SUPPLEMENT TO THE FIDELITY FREEDOM FUNDS(registered trademark)' MAY
20, 1999 PROSPECTUS
The following information replaces similar information found under the
heading "Performance" in the "Fund Summary" section on page 12.
AVERAGE ANNUAL RETURNS
For the periods ended Past 1 year Life of fundA,B
December 31, 1998
Freedom Income 11.10% 11.01%
Lehman Bros. Aggregate Bond 8.69% 9.17%
Index
Freedom Income Composite Index 10.58% 11.36%
Freedom 2000 15.26% 15.28%
Lehman Bros. Aggregate Bond 8.69% 9.17%
Index
Freedom 2000 Composite Index 14.55% 15.83%
Freedom 2010 19.31% 19.34%
S&P 500 28.58% 30.95%
Freedom 2010 Composite Index 18.16% 19.89%
Freedom 2020 21.67% 21.46%
S&P 500 28.58% 30.95%
Freedom 2020 Composite Index 20.16% 21.94%
Freedom 2030 22.12% 21.76%
S&P 500 28.58% 30.95%
Freedom 2030 Composite Index 20.42% 22.03%
A BEGINNING JANUARY 1 OF THE FIRST CALENDAR YEAR FOLLOWING THE FUNDS'
COMMENCEMENT OF OPERATIONS.
B FROM JANUARY 1, 1997.
The following information replaces similar information found under the
heading "Performance" in the "Fund Summary" section on page 13.
The following indexes 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 II Index for the high
yield fixed-income fund class, and Lehman Brothers 3-Month Treasury
Bill Index for the money market fund class. The index weightings of
each Composite Index are rebalanced monthly.
The following information replaces the Merrill Lynch High Yield Master
Index description found under the heading "Performance" in the "Fund
Summary" section on page 13.
Merrill Lynch High Yield Master II Index is a market value-weighted
index of all domestic and yankee high-yield bonds, including deferred
interest bonds and payment in kind securities. Issues included in the
index have maturities of one year or more and have a credit rating
lower than BBB-/Baa3, but are not in default.
The following information replaces similar information found under the
heading "Description of Underlying Fidelity Funds" in the "Investment
Details" section on page 19.
FIDELITY BLUE CHIP GROWTH FUND seeks growth of capital over the long
term.
FMR normally invests the fund's assets primarily in common stocks of
well-known and established companies.
FMR normally invests at least 65% of the fund's total assets in blue
chip companies. FMR defines blue chip companies to include those with
a market capitalization of at least $200 million, if the company's
stock is included in the S&P 500 or the Dow Jones Industrial Average,
or $1 billion if not included in either index.
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 channels 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.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
The following information supplements information found under the
heading "Description of Underlying Fidelity Funds" in the "Investment
Details" section on page 20 for Fidelity Disciplined Equity Fund.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
The following information replaces similar information found under the
heading "Description of Underlying Fidelity Funds" in the "Investment
Details" section on page 20.
FIDELITY FUND seeks long-term capital growth.
FMR normally invests the fund's assets primarily in common stocks.
FMR, to some extent, limits the emphasis on the fund's growth
objective by investing a portion of the fund's assets in securities
selected for their current income characteristics. FMR may from time
to time invest a portion of the fund's assets in bonds, including
lower-quality debt securities.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
FMR is not constrained by any particular investment style. At any
given time, FMR may tend to buy "growth" stocks or "value" stocks, or
a combination of both types. In buying and selling securities for the
fund, FMR relies on fundamental analysis of each issuer and its
potential for success in light of its current financial condition, its
industry position, and economic and market conditions. Factors
considered include growth potential, earnings estimates and
management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
FIDELITY GROWTH & INCOME PORTFOLIO seeks high total return through a
combination of current income and capital appreciation.
FMR normally invests a majority of the fund's assets in common stocks
with a focus on those that pay current dividends and show potential
for capital appreciation. FMR may also invest the fund's assets in
bonds, including lower-quality debt securities, as well as stocks that
are not currently paying dividends, but offer prospects for future
income or capital appreciation.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
FMR is not constrained by any particular investment style. At any
given time, FMR may tend to buy "growth" stocks or "value" stocks, or
a combination of both types. In buying and selling securities for the
fund, FMR relies on fundamental analysis of each issuer and its
potential for success in light of its current financial condition, its
industry position, and economic and market conditions. Factors
considered include growth potential, earnings estimates and
management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
The following information replaces similar information found under the
heading "Description of Underlying Fidelity Funds" in the "Investment
Details" section on page 22.
FIDELITY OTC PORTFOLIO seeks capital appreciation.
FMR normally invests the fund's assets primarily in common stocks.
FMR normally invests at least 65% of the fund's total assets in
securities principally traded on the OTC market. OTC securities are
securities principally traded on the OTC market (a telephone or
computer network that connects securities dealers). However, OTC
securities can be listed for trading on the New York or American Stock
Exchange or a foreign exchange and may include American Depositary
Receipts and securities eligible for unlisted trading privileges on
such exchanges. Securities that begin to trade principally on an
exchange after purchase continue to be considered OTC securities for
the purpose of the 65% policy. OTC securities can be issued by
companies of any size. However, the OTC market has more small and
medium-sized companies than other markets. FMR may also invest the
fund's assets in non-OTC securities.
FMR may invest the fund's assets in securities of foreign issuers in
addition to securities of domestic issuers.
FMR is not constrained by any particular investment style. At any
given time, FMR may tend to buy "growth" stocks or "value" stocks or a
combination of both types. In buying and selling securities for the
fund, FMR relies on fundamental analysis of each issuer and its
potential for success in light of its current financial condition, its
industry position, and economic and market conditions. Factors
considered include growth potential, earnings estimates and
management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
The following information replaces similar information found under the
heading "Description of Underlying Fidelity Funds" in the "Investment
Details" section on page 24.
INVESTMENT-GRADE FIXED-INCOME FUNDS
FIDELITY GOVERNMENT INCOME FUND seeks a high level of current income,
consistent with preservation of principal.
FMR normally invests the fund's assets in U.S. Government securities
and instruments related to U.S. Government securities. FMR normally
invests at least 65% of the fund's total assets in U.S. Government
securities. FMR does not currently intend to invest more than 40% of
the fund's assets in mortgage securities.
FMR uses the Lehman Brothers Government Bond Index as a guide in
structuring the fund and selecting its investments. FMR manages the
fund to have similar overall interest rate risk to the index. As of
July 31, 1999, the dollar-weighted average maturity of the fund and
the index was approximately 8.6 and 8.9 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 maturity.
FMR allocates the fund's assets among different market sectors (for
example, U.S. Treasury or U.S. Government agency securities) and
different maturities based on its view of the relative value of each
sector or maturity.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR analyzes a
security's structural features and current price compared to its
estimated long-term value, any short-term trading opportunities
resulting from market inefficiencies, and the credit quality of its
issuer.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices, interest rates or other factors that affect security
values. If FMR's strategies do not work as intended, the fund may not
achieve its objective.
FIDELITY INTERMEDIATE BOND FUND seeks a high level of current income.
FMR normally invests the fund's assets in U.S. dollar-denominated
investment-grade bonds (those of medium and high quality).
FMR uses the Lehman Brothers Intermediate Government/Corporate Bond
Index as a guide in structuring the fund and selecting its
investments. FMR manages the fund to have similar overall interest
rate risk to the index. In addition, the fund normally maintains a
dollar-weighted average maturity between three and 10 years. As of
April 30, 1999, the dollar-weighted average maturity of the fund and
the index was approximately 5.5 and 4.4 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 maturity.
FMR allocates the fund's assets among different market sectors (for
example, corporate or government securities) and different maturities
based on its view of the relative value of each sector or maturity.
In buying and selling securities for the fund, FMR analyzes a
security's structural features, current price compared to its
estimated long-term value, and any short-term trading opportunities
resulting from market inefficiencies, and the credit quality of its
issuer.
In order to earn additional income for the fund, FMR may use a trading
strategy that involves selling mortgage securities and simultaneously
agreeing to purchase similar securities on a later date at a set
price. This trading strategy may result in an increased portfolio
turnover rate which increases transaction costs and may increase
taxable gains.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices, interest rates or other factors that affect security
values. If FMR's strategies do not work as intended, the fund may not
achieve its objective.
FIDELITY INVESTMENT GRADE BOND FUND seeks a high level of current
income.
FMR normally invests the fund's assets in U.S. dollar-denominated
investment-grade bonds (those of medium and high quality).
FMR uses the Lehman Brothers Aggregate Bond Index as a guide in
structuring the fund and selecting its investments. FMR manages the
fund to have similar overall interest rate risk to the index. As of
April 30, 1999, the dollar-weighted average maturity of the fund and
the index was approximately 8.8 and 9.0 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 maturity.
FMR allocates the fund's assets among different market sectors (for
example, corporate or government securities) and different maturities
based on its view of the relative value of each sector or maturity.
In buying and selling securities for the fund, FMR analyzes a
security's structural features, current price compared to its
estimated long-term value, and any short-term trading opportunities
resulting from market inefficiencies, and the credit quality of its
issuer.
In order to earn additional income for the fund, FMR may use a trading
strategy that involves selling mortgage securities and simultaneously
agreeing to purchase similar securities on a later date at a set
price. This trading strategy may result in an increased portfolio
turnover rate which increases transaction costs and may increase
taxable gains.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices, interest rates or other factors that affect security
values. If FMR's strategies do not work as intended, the fund may not
achieve its objective.
HIGH YIELD FIXED-INCOME FUND
FIDELITY CAPITAL & INCOME FUND seeks to provide a combination of
income and capital growth.
FMR invests the fund's assets in equity and debt securities. FMR has
the flexibility to invest the fund's assets in securities of any type
or quality, including defaulted securities, but expects to invest the
majority of the fund's assets in debt securities and convertible
securities, with an emphasis on lower-quality debt securities. Many
lower-quality debt securities are subject to legal or contractual
restrictions limiting FMR's ability to resell the securities to the
general public. FMR may invest in companies whose financial condition
is troubled or uncertain and that may be involved in bankruptcy
proceedings, reorganizations or financial restructurings.
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 relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include a
security's structural features and current price compared to its
long-term value, and the earnings potential, credit standing and
management of the security's issuer.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices, interest rates or other factors that affect security
values. If FMR's strategies do not work as intended, the fund may not
achieve its objective.
MONEY MARKET FUND
RETIREMENT MONEY MARKET PORTFOLIO seeks to obtain as high a level of
current income as is consistent with the preservation of capital and
liquidity.
FMR invests the fund's assets in U.S. dollar-denominated money market
securities of domestic and foreign issuers and repurchase agreements.
FMR also may enter into reverse repurchase agreements for the fund.
FMR will invest more than 25% of the fund's total assets in the
financial services industry.
In buying and selling securities for the fund, FMR complies with
industry-standard requirements for money market funds regarding the
quality, maturity, and diversification of the fund's investments. FMR
stresses maintaining a stable $1.00 share price, liquidity, and
income.
The following information replaces similar information found under the
heading "Principal Investment Risks" in the "Investment Details"
section on page 28.
FOREIGN EXPOSURE. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign
operations, and securities for which an entity located in a foreign
country provides credit support or a maturity-shortening structure can
involve additional risks relating to political, economic, or
regulatory conditions in foreign countries. These risks include
fluctuations in foreign currencies; withholding or other taxes;
trading, settlement, custodial, and other operational risks; and the
less stringent investor protection and disclosure standards of some
foreign markets. For example, many foreign countries are less prepared
than the United States to properly process and calculate information
related to dates from and after January 1, 2000, which could result in
difficulty pricing foreign investments and failure by foreign issuers
to pay timely dividends, interest, or principal. All of these factors
can make foreign investments, especially those in emerging markets,
more volatile and potentially less liquid than U.S. investments. In
addition, foreign markets can perform differently from the U.S.
market.
Investing in emerging markets can involve risks in addition to and
greater than those generally associated with investing in more
developed foreign markets. The extent of economic development;
political stability; market depth, infrastructure, and capitalization;
and regulatory oversight can be less than in more developed markets.
Emerging market economies can be subject to greater social, economic,
regulatory, and political uncertainties. All of these factors can make
emerging market securities more volatile and potentially less liquid
than securities issued in more developed markets.
EUROPE. Europe includes both developed and emerging markets. Most
developed countries in Western Europe are members of the European
Union (EU) and many are also members of the 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
can be 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.
ASIA. Asia includes countries in all stages of economic
development, from the highly developed economy of Japan to the
emerging market economy of the People's Republic of China. Most Asian
economies are characterized by over-extension of credit, currency
devaluations, rising unemployment, decreased exports, and economic
recessions. Currency devaluations in any one country can have a
significant effect on the entire region. Recently, the markets in each
Asian country have suffered significant downturns as well as
significant volatility. Increased political and social unrest in some
or all Asian countries could cause further economic and market
uncertainty.
The following information replaces similar information found under the
heading "Policies" in the "Account Features and Policies" section on
page 41.
(small solid bullet) Confirmation statements (after transactions
affecting your account balance except reinvestment of distributions in
the fund or another fund and certain transactions through automatic
investment or withdrawal programs).
SUPPLEMENT TO THE
FIDELITY FREEDOM FUNDS(registered trademark)
MAY 20, 1999
STATEMENT OF ADDITIONAL INFORMATION
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION ON PAGE 2.
(iii) Each fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)).
(v) Each fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 15% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"PERFORMANCE" SECTION ON PAGE 48.
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
indexes 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 Index (MSCI EAFE)
for the international equity fund class, Lehman Brothers Aggregate
Bond Index for the investment-grade fixed-income fund class, Merrill
Lynch High Yield Master II Index for the high yield fixed-income fund
class, and Lehman Brothers 3-Month Treasury 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 48.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
THE FREEDOM FUNDS' COMPOSITE
INDEX WEIGHTINGS: OCTOBER
17, 1996 THROUGH JUNE 30,
1997*
Wilshire 5000 MSCI EAFE Lehman Brothers Aggregate Merrill Lynch High Yield
Bond Index Master II Index
Freedom Income 20.0% -- 40.0% --
Freedom 2000 39.2% 4.4% 40.9% 4.0%
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>
<TABLE>
<CAPTION>
<S> <C>
THE FREEDOM FUNDS' COMPOSITE
INDEX WEIGHTINGS: OCTOBER
17, 1996 THROUGH JUNE 30,
1997*
Lehman Brothers 3-Month
T-Bill Index
Freedom Income 40.0%
Freedom 2000 11.5%
Freedom 2010 --
Freedom 2020 --
Freedom 2030 --
</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>
THE FREEDOM FUNDS' COMPOSITE
INDEX WEIGHTINGS: JUNE 30,
1997 THROUGH DECEMBER 31, 1997
Wilshire 5000 MSCI EAFE Lehman Brothers Aggregate Merrill Lynch High Yield
Bond Index Master II Index
Freedom Income 20.0% -- 40.0% --
Freedom 2000 38.2% 4.5% 40.8% 4.0%
Freedom 2010 57.7% 9.5% 25.0% 7.1%
Freedom 2020 69.1% 12.6% 10.7% 7.6%
Freedom 2030 69.6% 15.1% 5.3% 10.0%
THE FREEDOM FUNDS' COMPOSITE
INDEX WEIGHTINGS: DECEMBER
31, 1997 THROUGH JUNE 30, 1998
Wilshire 5000 MSCI EAFE Lehman Brothers Aggregate Merrill Lynch High Yield
Bond Index Master II Index
Freedom Income 20.0% -- 40.0% --
Freedom 2000 37.9% 4.3% 40.5% 3.9%
Freedom 2010 56.8% 9.2% 25.7% 7.0%
Freedom 2020 68.6% 12.4% 11.4% 7.6%
Freedom 2030 69.6% 15.0% 5.5% 9.9%
THE FREEDOM FUNDS' COMPOSITE
INDEX WEIGHTINGS: JUNE 30,
1998 THROUGH DECEMBER 31, 1998
Wilshire 5000 MSCI EAFE Lehman Brothers Aggregate Merrill Lynch High Yield
Bond Index Master II Index
Freedom Income 20.0% -- 40.0% --
Freedom 2000 36.8% 3.9% 40.3% 3.6%
Freedom 2010 55.2% 8.5% 27.2% 6.7%
Freedom 2020 67.9% 11.9% 12.7% 7.5%
Freedom 2030 70.0% 14.5% 6.0% 9.5%
THE FREEDOM FUNDS' COMPOSITE
INDEX WEIGHTINGS: DECEMBER
31, 1998 THROUGH JUNE 30, 1999
Wilshire 5000 MSCI EAFE Lehman Brothers Aggregate Merrill Lynch High Yield
Bond Index Master II Index
Freedom Income 20.0% -- 40.0% --
Freedom 2000 34.9% 3.4% 40.5% 3.4%
Freedom 2010 52.4% 7.8% 29.5% 6.6%
Freedom 2020 66.3% 11.3% 14.8% 7.6%
Freedom 2030 70.0% 13.9% 6.8% 9.3%
THE FREEDOM FUNDS' COMPOSITE
INDEX WEIGHTINGS: JUNE 30,
1999 THROUGH DECEMBER 31, 1999
Wilshire 5000 MSCI EAFE Lehman Brothers Aggregate Merrill Lynch High Yield
Bond Index Master II Index
Freedom Income 20.0% -- 40.0% --
Freedom 2000 33.7% 3.4% 39.8% 3.3%
Freedom 2010 50.2% 7.6% 31.1% 6.3%
Freedom 2020 64.7% 11.4% 16.3% 7.6%
Freedom 2030 69.8% 13.9% 7.4% 8.9%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
THE FREEDOM FUNDS' COMPOSITE
INDEX WEIGHTINGS: JUNE 30,
1997 THROUGH DECEMBER 31, 1997
Lehman Brothers 3-Month
T-Bill Index
Freedom Income 40.0%
Freedom 2000 12.5%
Freedom 2010 0.7%
Freedom 2020 --
Freedom 2030 --
THE FREEDOM FUNDS' COMPOSITE
INDEX WEIGHTINGS: DECEMBER
31, 1997 THROUGH JUNE 30, 1998
Lehman Brothers 3-Month
T-Bill Index
Freedom Income 40.0%
Freedom 2000 13.4%
Freedom 2010 1.3%
Freedom 2020 --
Freedom 2030 --
THE FREEDOM FUNDS' COMPOSITE
INDEX WEIGHTINGS: JUNE 30,
1998 THROUGH DECEMBER 31, 1998
Lehman Brothers 3-Month
T-Bill Index
Freedom Income 40.0%
Freedom 2000 15.4%
Freedom 2010 2.4%
Freedom 2020 --
Freedom 2030 --
THE FREEDOM FUNDS' COMPOSITE
INDEX WEIGHTINGS: DECEMBER
31, 1998 THROUGH JUNE 30, 1999
Lehman Brothers 3-Month
T-Bill Index
Freedom Income 40.0%
Freedom 2000 17.8%
Freedom 2010 3.7%
Freedom 2020 --
Freedom 2030 --
THE FREEDOM FUNDS' COMPOSITE
INDEX WEIGHTINGS: JUNE 30,
1999 THROUGH DECEMBER 31, 1999
Lehman Brothers 3-Month
T-Bill Index
Freedom Income 40.0%
Freedom 2000 19.8%
Freedom 2010 4.8%
Freedom 2020 --
Freedom 2030 --
</TABLE>
MERRILL LYNCH HIGH YIELD MASTER II INDEX is a market
value-weighted index of all domestic and yankee high-yield bonds,
including deferred interest bonds and payment-in-kind securities.
Issues included in the index have maturities of one year or more and
have a credit rating lower than BBB-/Baa3, but are not in default.
Issues must have an outstanding par value of at least $50 million to
be included in the index.
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"PERFORMANCE" SECTION ON PAGE 50.
The following table represents the comparative indexes' calendar
year-to-year performance.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Wilshire 5000 MSCI EAFE Lehman Brothers Aggregate Merrill Lynch High Yield Lehman Brothers 3-Month
Bond Index Master II Index Treasury Bill Index
1998 23.43% 20.27% 8.69% 2.95% 5.31%
1997 31.29% 2.01% 9.65% 13.27% 5.52%
1996 21.21% 6.05% 3.63% 11.27% 5.38%
1995 36.45% 11.21% 18.47% 20.46% 6.09%
1994 (0.06)% 7.78% (2.92)% (1.03)% 4.26%
1993 11.28% 32.56% 9.75% 16.69% 3.20%
1992 8.97% (12.17)% 7.40% 17.44% 2.92%
1991 34.21% 12.13% 16.00% 39.17% 6.22%
1990 (6.18)% (23.45)% 8.96% (4.36)% 8.21%
1989 29.17% 10.53% 14.53% 2.31% 8.74%
</TABLE>
THE FOLLOWING INFORMATION HAS BEEN REMOVED FROM THE "TRUSTEES AND
OFFICERS" SECTION BEGINNING ON PAGE 52.
E. BRADLEY JONES (71), Trustee. Prior to his retirement in 1984, Mr.
Jones was Chairman and Chief Executive Officer of LTV Steel Company.
He is a Director of TRW Inc. (original equipment and replacement
products), Consolidated Rail Corporation, Birmingham Steel
Corporation, and RPM, Inc. (manufacturer of chemical products), and he
previously served as a Director of NACCO Industries, Inc. (mining and
manufacturing, 1985-1995), Hyster-Yale Materials Handling, Inc.
(1985-1995), and Cleveland-Cliffs Inc. (mining), and as a Trustee of
First Union Real Estate Investments. In addition, he serves as a
Trustee of the Cleveland Clinic Foundation, where he has also been a
member of the Executive Committee as well as Chairman of the Board and
President, a Trustee and member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic
Florida.
LEONARD M. RUSH (52), Assistant Treasurer (1994), is an employee of
FMR (1994). Prior to becoming Assistant Treasurer of the Fidelity
funds, Mr. Rush was Chief Compliance Officer of FMR Corp. (1993-1994)
and Chief Financial Officer of Fidelity Brokerage Services, Inc.
(1990-1993).
THE FOLLOWING INFORMATION SUPPLEMENTS THE SIMILAR INFORMATION FOUND IN
THE "TRUSTEES AND OFFICERS" SECTION BEGINNING ON PAGE 52.
NED C. LAUTENBACH (55), Trustee (2000), has been a partner of Clayton,
Dubilier & Rice, Inc. (private equity investment firm) since September
1998. Mr. Lautenbach was Senior Vice President of IBM Corporation from
1992 until his retirement in July 1998. From 1993 to 1995 he was
Chairman of IBM World Trade Corporation. He also was a member of IBM's
Corporate Executive Committee from 1994 to July 1998. He is a Director
of PPG Industries Inc. (glass, coating and chemical manufacturer),
Dynatech Corporation (global communications equipment), Eaton
Corporation (global manufacturer of highly engineered products) and
ChoicePoint Inc. (data identification, retrieval, storage, and
analysis).
THE FOLLOWING INFORMATION SUPPLEMENTS THE SIMILAR INFORMATION FOUND IN
THE "TRUSTEES AND OFFICERS" SECTION BEGINNING ON PAGE 52.
MARIA F. DWYER (41), Deputy Treasurer (2000), is Deputy Treasurer of
the Fidelity funds and is a Vice President (1999) and an employee
(1996) of FMR. Prior to joining Fidelity, Ms. Dwyer served as Director
of Compliance for MFS Investment Management.
THE FOLLOWING INFORMATION REPLACES THE COMPENSATION TABLE FOUND IN THE
"TRUSTEES AND OFFICERS" SECTION BEGINNING ON PAGE 54.
The following table sets forth information describing the compensation
of each Trustee and Member of the Advisory Board of each fund for his
or her services for the fiscal year ended March 31, 1999, or calendar
year ended December 31, 1998, as applicable.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Compensation Table
AGGREGATE COMPENSATION FROM A Edward C. Johnson 3d** Abigail P. Johnson ** J. Gary Burkhead ** Ralph F. Cox
FUND
Freedom IncomeB $ 0 $ 0 $ 0 $ 21
Freedom 2000B $ 0 $ 0 $ 0 $ 52
Freedom 2010B $ 0 $ 0 $ 0 $ 94
Freedom 2020B $ 0 $ 0 $ 0 $ 88
Freedom 2030B $ 0 $ 0 $ 0 $ 29
TOTAL COMPENSATION FROM THE $ 0 $ 0 $ 0 $ 223,500
FUND COMPLEX*,A
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Compensation Table
AGGREGATE COMPENSATION
FROM A Phyllis Burke Davis Robert M. Gates E. Bradley Jones **** Donald J. Kirk Ned C. Lautenbach***
FUND
Freedom IncomeB $ 21 $ 21 $ 21 $ 22 $ 0
Freedom 2000B $ 49 $ 51 $ 49 $ 50 $ 0
Freedom 2010B $ 90 $ 92 $ 90 $ 90 $ 0
Freedom 2020B $ 85 $ 87 $ 85 $ 85 $ 0
Freedom 2030B $ 28 $ 28 $ 28 $ 28 $ 0
TOTAL COMPENSATION
FROM THE $ 220,500 $ 223,500 $222,000 $ 226,500 $ 0
FUND COMPLEX*,A
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Compensation Table
AGGREGATE COMPENSATION
FROM A Peter S. Lynch** William O. McCoy Gerald C. Mc- Donough Marvin L. Mann Robert C. Pozen**
FUND
Freedom IncomeB $ 0 $ 21 $ 26 $ 21 $ 0
Freedom 2000B $ 0 $ 51 $ 61 $ 51 $ 0
Freedom 2010B $ 0 $ 92 $ 112 $ 92 $ 0
Freedom 2020B $ 0 $ 87 $ 105 $ 87 $ 0
Freedom 2030B $ 0 $ 28 $ 34 $ 28 $ 0
TOTAL COMPENSATION FROM THE $ 0 $ 223,500 $ 273,500 $ 220,500 $ 0
FUND COMPLEX*,A
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Compensation Table
AGGREGATE COMPENSATION FROM A Thomas R. Williams
FUND
Freedom IncomeB $ 21
Freedom 2000B $ 51
Freedom 2010B $ 92
Freedom 2020B $ 87
Freedom 2030B $ 28
TOTAL COMPENSATION FROM THE $ 223,500
FUND COMPLEX*,A
</TABLE>
* Information is for the calendar year ended December 31, 1998 for 237
funds in the complex.
** Interested Trustees of the funds, Ms. Johnson and Mr. Burkhead are
compensated by FMR.
*** During the period from October 14, 1999 through December 31, 1999,
Mr. Lautenbach served as a Member of the Advisory Board. Effective
January 1, 2000, Mr. Lautenbach serves as a Member of the Board of
Trustees.
**** Mr. Jones served on the Board of Trustees through December 31,
1999.
A Compensation figures include cash, amounts required to be deferred,
and may include amounts deferred at the election of Trustees. For the
calendar year ended December 31, 1998, the Trustees accrued required
deferred compensation from the funds as follows: Ralph F. Cox,
$75,000; Phyllis Burke Davis, $75,000; Robert M. Gates, $75,000; E.
Bradley Jones, $75,000; Donald J. Kirk, $75,000; William O. McCoy,
$75,000; Gerald C. McDonough, $87,500; Marvin L. Mann, $75,000; and
Thomas R. Williams, $75,000. Certain of the non-interested Trustees
elected voluntarily to defer a portion of their compensation as
follows: Ralph F. Cox, $55,039; Marvin L. Mann, $55,039; Thomas R.
Williams, $63,433; and William O. McCoy, $55,039.
B Compensation figures include cash.
