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 15.84% 12.56%
COMPOSITE INDEX
FREEDOM 2000 23.25% 17.14%
FREEDOM 2000 24.48% 18.67%
COMPOSITE INDEX
FREEDOM 2010 31.31% 22.78%
FREEDOM 2010 32.78% 24.63%
COMPOSITE INDEX
FREEDOM 2020 35.36% 25.71%
FREEDOM 2020 37.20% 27.81%
COMPOSITE INDEX
FREEDOM 2030 36.28% 26.30%
FREEDOM 2030 37.67% 28.15%
COMPOSITE INDEX
CUMULATIVE TOTAL RETURNS
PAST 1 LIFE OF
YEAR FUND*
FREEDOM INCOME 14.88% 17.17%
FREEDOM INCOME 15.84% 18.74%
COMPOSITE INDEX
FREEDOM 2000 23.25% 25.83%
FREEDOM 2000 24.48% 28.22%
COMPOSITE INDEX
FREEDOM 2010 31.31% 34.71%
FREEDOM 2010 32.78% 37.67%
COMPOSITE INDEX
FREEDOM 2020 35.36% 39.41%
FREEDOM 2020 37.20% 42.80%
COMPOSITE INDEX
FREEDOM 2030 36.28% 40.35%
FREEDOM 2030 37.67% 43.35%
COMPOSITE INDEX
* 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.
"Growth" stocks can react differently to issuer, political, market
and economic developments than the market as a whole and other types
of stocks. "Growth" stocks tend to be more expensive relative to their
earnings or assets compared to other types of stocks. As a result,
"growth" stocks tend to be sensitive to changes in their earnings and
more volatile than other types of stocks.
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.
FIDE LITY GROWTH COMPANY FUND is an equity fund that seeks capital
appreciation.
FMR normally invests the fund's assets primarily in common
stocks.
FMR invests the fund's assets in companies FMR believes have
above-average growth potential. Growth may be measured by factors such
as earnings or revenue.
Companies with high growth potential tend to be companies with
higher than average price/earnings (P/E) ratios. Companies with strong
growth potential often have new products, technologies, distribution
ch annels or other opportunities or have a strong industry or
market position. The stocks of these companies are often called
"growth" stocks.
FMR may invest the fund's assets in securities of foreign issuers
in addition to securities of domestic issuers.
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.
