENTS 17.1%
FIDELITY TARGET TIMELINE 1999
INVESTMENTS JANUARY 31, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
NONCONVERTIBLE BONDS - 71.3%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
DURABLES - 0.7%
CONSUMER ELECTRONICS - 0.7%
Black & Decker Corp. 6.625% Baa2 $ 100,000 $ 101,650
11/15/00
ENERGY - 4.4%
OIL & GAS - 4.4%
Burlington Resources, Inc. A3 246,000 247,151
7.15% 5/1/99
Occidental Petroleum Corp. Baa3 101,000 101,005
6.25% 11/8/00
Texas Eastern Transmission A2 220,000 238,229
Corp. 10.375% 11/15/00
586,385
FINANCE - 51.0%
BANKS - 34.7%
Banco LatinAmericano de Baa2 350,000 353,731
Exporaciones SA 7% 9/24/99
(b)
Bank of Nova Scotia 9% 10/1/99 A1 500,000 512,095
Bank South Corp. 10.2% 6/1/99 Aa3 200,000 203,196
BanPonce Corp. 6.378% 4/8/99 A3 150,000 150,245
Chase Manhattan Corp. 10% A1 253,000 257,384
6/15/99
Citicorp 9.75% 8/1/99 A1 225,000 229,921
First Hawaiian, Inc. 6.25% A3 165,000 165,317
8/15/00
First Interstate Bancorp A1 362,000 364,067
8.625% 4/1/99
First Security Corp. 7.875% A3 450,000 458,438
10/15/99
Florida National Banks, Inc. A2 376,000 380,963
9.875% 5/15/99
Kansallis-Osake-Pankki yankee A2 250,000 254,008
6.375% 8/15/00
KeyCorp. 7.43% 3/28/00 A1 150,000 153,452
Midlantic Corp. 9.25% 9/1/99 A2 318,000 325,244
Republic of New York Corp. A2 125,000 134,278
9.75% 12/1/00
Shawmut National Corp. 8.625% A3 497,000 511,110
12/15/99
St. George Bank Ltd. yankee A3 200,000 200,530
6.875% 4/1/99 (b)
4,653,979
CREDIT & OTHER FINANCE - 11.8%
Aristar, Inc. 7.5% 7/1/99 Baa1 549,000 554,045
Beneficial Corp. 10.1% A2 75,000 80,874
11/27/00
Chrysler Financial Co. LLC A2 383,000 396,673
9.5% 12/15/99
Greyhound Financial Corp. Baa1 165,000 167,219
6.65% 1/19/00
NONCONVERTIBLE BONDS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE -
CONTINUED
Heller Financial, Inc. 7.875% A3 $ 275,000 $ 279,268
11/1/99
Southwestern Bell Capital A2 100,000 101,619
Corp. 6.75% 2/1/00
1,579,698
INSURANCE - 4.5%
SunAmerica, Inc. 6.2% 10/31/99 Aaa 400,000 402,832
Travelers Property Casualty A2 205,000 206,843
Corp. 6.75% 9/1/99
609,675
TOTAL FINANCE 6,843,352
MEDIA & LEISURE - 5.5%
BROADCASTING - 2.3%
TCI Communications, Inc. Baa3 300,000 302,316
7.25% 6/15/99
ENTERTAINMENT - 1.7%
Disney (Walt) Co. 6.25% A2 225,000 225,691
6/21/99
PUBLISHING - 1.5%
News America Holdings, Inc. Baa3 200,000 204,408
7.45% 6/1/00
TOTAL MEDIA & LEISURE 732,415
NONDURABLES - 2.1%
TOBACCO - 2.1%
Philip Morris Companies, Inc. A2 270,000 280,225
9.25% 2/15/00
RETAIL & WHOLESALE - 2.7%
GENERAL MERCHANDISE STORES -
2.7%
Dayton Hudson Corp. 10% A3 340,000 367,309
12/1/00
TRANSPORTATION - 2.6%
AIR TRANSPORTATION - 1.7%
Delta Air Lines, Inc. 9.875% Baa3 215,000 224,591
5/15/00
RAILROADS - 0.9%
Burlington Northern, Inc. Baa2 125,000 125,690
7.4% 5/15/99
TOTAL TRANSPORTATION 350,281
NONCONVERTIBLE BONDS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
UTILITIES - 2.3%
GAS - 2.3%
Sonat, Inc. 9.5% 8/15/99 Baa1 $ 300,000 $ 306,786
TOTAL NONCONVERTIBLE BONDS 9,568,403
(Cost $9,769,480)
U.S. GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS - 12.7%
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 3.6%
Financing Corp. stripped Aaa 311,000 302,976
principal 0% 8/8/99
State of Israel (guaranteed Aaa 175,000 178,755
by U.S. Government through
Agency for International
Development) 7.75% 11/15/99
TOTAL U.S. GOVERNMENT AGENCY 481,731
OBLIGATIONS
U.S. TREASURY OBLIGATIONS -
9.1%
U.S. Treasury Notes:
6% 8/15/99 Aaa 780,000 785,606
8.5% 2/15/00 Aaa 425,000 441,337
TOTAL U.S. TREASURY 1,226,943
OBLIGATIONS
TOTAL U.S. GOVERNMENT AND 1,708,674
GOVERNMENT AGENCY OBLIGATIONS
(Cost $1,691,017)
FOREIGN GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS - 6.1%
Export Development Corp. Aa2 500,000 508,290
yankee 8.125% 8/10/99 (c)
Manitoba Province 7.93% A1 150,000 154,245
2/15/00 (c)
Ontario Province euro global Aa3 150,000 152,015
6.125% 6/28/00 (c)
TOTAL FOREIGN GOVERNMENT AND 814,550
GOVERNMENT AGENCY OBLIGATIONS
(Cost $832,795)
SUPRANATIONAL OBLIGATIONS -
4.8%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
African Development Bank 9.3% Aa1 $ 300,000 $ 316,323
7/1/00
European Investment Bank Aaa 300,000 324,459
10.125% 10/1/00
TOTAL SUPRANATIONAL OBLIGATIONS 640,782
(Cost $659,154)
CERTIFICATES OF DEPOSIT - 1.9%
First National Bank of 250,000 251,061
Maryland 6.05% 10/28/99
(Cost $249,613)
CASH EQUIVALENTS - 3.2%
MATURITY AMOUNT
Investments in repurchase $ 434,175 434,000
agreements (U.S. Government
obligations), in a joint
trading account at 4.83%,
dated 1/29/99 due 2/1/99
(Cost $434,000)
TOTAL INVESTMENT IN $ 13,417,470
SECURITIES - 100%
(Cost $13,636,059)
</TABLE>
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 $554,261 or 3.9% 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 advisor, 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:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 76.7% AAA, AA, A 71.0%
Baa 18.2% BBB 23.9%
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 81.1%
Canada 9.9
Multi-National 7.5
Australia 1.5
TOTAL 100.0%
Purchases and sales of securities, other than short-term securities,
aggregated $357,340 and $1,083,246, respectively, of which U.S.
government and government agency obligations aggregated $0 and
$205,375, respectively (see Note 3 of Notes to Financial Statements).
INCOME TAX INFORMATION
At January 31, 1999, the aggregate cost of investment securities for
income tax purposes was $13,636,378. Net unrealized depreciation
aggregated $218,908, of which $39,453 related to appreciated
investment securities and $258,361 related to depreciated investment
securities.
At July 31, 1998, the fund had a capital loss carryforward of
approximately $86,000 of which $44,000 and $42,000 will expire on July
31, 2005 and 2006, respectively.
The fund intends to elect to defer to its fiscal year ending July 31,
1999 approximately $25,000 of losses recognized during the period
November 1, 1997 to July 31, 1998.
FIDELITY TARGET TIMELINE 1999
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 13,417,470
value (including repurchase
agreements of $434,000)
(cost $13,636,059) - See
accompanying schedule
Cash 515
Receivable for investments 369,089
sold
Receivable for fund shares 3,616
sold
Interest receivable 292,953
Receivable from investment 11,125
adviser for expense
reductions
TOTAL ASSETS 14,094,768
LIABILITIES
Payable for fund shares $ 23,382
redeemed
Distributions payable 6,470
Other payables and accrued 19,215
expenses
TOTAL LIABILITIES 49,067
NET ASSETS $ 14,045,701
Net Assets consist of:
Paid in capital $ 14,389,410
Undistributed net investment 5,060
income
Accumulated undistributed net (130,180)
realized gain (loss) on
investments
Net unrealized appreciation (218,589)
(depreciation) on investments
NET ASSETS, for 1,489,902 $ 14,045,701
shares outstanding
NET ASSET VALUE, offering $9.43
price and redemption price
per share ($14,045,701
(divided by) 1,489,902
shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 547,227
Interest
EXPENSES
Management fee $ 31,267
Transfer agent fees 12,988
Accounting fees and expenses 30,024
Non-interested trustees' 31
compensation
Custodian fees and expenses 1,145
Registration fees 12,599
Audit 16,903
Legal 1,301
Miscellaneous 42
Total expenses before 106,300
reductions
Expense reductions (80,955) 25,345
NET INVESTMENT INCOME 521,882
REALIZED AND UNREALIZED GAIN (18,834)
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized (36,823)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (55,657)
NET INCREASE (DECREASE) IN $ 466,225
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION
Expense reductions Custodian $ 105
credits
FMR reimbursement 80,850
$ 80,955
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, 1998
1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 521,882 $ 948,087
income
Net realized gain (loss) (18,834) (24,050)
Change in net unrealized (36,823) (139,051)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 466,225 784,986
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (524,934) (947,475)
from net investment income
Share transactions Net 1,430,117 4,112,241
proceeds from sales of shares
Reinvestment of distributions 479,198 931,263
Cost of shares redeemed (2,011,854) (2,871,463)
NET INCREASE (DECREASE) IN (102,539) 2,172,041
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 170 388
TOTAL INCREASE (DECREASE) (161,078) 2,009,940
IN NET ASSETS
NET ASSETS
Beginning of period 14,206,779 12,196,839
End of period (including $ 14,045,701 $ 14,206,779
undistributed net investment
income of $5,060 and $8,112,
respectively)
OTHER INFORMATION
Shares
Sold 150,846 432,026
Issued in reinvestment of 50,610 97,918
distributions
Redeemed (212,563) (301,519)
Net increase (decrease) (11,107) 228,425
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
(UNAUDITED) 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 .343 D .687 D .724 D .310
Operations Net investment
income
Net realized and unrealized (.028) (.118) .027 (.470)
gain (loss)
Total from investment .315 .569 .751 (.160)
operations
Less Distributions
From net investment income (.345) (.689) (.702) (.310)
Redemption fees added to paid .000 .000 .001 .000
in capital
Net asset value, end of period $ 9.430 $ 9.460 $ 9.580 $ 9.530
TOTAL RETURN B, C 3.37% 6.14% 8.16% (1.58)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 14,046 $ 14,207 $ 12,197 $ 7,322
(000 omitted)
Ratio of expenses to average .35% A, E .35% E .35% E .35% A, E
net assets
Ratio of expenses to average .35% A .35% .34% F .34% A, F
net assets after expense
reductions
Ratio of net investment 7.18% A 7.24% 7.38% 6.88% A
income to average net assets
Portfolio turnover rate 5% A 43% 80% 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 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 (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
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
JANUARY 31, 1999
(MOODY'S RATINGS) % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS 6
MONTHS AGO
Aaa 17.8 25.1
Aa 19.8 10.6
A 32.8 38.6
Baa 26.5 24.1
Ba and Below 1.0 0.0
</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 JANUARY 31, 1999
6 MONTHS AGO
Years 3.1 3.7
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, 1999
6 MONTHS AGO
Years 2.7 3.1
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 JANUARY 31, 1999 *
Row: 1, Col: 1, Value: 68.0
Row: 1, Col: 2, Value: 15.8
Row: 1, Col: 3, Value: 11.5
Row: 1, Col: 4, Value: 2.6
Row: 1, Col: 5, Value: 2.1
Corporate bonds 68.0%
U.S. government
and agency
obligations 15.8%
Foreign government
obligations 11.5%
Other 2.6%
Short-term
investments 2.1%
* FOREIGN INVESTMENTS 21.7%
AS OF JULY 31, 1998 **
Row: 1, Col: 1, Value: 59.0
Row: 1, Col: 2, Value: 22.5
Row: 1, Col: 3, Value: 13.6
Row: 1, Col: 4, Value: 3.1
Row: 1, Col: 5, Value: 1.8
Corporate bonds 59.0%
U.S. government
and agency
obligations 22.7%
Foreign government
obligations 13.6%
Other 3.1%
Short-term
investments 1.6%
** FOREIGN INVESTMENTS 24.7%
FIDELITY TARGET TIMELINE 2001
INVESTMENTS JANUARY 31, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
NONCONVERTIBLE BONDS - 68.0%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
BASIC INDUSTRIES - 1.6%
CHEMICALS & PLASTICS - 1.6%
Monsanto Co. 5.375% 12/1/01 A2 $ 250,000 $ 248,878
(b)
CONSTRUCTION & REAL ESTATE -
1.0%
REAL ESTATE INVESTMENT TRUSTS
- - 1.0%
EOP Operating LP 6.375% Baa1 150,000 149,850
1/15/02
ENERGY - 1.3%
OIL & GAS - 1.3%
Petro-Canada, Inc. yankee A3 190,000 201,562
8.6% 10/15/01
FINANCE - 43.2%
BANKS - 29.4%
Bank of New York Co., Inc. A2 136,000 146,488
7.875% 11/15/02
BankAmerica Corp. 7.5% Aa3 25,000 26,584
10/15/02
BanPonce Financial Corp. 7.3% A3 400,000 410,452
6/5/02
Barclays Bank PLC yankee A1 100,000 100,627
5.95% 7/15/01
Barnett Banks, Inc. 9.83% A2 160,000 188,648
5/30/03
Boatmens Bancshares, Inc. Aa3 206,000 225,813
9.25% 11/1/01
Capital One Bank 6.28% 2/20/01 Baa3 150,000 148,230
Central Fidelity Banks, Inc. A1 200,000 218,582
8.15% 11/15/02
Citicorp 5.625% 2/15/01 Aa3 300,000 301,674
Huntington Bancshares, Inc. Baa1 100,000 107,504
7.875% 11/15/02
Integra Financial Corp. 8.5% A2 350,000 377,864
5/15/02
Kansallis-Osake-Pankki, 10% A3 355,000 399,048
5/1/02
Korea Development Bank 7.125% Ba2 160,000 156,840
9/17/01
Mellon Financial Co. 9.25% A3 200,000 217,982
8/15/01
NationsBank Corp. 5.75% Aa2 200,000 201,362
3/15/01
Skandinaviska Enskilda Banken A3 300,000 322,353
yankee 8.45% 5/15/02
Society National Bank 7.85% A1 300,000 324,681
11/1/02
Summit Bancorp 8.625% 12/10/02 BBB+ 250,000 277,240
US Bank NA 5.25% 6/4/03 Aa3 250,000 251,390
Wells Fargo & Co. 6.875% A1 160,000 167,534
4/15/03
4,570,896
CREDIT & OTHER FINANCE - 8.5%
Aristar, Inc. 7.75% 6/15/01 A3 200,000 208,612
Associates Corp. of North Aa3 250,000 252,758
America 5.875% 7/15/02
Countrywide Funding Corp. Baa1 250,000 268,505
8.25% 7/15/02
Finova Capital Corp. 7.125% Baa1 174,000 180,337
5/1/02
NONCONVERTIBLE BONDS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE -
CONTINUED
Ford Motor Credit Co. 5.125% A1 $ 200,000 $ 198,960
10/15/01
Greyhound Financial Corp. Baa1 100,000 108,125
7.82% 1/27/03
Southwestern Bell Capital A2 100,000 106,476
Corp. 7.36% 5/1/02
1,323,773
INSURANCE - 1.3%
Sun America, Inc. 6.58% Baa1 200,000 206,036
1/15/02
SAVINGS & LOANS - 2.4%
Great Western Financial Corp. A3 100,000 107,679
8.6% 2/1/02
Long Island Savings Bank FSB Baa3 250,000 256,430
7% 6/13/02
364,109
SECURITIES INDUSTRY - 1.6%
Merrill Lynch & Co., Inc. Aa3 250,000 250,938
5.71% 1/15/02
TOTAL FINANCE 6,715,752
INDUSTRIAL MACHINERY &
EQUIPMENT - 1.6%
Tyco International Group SA Baa1 250,000 253,625
yankee 6.125% 6/15/01
NONDURABLES - 1.6%
BEVERAGES - 1.6%
Seagram J E & Sons, Inc. Baa3 250,000 251,875
6.25% 12/15/01
RETAIL & WHOLESALE - 7.3%
GENERAL MERCHANDISE STORES -
7.3%
Dayton Hudson Corp.:
6.4% 2/15/03 A3 245,000 253,818
9.75% 7/1/02 A3 75,000 84,914
Federated Department Stores, Baa2 400,000 431,924
Inc. 8.125% 10/15/02
Penney (J.C.) Co., Inc. 7.25% A2 350,000 363,965
4/1/02
1,134,621
TRANSPORTATION - 2.1%
AIR TRANSPORTATION - 2.1%
Delta Air Lines, Inc. 8.5% Baa3 311,000 329,918
3/15/02
UTILITIES - 8.3%
ELECTRIC UTILITY - 2.8%
Niagara Mohawk Power Corp. Baa3 115,000 118,236
6.875% 3/1/01
Philadelphia Electric Co. Baa1 295,000 311,552
7.125% 9/1/02
429,788
NONCONVERTIBLE BONDS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
UTILITIES - CONTINUED
GAS - 4.2%
Columbia Gas System, Inc. A3 $ 150,000 $ 155,457
6.61% 11/28/02
Enron Corp. 9.875% 6/15/03 Baa2 210,000 242,149
Southwest Gas Corp. 9.75% Baa2 225,000 250,965
6/15/02
648,571
TELEPHONE SERVICES - 1.3%
GTE Corp. 9.1% 6/1/03 Baa1 95,000 108,596
MCI WorldCom, Inc. 6.125% Baa2 100,000 101,762
8/15/01
210,358
TOTAL UTILITIES 1,288,717
TOTAL NONCONVERTIBLE BONDS 10,574,798
(Cost $10,533,829)
U.S. GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS - 15.8%
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 1.7%
Financing Corp. stripped Aaa 300,000 268,002
principal 0% 5/2/01
U.S. TREASURY OBLIGATIONS -
14.1%
U.S. Treasury Notes 7.875% Aaa 2,030,000 2,185,112
8/15/01
TOTAL U.S. GOVERNMENT AND 2,453,114
GOVERNMENT AGENCY OBLIGATIONS
(Cost $2,409,049)
FOREIGN GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS - 11.5%
Canadian Government 6.125% Aa2 400,000 412,800
7/15/02 (c)
Irish Republic:
yankee 8.625% 4/15/01 (c) Aaa 85,000 90,837
7.64% 1/2/02 (c) Aaa 210,000 222,795
Manitoba Province yankee 8% Aa3 400,000 433,616
4/15/02 (c)
Nova Scotia Province yankee A3 275,000 310,767
9.375% 7/15/02 (c)
Ontario Province yankee Aa3 150,000 161,664
7.375% 1/27/03 (c)
Swedish Kingdom yankee 0%, Aa2 174,000 154,488
4/1/01 (c)
TOTAL FOREIGN GOVERNMENT AND 1,786,967
GOVERNMENT AGENCY OBLIGATIONS
(Cost $1,750,018)
SUPRANATIONAL OBLIGATIONS -
2.6%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
African Development Bank Aa1 $ 375,000 $ 402,746
yankee 7.7% 7/15/02 (Cost
$390,137)
CASH EQUIVALENTS - 2.1%
MATURITY AMOUNT
Investments in repurchase $ 329,133 329,000
agreements (U.S. Government
obligations), in a joint
trading account at 4.83%,
dated 1/29/99 due 2/1/99
(Cost $329,000)
TOTAL INVESTMENT IN $ 15,546,625
SECURITIES - 100%
(Cost $15,412,033)
</TABLE>
LEGEND
(a) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investor 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 $248,878 or 1.6% 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 advisor, 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:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 70.4% AAA, AA, A 71.3%
Baa 24.7% BBB 26.6%
Ba 1.0% 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 78.3%
Canada 9.8
Sweden 3.1
Multi-National 2.6
Finland 2.6
Ireland 2.0
Korea (South) 1.0
Others (individually less 0.6
than 1%)
TOTAL 100.0%
Purchases and sales of securities, other than short-term securities,
aggregated $3,548,142 and $1,138,995, respectively, of which U.S.
government and government agency obligations aggregated $325,031 and
$833,970, respectively (see Note 3 of Notes to Financial Statements).
INCOME TAX INFORMATION
At January 31, 1999, the aggregate cost of investment securities for
income tax purposes was $15,412,033. Net unrealized appreciation
aggregated $134,592, of which $195,780 related to appreciated
investment securities and $61,188 related to depreciated investment
securities.
At July 31, 1998, 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
JANUARY 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 15,546,625
value (including repurchase
agreements of $329,000)
(cost $15,412,033) - See
accompanying schedule
Cash 375
Receivable for fund shares 4,718
sold
Interest receivable 281,574
Receivable from investment 9,333
adviser for expense
reductions
TOTAL ASSETS 15,842,625
LIABILITIES
Payable for fund shares $ 205
redeemed
Distributions payable 3,813
Other payables and accrued 19,496
expenses
TOTAL LIABILITIES 23,514
NET ASSETS $ 15,819,111
Net Assets consist of:
Paid in capital $ 15,689,194
Undistributed net investment 3,724
income
Accumulated undistributed net (8,399)
realized gain (loss) on
investments
Net unrealized appreciation 134,592
(depreciation) on investments
NET ASSETS, for 1,625,206 $ 15,819,111
shares outstanding
NET ASSET VALUE, offering $9.73
price and redemption price
per share ($15,819,111
(divided by) 1,625,206
shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 502,551
Interest
EXPENSES
Management fee $ 31,229
Transfer agent fees 12,851
Accounting fees and expenses 30,023
Non-interested trustees' 26
compensation
Custodian fees and expenses 1,106
Registration fees 12,217
Audit 15,296
Legal 1,203
Miscellaneous 38
Total expenses before 103,989
reductions
Expense reductions (78,583) 25,406
NET INVESTMENT INCOME 477,145
REALIZED AND UNREALIZED GAIN 17,534
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized 130,291
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 147,825
NET INCREASE (DECREASE) IN $ 624,970
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION
Expense reductions Custodian $ 13
credits
FMR reimbursement 78,570
$ 78,583
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, 1998
1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 477,145 $ 789,851
income
Net realized gain (loss) 17,534 35,186
Change in net unrealized 130,291 (53,731)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 624,970 771,306
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (478,042) (789,859)
from net investment income
Share transactions Net 3,547,255 3,790,981
proceeds from sales of shares
Reinvestment of distributions 455,178 777,361
Cost of shares redeemed (1,444,076) (1,815,356)
NET INCREASE (DECREASE) IN 2,558,357 2,752,986
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 1,416 273
TOTAL INCREASE (DECREASE) 2,706,701 2,734,706
IN NET ASSETS
NET ASSETS
Beginning of period 13,112,410 10,377,704
End of period (including $ 15,819,111 $ 13,112,410
undistributed net investment
income of $3,724 and $4,621,
respectively)
OTHER INFORMATION
Shares
Sold 363,998 393,791
Issued in reinvestment of 46,689 80,843
distributions
Redeemed (148,267) (188,774)
Net increase (decrease) 262,420 285,860
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
(UNAUDITED) 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 .322 D .648 D .690 D .310
Operations Net investment
income
Net realized and unrealized .110 (.019) .240 (.600)
gain (loss)
Total from investment .432 .629 .930 (.290)
operations
Less Distributions
From net investment income (.323) (.649) (.690) (.310)
Redemption fees added to paid .001 .000 .000 .000
in capital
Net asset value, end of period $ 9.730 $ 9.620 $ 9.640 $ 9.400
TOTAL RETURN B, C 4.54% 6.74% 10.26% (2.88)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 15,819 $ 13,112 $ 10,378 $ 6,180
(000 omitted)
Ratio of expenses to average .35% A, E .35% E .35% E .35% A, E
net assets
Ratio of expenses to average .35% A .35% .34% F .34% A, F
net assets after expense
reductions
Ratio of net investment 6.57% A 6.75% 7.31% 6.93% A
income to average net assets
Portfolio turnover rate 16% A 47% 97% 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 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 (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
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
JANUARY 31, 1999
(MOODY'S RATINGS) % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS 6
MONTHS AGO
Aaa 43.7 41.1
Aa 7.3 5.8
A 19.3 23.5
Baa 28.0 28.3
Ba and Below 1.1 0.0
</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 ATTHE TIME OF
ACQUISITION BY FIDELITY
AVERAGE YEARS TO MATURITY AS
OF JANUARY 31, 1999
6 MONTHS AGO
Years 5.9 6.5
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, 1999
6 MONTHS AGO
Years 4.6 5.0
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 JANUARY 31, 1999 *
Row: 1, Col: 1, Value: 52.0
Row: 1, Col: 2, Value: 42.8
Row: 1, Col: 3, Value: 3.8
Row: 1, Col: 4, Value: 1.4
Row: 1, Col: 1, Value: 54.0
Corporate bonds 52.8%
U.S. government
and agency
obligations 42.8%
Foreign government
obligations 3.8%
Short-term
investments 0.6%
* FOREIGN INVESTMENTS 13.5%
AS OF JULY 31, 1998 **
Row: 1, Col: 2, Value: 40.1
Row: 1, Col: 3, Value: 4.3
Row: 1, Col: 4, Value: 1.6
Corporate bonds 54.3%
U.S. government
and agency
obligations 40.1%
Foreign government
obligations 4.3%
Short-term
investments 1.3%
** FOREIGN INVESTMENTS 14.3%
FIDELITY TARGET TIMELINE 2003
INVESTMENTS JANUARY 31, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
NONCONVERTIBLE BONDS - 52.8%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
AEROSPACE & DEFENSE - 2.2%
DEFENSE ELECTRONICS - 2.2%
Raytheon Co. 6.5% 7/15/05 Baa1 $ 500,000 $ 521,635
BASIC INDUSTRIES - 0.9%
CHEMICALS & PLASTICS - 0.9%
Praxair, Inc. 6.15% 4/15/03 A3 200,000 201,134
CONSTRUCTION & REAL ESTATE -
0.8%
REAL ESTATE INVESTMENT TRUSTS
- - 0.8%
EOP Operating LP 6.5% 1/15/04 Baa1 200,000 199,800
ENERGY - 0.4%
OIL & GAS - 0.4%
Petroleum Geo-Services ASA Baa3 100,000 99,197
yankee 6.25% 11/19/03 (b)
FINANCE - 31.3%
BANKS - 18.9%
Bank One Corp. 7.25% 8/15/04 A1 395,000 427,473
Bayerische Landesbank Aaa 200,000 207,672
Gironzentrale yankee 6.375%
10/15/05
Capital One Bank 6.375% Baa3 250,000 246,805
2/15/03
First National Bank Boston NA A2 325,000 357,227
8% 9/15/04
First Security Corp. 7% Baa1 375,000 387,405
7/15/05
First Tennessee National Baa1 200,000 211,474
Corp. 6.75% 11/15/05
Korea Development Bank:
yankee 6.5% 11/15/02 Ba2 100,000 94,800
6.625% 11/21/03 Ba2 10,000 9,481
7.375% 9/17/04 Ba2 150,000 145,200
Merita Bank Ltd. yankee 6.5% A3 150,000 153,284
1/15/06
Signet Bank 7.8% 9/15/06 A1 250,000 280,928
Society National Bank 7.25% A1 500,000 540,130
6/1/05
Sovran Financial Corp. 9.25% Aa3 125,000 152,085
6/15/06
St. George Bank Ltd. yankee Baa1 500,000 519,785
7.15% 10/15/05 (b)
Swiss Bank Corp. 6.75% 7/15/05 Aa1 500,000 523,440
Union Planters Corp. 6.75% Baa2 150,000 156,860
11/1/05
4,414,049
NONCONVERTIBLE BONDS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 9.2%
Abbey National PLC 6.69% Aa3 $ 300,000 $ 314,313
10/17/05
Associates Corp. of North Aa3 400,000 405,656
America 5.75% 11/1/03
Bank of Montreal 6.1% 9/15/05 A1 125,000 126,578
Finova Capital Corp. 6.12% Baa1 300,000 300,045
5/28/02
Fleet Financial Group, Inc. A3 375,000 402,821
7.125% 4/15/06
PNC Funding Corp. 7.75% 6/1/04 A3 220,000 241,564
Southwestern Bell Capital A2 100,000 109,530
Corp. 7.13% 6/1/05
Sprint Capital Corp. 5.7% Baa1 250,000 251,020
11/15/03
2,151,527
SAVINGS & LOANS - 3.2%
Ahmanson (H.F.) & Co. 7.875% Baa1 700,000 757,624
9/1/04
TOTAL FINANCE 7,323,200
MEDIA & LEISURE - 4.0%
BROADCASTING - 0.5%
Time Warner, Inc. 7.75% Baa3 111,000 123,173
6/15/05
PUBLISHING - 3.5%
News America Holdings, Inc. Baa3 710,000 806,887
8.5% 2/15/05
TOTAL MEDIA & LEISURE 930,060
NONDURABLES - 3.4%
BEVERAGES - 1.1%
Seagram J E & Sons, Inc. 6.4% Baa3 250,000 253,250
12/15/03
TOBACCO - 2.3%
Philip Morris Companies, Inc. A2 500,000 533,675
7% 7/15/05
TOTAL NONDURABLES 786,925
RETAIL & WHOLESALE - 1.8%
GENERAL MERCHANDISE STORES -
1.8%
Dayton Hudson Corp. 7.5% A3 375,000 415,245
7/15/06
TRANSPORTATION - 4.9%
AIR TRANSPORTATION - 0.8%
Delta Air Lines, Inc. 8.5% Baa3 174,000 184,584
3/15/02
NONCONVERTIBLE BONDS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
TRANSPORTATION - CONTINUED
RAILROADS - 4.1%
Canadian National Railway Co. Baa2 $ 300,000 $ 317,097
7% 3/15/04
Norfolk Southern Corp. 7.875% Baa1 400,000 441,596
2/15/04
Union Pacific Corp. 6.34% Baa3 200,000 201,800
11/25/03
960,493
TOTAL TRANSPORTATION 1,145,077
UTILITIES - 3.1%
ELECTRIC UTILITY - 1.2%
Philadelphia Electric Co. Baa1 270,000 281,999
6.625% 3/1/03
GAS - 1.9%
Columbia Gas System, Inc. A3 150,000 158,888
6.8% 11/28/05
InterNorth, Inc. 9.625% Baa2 245,000 288,725
3/15/06
447,613
TOTAL UTILITIES 729,612
TOTAL NONCONVERTIBLE BONDS 12,351,885
(Cost $11,940,839)
U.S. GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS - 42.8%
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 6.0%
Federal Farm Credit Bank:
7.26% 5/2/05 Aaa 500,000 554,140
7.35% 3/24/05 Aaa 150,000 166,712
Federal Home Loan Bank:
4.96% 10/7/05 Aaa 410,000 404,104
9.5% 2/25/04 Aaa 150,000 178,617
Freddie Mac 8% 1/26/05 Aaa 100,000 114,234
TOTAL U.S. GOVERNMENT AGENCY 1,417,807
OBLIGATIONS
U.S. TREASURY OBLIGATIONS -
36.8%
U.S. Treasury Bonds:
10.75% 8/15/05 Aaa 2,250,000 2,996,706
11.625% 11/15/04 Aaa 1,945,000 2,612,991
U.S. GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
U.S. TREASURY OBLIGATIONS -
CONTINUED
U.S. Treasury Bonds: -
continued
11.875% 11/15/03 Aaa $ 1,750,000 $ 2,280,740
U.S. Treasury Notes 7% 7/15/06 Aaa 635,000 723,106
TOTAL U.S. TREASURY 8,613,543
OBLIGATIONS
TOTAL U.S. GOVERNMENT AND 10,031,350
GOVERNMENT AGENCY OBLIGATIONS
(Cost $9,904,046)
FOREIGN GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS - 3.8%
Korean Republic global bond Ba1 20,000 20,887
8.75% 4/15/03 (c)
Ontario Province 7%, 8/4/05 Aa3 275,000 299,604
(c)
Saskatchewan Province yankee A2 500,000 558,600
8% 7/15/04 (c)
TOTAL FOREIGN GOVERNMENT AND 879,091
GOVERNMENT AGENCY OBLIGATIONS
(Cost $853,786)
CASH EQUIVALENTS - 0.6%
MATURITY AMOUNT
Investments in repurchase $ 148,060 148,000
agreements (U.S. Government
obligations), in a joint
trading account at 4.83%,
dated 1/29/99 due 2/1/99
(Cost $148,000)
TOTAL INVESTMENT IN $ 23,410,326
SECURITIES - 100%
(Cost $22,846,671)
</TABLE>
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 $618,982 or 2.6% 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 advisor, 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:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 70.3% AAA, AA, A 63.1%
Baa 28.0% BBB 31.0%
Ba 1.1% 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 86.5%
Canada 5.5
Switzerland 2.2
Australia 2.2
United Kingdom 1.4
Korea (South) 1.1
Others (individually less 1.1
than 1%)
TOTAL 100.0%
Purchases and sales of securities, other than short-term securities,
aggregated $6,521,015 and $2,736,554, respectively, of which U.S.
government and government agency obligations aggregated $3,333,584 and
$1,191,172, respectively (see Note 3 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At January 31, 1999, the aggregate cost of investment securities for
income tax purposes was $22,859,552. Net unrealized appreciation
aggregated $550,774, of which $588,823 related to appreciated
investment securities and $38,049 related to depreciated investment
securities.
FIDELITY TARGET TIMELINE 2003
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 23,410,326
value (including repurchase
agreements of $148,000)
(cost $22,846,671) - See
accompanying schedule
Cash 357
Receivable for investments 214,186
sold
Receivable for fund shares 87,926
sold
Interest receivable 467,056
Receivable from investment 10,296
adviser for expense
reductions
TOTAL ASSETS 24,190,147
LIABILITIES
Distributions payable $ 4,517
Other payables and accrued 20,933
expenses
TOTAL LIABILITIES 25,450
NET ASSETS $ 24,164,697
Net Assets consist of:
Paid in capital $ 23,575,480
Undistributed net investment 15,333
income
Accumulated undistributed net 10,229
realized gain (loss) on
investments
Net unrealized appreciation 563,655
(depreciation) on investments
NET ASSETS, for 2,442,367 $ 24,164,697
shares outstanding
NET ASSET VALUE, offering $9.89
price and redemption price
per share ($24,164,697
(divided by) 2,442,367
shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31,
1999 (UNAUDITED)
INVESTMENT INCOME $ 814,188
Interest
EXPENSES
Management fee $ 48,205
Transfer agent fees 19,633
Accounting fees and expenses 30,036
Non-interested trustees' 44
compensation
Custodian fees and expenses 1,482
Registration fees 14,735
Audit 16,909
Legal 1,798
Miscellaneous 56
Total expenses before 132,898
reductions
Expense reductions (93,661) 39,237
NET INVESTMENT INCOME 774,951
REALIZED AND UNREALIZED GAIN 36,969
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized 362,813
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) 399,782
NET INCREASE (DECREASE) IN $ 1,174,733
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION
FMR reimbursement $ 93,661
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JANUARY 31, YEAR ENDED JULY 31, 1998
1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 774,951 $ 1,138,446
income
Net realized gain (loss) 36,969 170,856
Change in net unrealized 362,813 (69,477)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 1,174,733 1,239,825
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (788,287) (1,138,249)
From net investment income
From net realized gain (105,553) -
TOTAL DISTRIBUTIONS (893,840) (1,138,249)
Share transactions Net 6,966,666 11,946,066
proceeds from sales of shares
Reinvestment of distributions 860,005 1,120,445
Cost of shares redeemed (3,722,360) (6,605,867)
NET INCREASE (DECREASE) IN 4,104,311 6,460,644
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 2,285 3,551
TOTAL INCREASE (DECREASE) 4,387,489 6,565,771
IN NET ASSETS
NET ASSETS
Beginning of period 19,777,208 13,211,437
End of period (including $ 24,164,697 $ 19,777,208
undistributed net investment
income of $15,333 and
$28,669, respectively)
OTHER INFORMATION
Shares
Sold 704,226 1,226,446
Issued in reinvestment of 86,949 115,195
distributions
Redeemed (377,296) (678,796)
Net increase (decrease) 413,879 662,845
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SIX MONTHS ENDED JANUARY 31, YEARS ENDED JULY 31,
1999
(UNAUDITED) 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 .343 D .670 D .634 D .307
Operations Net investment
income
Net realized and unrealized .196 .078 .428 (.762)
gain (loss)
Total from investment .539 .748 1.062 (.455)
operations
Less Distributions
From net investment income (.350) (.670) (.634) (.306)
From net realized gain (.050) - - -
Total distributions (.400) (.670) (.634) (.306)
Redemption fees added to paid .001 .002 .002 .001
in capital
Net asset value, end of period $ 9.890 $ 9.750 $ 9.670 $ 9.240
TOTAL RETURN B, C 5.60% 8.00% 11.94% (4.53)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 24,165 $ 19,777 $ 13,211 $ 6,977
(000 omitted)
Ratio of expenses to average .35% A, E .35% E .35% E .35% A, E
net assets
Ratio of expenses to average .35% A .35% .34% F .34% A, F
net assets after expense
reductions
Ratio of net investment 6.91% A 6.92% 6.76% 6.93% A
income to average net assets
Portfolio turnover rate 25% A 67% 83% 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 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 (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
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 January 31, 1999 (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, 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 continue to purchase shares in
accounts existing after that date. Fidelity Target Timeline 1999 will
be liquidated shortly after it's 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
expect 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.
Income and capital gain distributions are determined in accordance
with income tax
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS
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. Fidelity Target Timeline 2003
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 .50% of
the proceeds of the redeemed shares. The fee, which is retained by the
funds, 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, 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. 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 annualized 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 it's services, FIMM receives a fee from FMR of 50% of the
management fee payable to FMR.
The fees are paid prior to any voluntary expense limitations 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 annualized rate of .18% of the average net assets of
each fund.
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.
In addition, certain funds have entered into an arrangement with their
custodian whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of each applicable fund's
expenses. For the period, the reductions under this arrangement 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 28.92%
Fidelity Target Timeline 2001 26.59%
Fidelity Target Timeline 2003 17.75%
7. CHANGE IN INDEPENDENT AUDITOR.
Based on the recommendation of the Audit Committee of Fidelity Target
Timeline 1999, Fidelity Target Timeline 2001 and Fidelity Target
Timeline 2003 , the Board of Trustees has determined not to retain
PricewaterhouseCoopers LLP (PwC) as the funds' independent auditor and
voted to appoint Deloitte & Touche LLP for the current fiscal year.
During the two most recent fiscal years, PwC's audit reports contained
no adverse opinion or disclaimer of opinion; nor were the reports
qualified or modified as to uncertainty, audit scope, or accounting
principles. Further, there were no disagreements between the funds
and PwC on accounting principles, financial statement disclosure or
audit scope, which if not resolved to the satisfaction of PwC would
have caused it to make reference to the disagreements in connection
with its report.
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 TouchTone Xpress(registered trademark) 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)TOUCHTONE XPRESS
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.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and
send you written confirmation upon completion of your request.
(LETTER_GRAPHIC)
MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)
FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(LETTER_GRAPHIC)
FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
TO VISIT FIDELITY
For directions and hours, please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
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10100 Santa Monica Blvd.
Los Angeles, CA
251 University Avenue
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1760 Challenge Way
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4090 N. Ocean Boulevard
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1907 West State Road 434
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8880 Tamiami Trail, North
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2401 PGA Boulevard
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8065 Beneva Road
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1502 N. Westshore Blvd.
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GEORGIA
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
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ILLINOIS
One North Franklin Street
Chicago, IL
1415 West 22nd Street
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1700 East Golf Road
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4729 East 82nd Street
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MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
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MASSACHUSETTS
470 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
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44 Mall Road
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MICHIGAN
280 North Woodward Ave.
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MINNESOTA
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700 West 47th Street
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8885 Ladue Road
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200 North Broadway
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NEW JERSEY
150 Essex Street
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56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1055 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
OHIO
600 Vine Street
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28699 Chagrin Boulevard
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16850 SW 72 Avenue
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PENNSYLVANIA
1735 Market Street
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439 Fifth Avenue
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TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
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
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
Stanley N. Griffith,
Assistant 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
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
* INDEPENDENT TRUSTEES
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-Intermediate Government Fund
Short-Term Bond Fund
Spartan(registered trademark) Ginnie Mae Fund
Spartan Government Income Fund
Spartan Investment Grade Bond Fund
Spartan Short-Intermediate Government Fund
Spartan Short-Term 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)
TouchTone Xpress(registered trademark) (automated graphic)
1-800-544-5555
(automated graphic) AUTOMATED LINE FOR QUICKEST SERVICE
TTI-SANN-0399 72372
1.700749.101
(Fidelity Logo Graphic)(registered trademark)
corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
