SUPPLEMENT TO THE FIDELITY FREEDOM FUNDS(registered trademark)' MAY
21, 1998 PROSPECTUS
Fidelity Government Securities Fund, an underlying fund of the
Fidelity Freedom Funds, has been renamed Fidelity Government Income
Fund.
The following information replaces similar information found in the
"Performance" section beginning on page 14.
AVERAGE ANNUAL TOTAL RETURNS
PAST 1 LIFE OF
YEAR FUND*
FREEDOM INCOME 14.88% 11.53%
FREEDOM INCOME COMPOSITE INDEX 15.84% 12.56%
FREEDOM 2000 23.25% 17.14%
FREEDOM 2000 COMPOSITE INDEX 24.48% 18.67%
FREEDOM 2010 31.31% 22.78%
FREEDOM 2010 COMPOSITE INDEX 32.78% 24.63%
FREEDOM 2020 35.36% 25.71%
FREEDOM 2020 COMPOSITE INDEX 37.20% 27.81%
FREEDOM 2030 36.28% 26.30%
FREEDOM 2030 COMPOSITE INDEX 37.67% 28.15%
CUMULATIVE TOTAL RETURNS
PAST 1 LIFE OF
YEAR FUND*
FREEDOM INCOME 14.88% 17.17%
FREEDOM INCOME COMPOSITE INDEX 15.84% 18.74%
FREEDOM 2000 23.25% 25.83%
FREEDOM 2000 COMPOSITE INDEX 24.48% 28.22%
FREEDOM 2010 31.31% 34.71%
FREEDOM 2010 COMPOSITE INDEX 32.78% 37.67%
FREEDOM 2020 35.36% 39.41%
FREEDOM 2020 COMPOSITE INDEX 37.20% 42.80%
FREEDOM 2030 36.28% 40.35%
FREEDOM 2030 COMPOSITE INDEX 37.67% 43.35%
* FROM OCTOBER 17, 1996 (COMMENCEMENT OF OPERATIONS).
YEAR-BY-YEAR TOTAL RETURNS
CALENDAR YEARS 1997
FREEDOM INCOME 10.91%
FREEDOM INCOME COMPOSITE INDEX 12.15%
CONSUMER PRICE INDEX 1.70%
YEAR-BY-YEAR TOTAL RETURNS
CALENDAR YEARS 1997
FREEDOM 2000 15.29%
FREEDOM 2000 COMPOSITE INDEX 17.11%
CONSUMER PRICE INDEX 1.70%
YEAR-BY-YEAR TOTAL RETURNS
CALENDAR YEARS 1997
FREEDOM 2010 19.36%
FREEDOM 2010 COMPOSITE INDEX 21.61%
CONSUMER PRICE INDEX 1.70%
YEAR-BY-YEAR TOTAL RETURNS
CALENDAR YEARS 1997
FREEDOM 2020 21.24%
FREEDOM 2020 COMPOSITE INDEX 23.72%
CONSUMER PRICE INDEX 1.70%
YEAR-BY-YEAR TOTAL RETURNS
CALENDAR YEARS 1997
FREEDOM 2030 21.40%
FREEDOM 2030 COMPOSITE INDEX 23.62%
CONSUMER PRICE INDEX 1.70%
The following information replaces similar information found in the
"Performance" section on page 16.
Total returns of the following indices are used to calculate a Freedom
Fund's Composite Index: Wilshire 5000 Index for the domestic equity
fund class, Morgan Stanley Capital International Europe, Australasia,
Far East (EAFE) Index for the international equity fund class, Lehman
Brothers Aggregate Bond Index for the investment grade fixed-income
fund class, Merrill Lynch High Yield Master Index for the high yield
fixed-income fund class, and Lehman Brothers 3-Month Treasury Bill
Index for the money market fund class:
The following information replaces the Standard & Poor's 500 Index
description found in the "Performance" section on page 16.
(small solid bullet) WILSHIRE 5000 INDEX is a market
capitalization-weighted index of approximately 7,000 U.S. equity
securities. The index contains all actively traded common stocks with
readily available price data traded on the New York Stock Exchange,
American Stock Exchange, and NASDAQ.
The following information supplements the information found under
the heading "Risk Considerations of the Underlying Fidelity Funds" in
the "Investment Principles and Risks" section on page 22.
The value of securities selected using quantitative analysis can
react differently to issuer, political, market and economic
developments than the market as a whole or securities selected using
only fundamental analysis. The factors used in quantitative analysis
and the weight placed on those factors may not be predictive of a
security's value. In addition, factors that affect a security's value
can change over time and these changes may not be reflected in the
quantitative model.
The following information replaces similar information found under
the heading "Description of Underlying Fidelity Funds" in the
"Investment Principles and Risks"section on page 24.
FIDELITY DISCIPLINED EQUITY FUND is an equity fund that seeks
capital growth.
FMR normally invests at least 65% of the fund's total assets in
common stocks. FMR seeks to reduce the impact of industry weightings
on the performance of the fund by considering each industry's
weighting in the S&P 500 when allocating the fund's investments across
industries.
FMR may invest the fund's assets in securities of foreign issuers
in addition to securities of domestic issuers.
In buying and selling securities for the fund, FMR uses a
disciplined approach that involves computer-aided, quantitative
analysis supported by fundamental analysis. FMR's computer model
systematically reviews thousands of stocks, using data such as
historical earnings, dividend yield, earnings per share, and other
quantitative factors. Then, the issuers of potential investments are
analyzed further using fundamental factors, such as growth potential,
earnings estimates and financial condition.
FIDELITY DIVERSIFIED INTERNATIONAL FUND is an equity fund that
seeks capital growth.
FMR normally invests at least 65% of the fund's total assets in
foreign securities. FMR normally invests the fund's assets primarily
in common stocks.
FMR normally diversifies the funds' investments across different
countries and regions. In allocating the fund's investments across
countries and regions, FMR will consider the size of the market in
each country and region relative to the size of the international
market as a whole.
In buying and selling securities for the fund, FMR uses a
disciplined approach that involves computer-aided, quantitative
analysis supported by fundamental analysis. FMR's computer model
systematically reviews thousands of stocks, using data such as
historical earnings, dividend yield, earnings per share, and other
quantitative factors. Then, the issuers of potential investments are
analyzed further using fundamental factors, such as growth potential,
earnings estimates and financial condition.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FIDELITY EUROPE FUND is an equity fund that seeks growth of capital
over the long term.
FMR normally invests at least 65% of the fund's total assets in
securities of issuers that have their principal activities in Europe.
Europe includes Austria, Belgium, Belarus, Bulgaria, the Czech
Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary,
Ireland, Italy, Latvia, Lithuania, Luxembourg, the Netherlands,
Norway, Poland, Portugal, Russia, Slovakia, Slovenia, Spain, Sweden,
Switzerland, Turkey, and the United Kingdom. FMR normally invests the
fund's assets primarily in common stocks.
FMR normally diversifies the fund's investments across different
European countries. In allocating the fund's investments across
countries, FMR will consider the size of the market in each country
relative to the size of the markets in Europe as a whole.
Europe includes both developed and emerging markets. Most developed
countries in Western Europe are members of the European Union and many
are also members of the European Economic and Monetary Union (EMU),
which requires compliance with restrictions on inflation rates,
deficits and debt levels. Many Eastern European countries continue to
move toward market economies. However, their markets remain relatively
undeveloped and are particularly sensitive to political and economic
developments. The tight fiscal and monetary controls necessary to join
the EMU will significantly affect every country in Europe.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FIDELITY JAPAN FUND is an equity fund that seeks long-term growth
of capital.
FMR normally invests at least 65% of the fund's total assets in
securities of Japanese issuers. FMR normally invests the fund's assets
primarily in common stocks.
The Japanese economy is currently in a recession. The economy is
characterized by government intervention and protectionism, an
unstable financial services sector, and relatively high unemployment.
Economic growth is dependent on international trade, government
support of the financial services sector and other troubled sectors,
and consistent government policy. The Japanese market has decreased
significantly recently.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FIDELITY OVERSEAS FUND is an equity fund that seeks long-term
growth of capital.
FMR normally invests at least 65% of the fund's total assets in
foreign securities. FMR normally invests the fund's assets primarily
in common stocks.
FMR normally diversifies the fund's investments across different
countries and regions. In allocating the fund's investments across
countries and regions, FMR will consider the size of the market in
each country and region relative to the size of the international
market as a whole.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FIDELITY SOUTHEAST ASIA FUND is an equity fund that seeks capital
appreciation.
FMR normally invests at least 65% of the fund's total assets in
securities of Southeast Asian issuers. Southeast Asia includes Hong
Kong, Indonesia, South Korea, Malaysia, the Philippines, the People's
Republic of China, Singapore, Taiwan, and Thailand. FMR normally
invests the fund's assets primarily in common stocks.
FMR normally diversifies the fund's investments across different
Southeast Asian countries. In allocating the fund's investments across
countries, FMR will consider the size of the market in each country
relative to the size of the markets in Southeast Asia as a whole.
The Southeast Asia economies are generally in recessions. Many of
their economies are characterized by undeveloped financial services
sectors and heavy reliance on international trade. Currency
devaluations, political and social instability, and general economic
conditions have resulted in significant market downturns and
volatility. A small number of companies and industries represent a
large portion of the market in many Southeast Asian countries.
FMR may lend the fund' securities to broker-dealers or other
institutions to earn income for the fund.
FIDELITY GOVERNMENT INCOME FUND is a fixed-income fund that seeks high
current income, consistent with preservation of principal, by
investing in U.S. Government securities and instruments related to
U.S. Government securities under normal conditions. The benchmark
index for the fund is the Lehman Brothers Government Bond Index, a
market value weighted benchmark of U.S. Government and government
agency securities (other than mortgage securities) with maturities of
one year or more. FMR manages the fund to have similar overall
interest rate risk to the index. As of July 31, 1998, the dollar
weighted average maturity of the fund and index was approximately 8.70
years and 8.90 years, respectively.
In determining a security's maturity for purposes of calculating the
fund's average maturity, an estimate of the average time for its
principal to be paid may be used. This can be substantially shorter
than its stated final maturity.
The fund normally invests only in U.S. Government securities,
repurchase agreements and other instruments related to U.S. Government
securities. FMR normally invests at least 65% of the fund's total
assets in U.S. Government securities and repurchase agreements for
U.S. Government securities. Other instruments may include futures or
options on U.S. Government securities or interests in U. S. Government
securities that have been repackaged by dealers or other third
parties. It is important to note that neither the fund's share price
nor its yield is guaranteed by the U.S. Government.
In managing the fund, FMR selects a benchmark index that is
representative of the universe of securities in which the fund
invests. FMR uses this benchmark as a guide in structuring the fund
and selecting its investments.
FMR allocates among different market sectors (for example, fixed-rate
or adjustable rate mortgages) and different maturities based on its
view of the relative value of each sector or maturity.
FMR focuses on assembling a portfolio of income-producing bonds that
it believes will provide the best balance between risk and return
within the universe of securities in which the fund may invest. FMR's
evaluation of a potential investment includes an analysis of the
credit quality of the issuer, its structural features, its current
price compared to FMR's estimate of its long-term value, and any
short-term trading opportunities resulting from market inefficiencies.
SUPPLEMENT TO THE FIDELITY FREEDOM FUNDS(registered trademark)
MAY 21, 1998
STATEMENT OF ADDITIONAL INFORMATION
Fidelity Government Securities Fund, an underlying fund of the
Fidelity Freedom Funds, has been renamed Fidelity Government Income
Fund.
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOUND IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION ON PAGE 3 AND IS
INSERTED AS THE PENULTIMATE PARAGRAPH OF THE SECTION.
Each Freedom Fund intends to comply with the requirements of Section
12(d)(1)(G)(i)(IV) of the 1940 Act.
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOUND UNDER
THE HEADING "FUTURES CONTRACTS" IN THE "INVESTMENT PRACTICES OF THE
UNDERLYING FIDELITY FUNDS" SECTION ON PAGE 9.
Futures may be based on foreign indexes such as the CAC40 (France),
DAX30 (Germany), EuroTop 100 (Europe), IBEX (Spain), FTSE 100 (United
Kingdom), All Ordinary (Australia), Hang Seng (Hong Kong), and Nikkei
225, Nikkei 300 and TOPIX (Japan).
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOUND UNDER
THE HEADING "FUTURES MARGIN PAYMENTS" IN THE "INVESTMENT PRACTICES OF
THE UNDERLYING FIDELITY FUNDS" SECTION ON PAGE 9.
Although futures exchanges generally operate similarly in the
United States and abroad, foreign futures exchanges may follow
trading, settlement and margin procedures that are different from
those for U.S. exchanges. Futures contracts traded outside the United
States may involve greater risk of loss than U.S.-traded contracts,
including potentially greater risk of losses due to insolvency of a
futures broker, exchange member or other party that may owe initial or
variation margin to a fund. Because initial and variation margin
payments may be measured in foreign currency, a futures contract
traded outside the United States may also involve the risk of foreign
currency fluctuation.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"PERFORMANCE" SECTION ON PAGE 25.
The performance of each Freedom Fund may be compared to the
performance of a Target Asset Allocation Composite Index (Composite
Index). A Freedom Fund's Composite Index is a representation of the
performance of the asset classes (domestic and international equity
funds, investment grade and high yield fixed-income funds, and money
market funds) in which a Freedom Fund is invested and is based on the
weightings of each asset class in a Freedom Fund. The following
indices are used to calculate a Freedom Fund's Composite Index:
Wilshire 5000 Index for the domestic equity fund class, Morgan Stanley
Capital International Europe, Australasia, Far East (EAFE) Index for
the international equity fund class, Lehman Brothers Aggregate Bond
Index for the investment grade fixed-income fund class, Merrill Lynch
High Yield Master Index for the high yield fixed-income fund class,
and Lehman Brothers 3-Month T-Bill Index for the money market fund
class. The index weightings of each Composite Index are rebalanced
monthly.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"PERFORMANCE" SECTION ON PAGE 25.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
THE FREEDOM FUNDS' COMPOSITE INDEX WEIGHTINGS:
OCTOBER 17, 1996 THROUGH JUNE 30, 1997*
WILSHIRE 5000 MSCI EAFE LEHMAN BROTHERS MERRILL LYNCH HIGH LEHMAN BROTHERS
AGGREGATE BOND YIELD MASTER INDEX 3-MONTH
INDEX T-BILL INDEX
FREEDOM INCOME 20.0% -- 40.0% -- 40.0%
FREEDOM 2000 39.2% 4.4% 40.9% 4.0% 11.5%
FREEDOM 2010 59.2% 9.7% 24.1% 7.0% --
FREEDOM 2020 70.0% 12.4% 10.1% 7.5% --
FREEDOM 2030 70.0% 15.0% 5.0% 10.0% --
</TABLE>
* The weightings of the Composite Indices of the Freedom Funds' did
not change on December 31, 1996.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
THE FREEDOM FUNDS' COMPOSITE INDEX WEIGHTINGS:
JUNE 30, 1997 THROUGH DECEMBER 31, 1997
WILSHIRE 5000 MSCI EAFE LEHMAN BROTHERS MERRILL LYNCH HIGH LEHMAN BROTHERS
AGGREGATE BOND YIELD MASTER INDEX 3-MONTH
INDEX T-BILL INDEX
FREEDOM INCOME 20.0% -- 40.0% -- 40.0%
FREEDOM 2000 38.2% 4.5% 40.8% 4.0% 12.5%
FREEDOM 2010 57.7% 9.5% 25.0% 7.1% 0.7%
FREEDOM 2020 69.1% 12.6% 10.7% 7.6% --
FREEDOM 2030 69.6% 15.1% 5.3% 10.0% --
</TABLE>
THE FREEDOM FUNDS' COMPOSITE INDEX WEIGHTINGS:
DECEMBER 31, 1997 THROUGH JUNE 30, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
WILSHIRE 5000 MSCI EAFE LEHMAN BROTHERS MERRILL LYNCH HIGH LEHMAN BROTHERS
AGGREGATE BOND YIELD MASTER INDEX 3-MONTH
INDEX T-BILL INDEX
FREEDOM INCOME 20.0% -- 40.0% -- 40.0%
FREEDOM 2000 37.9% 4.3% 40.5% 3.9% 13.4%
FREEDOM 2010 56.8% 9.2% 25.7% 7.0% 1.3%
FREEDOM 2020 68.6% 12.4% 11.4% 7.6% --
FREEDOM 2030 69.6% 15.0% 5.5% 9.9% --
</TABLE>
THE FREEDOM FUNDS' COMPOSITE INDEX WEIGHTINGS:
JUNE 30, 1998 THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
WILSHIRE 5000 MSCI EAFE LEHMAN BROTHERS MERRILL LYNCH HIGH LEHMAN BROTHERS
AGGREGATE BOND YIELD MASTER INDEX 3-MONTH
INDEX T-BILL INDEX
FREEDOM INCOME 20.0% -- 40.0% -- 40.0%
FREEDOM 2000 36.8% 3.9% 40.3% 3.6% 15.4%
FREEDOM 2010 55.2% 8.5% 27.2% 6.7% 2.4%
FREEDOM 2020 67.9% 11.9% 12.7% 7.5% --
FREEDOM 2030 70.0% 14.5% 6.0% 9.5% --
</TABLE>
THE FOLLOWING INFORMATION REPLACES THE STANDARD & POOR'S 500 INDEX
DESCRIPTION FOUND IN THE "PERFORMANCE" SECTION ON PAGE 26.
WILSHIRE 5000 is a market capitalization-weighted index of
approximately 7,000 U.S. equity securities. The index contains all
actively traded common stocks with readily available price data traded
on the New York Stock Exchange, American Stock Exchange, and NASDAQ.
THE FOLLOWING TABLE REPLACES THE SIMILAR TABLE FOUND IN THE
"PERFORMANCE" SECTION ON PAGE 27.
The following table represents the comparative indices' calendar
year-to-year performance.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
WILSHIRE 5000 MSCI EAFE LEHMAN BROTHERS MERRILL LYNCH HIGH YIELD LEHMAN BROTHERS
AGGREGATE BOND MASTER INDEX 3-MONTH T-BILL
INDEX INDEX
1997 31.29% 2.01% 9.65% 12.82% 5.52%
1996 21.21% 6.05% 3.63% 11.06% 5.38%
1995 36.45% 11.21% 18.47% 19.91% 6.09%
1994 (0.06)% 7.78% (2.92)% (1.17)% 4.26%
1993 11.28% 32.56% 9.75% 17.18% 3.20%
1992 8.97% (12.17)% 7.40% 18.16% 2.92%
1991 34.21% 12.13% 16.00% 34.58% 6.22%
1990 (6.18)% (23.45)% 8.96% (4.35)% 8.21%
1989 29.17% 10.53% 14.53% 4.23% 8.74%
1988 17.94% 28.27% 7.89% 13.47% 6.40%
</TABLE>
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"TRUSTEES AND OFFICERS" SECTION ON PAGE 31.
*ROBERT C. POZEN (51), Trustee (1997) and Senior Vice President, is
also President and a Director of FMR (1997); and President and a
Director of Fidelity Investments Money Management, Inc. (1998),
Fidelity Management & Research (U.K.) Inc. (1997), and Fidelity
Management & Research (Far East) Inc. (1997). Previously, Mr. Pozen
served as General Counsel, Managing Director, and Senior Vice
President of FMR Corp.
