UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-4085

Fidelity Income Fund
(Exact name of registrant as specified in charter)

82 Devonshire St., Boston, Massachusetts 02109
(Address of principal executive offices) (Zip code)

Eric D. Roiter, Secretary

82 Devonshire St.

Boston, Massachusetts 02109
(Name and address of agent for service)

Registrant's telephone number, including area code: 617-563-7000

Date of fiscal year end:	July 31

Date of reporting period:	July 31, 2007

Item 1. Reports to Stockholders

Fidelity® Ginnie Mae Fund

Fidelity Intermediate
Government Income Fund

Annual Report

July 31, 2007

(2_fidelity_logos) (Registered_Trademark)

Chairman's Message	<Click Here>	Ned Johnson's message to shareholders.
Shareholder Expense Example	<Click Here>	An example of shareholder expenses.
Fidelity Ginnie Mae Fund
	<Click Here>	Performance
	<Click Here>	Management's Discussion of Fund Performance
	<Click Here>	Investment Changes
	<Click Here>	Investments
	<Click Here>	Financial Statements
Fidelity Intermediate Government Income Fund
	<Click Here>	Performance
	<Click Here>	Management's Discussion of Fund Performance
	<Click Here>	Investment Changes
	<Click Here>	Investments
	<Click Here>	Financial Statements
Notes	<Click Here>	Notes to the financial statements
Report of Independent Registered Public Accounting Firm	<Click Here>
Trustees and Officers	<Click Here>
Distributions	<Click Here>
Board Approval of Investment Advisory Contracts and Management Fees	<Click Here>

To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.

Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.

Other third party marks appearing herein are the property of their respective owners.

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.

Annual Report

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.

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.

NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE

Neither the funds nor Fidelity Distributors Corporation is a bank.

Annual Report

Chairman's Message

(photo_of_Edward_C_Johnson_3d)

Dear Shareholder:

Stocks are currently on pace to register their fifth straight year of positive returns, although gains could be trimmed if the U.S. economy continues to slow. While financial markets are always unpredictable, there are a number of time-tested principles that can put the historical odds in your favor.

One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.

You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).

A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.

We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.

Sincerely,

/s/Edward C. Johnson 3d

Edward C. Johnson 3d

Annual Report

Shareholder Expense Example

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2007 to July 31, 2007).

Actual Expenses

The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.

Hypothetical Example for Comparison Purposes

The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

Annual Report

Shareholder Expense Example - continued

	Beginning Account Value February 1, 2007	Ending Account Value July 31, 2007	Expenses Paid During Period* February 1, 2007 to July 31, 2007
Ginnie Mae Fund
Actual	$ 1,000.00	$ 1,017.80	$ 2.25
Hypothetical^A	$ 1,000.00	$ 1,022.56	$ 2.26
Intermediate Government Income Fund
Actual	$ 1,000.00	$ 1,026.00	$ 2.26
Hypothetical^A	$ 1,000.00	$ 1,022.56	$ 2.26

^A 5% return per year before expenses

* Expenses are equal to each Fund's annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

	Annualized Expense Ratio
Ginnie Mae Fund	.45%
Intermediate Government Income Fund	.45%

Annual Report

Fidelity Ginnie Mae Fund

Performance: The Bottom Line

Average annual 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) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.

Average Annual Total Returns

Periods ended July 31, 2007	Past 1 year	Past 5 years	Past 10 years
Fidelity® Ginnie Mae Fund	5.29%	3.61%	5.20%

$10,000 Over 10 Years

Let's say hypothetically that $10,000 was invested in Fidelity® Ginnie Mae Fund on July 31, 1997. The chart shows how the value of your investment would have changed, and also shows how the Lehman Brothers® GNMA Index performed over the same period.

Annual Report

Fidelity Ginnie Mae Fund

Management's Discussion of Fund Performance

Comments from William Irving, Portfolio Manager of Fidelity® Ginnie Mae Fund

The investment-grade bond market posted a reasonably solid advance for the 12 months ending July 31, 2007. In that time, the Lehman Brothers® U.S. Aggregate Index - a performance gauge of taxable, high-quality debt - gained 5.58%. A sizable percentage of that increase came in the first four months of the period. The index returned a cumulative 4.30% from August through November, as investors responded favorably to the end of the Federal Reserve Board's two-year campaign of interest rate hikes. In fact, the central bank left rates unchanged through the entire 12-month period. Bonds turned negative in December and January, but had their best month of the past year in February, rising 1.54% as extreme volatility in the stock markets led to a flight to safety in high-quality debt. Performance was lackluster thereafter, however. Inflation concerns and dwindling hopes for a near-term Fed rate cut pressured bond prices for much of the remainder of the period, as did the meltdown of the subprime mortgage sector. Against that backdrop, the index gained only 0.32% over the final five months of the period.

For the 12 months ending July 31, 2007, the fund returned 5.29%, while the Lehman Brothers GNMA Index gained 5.46%. The fund's performance was aided by its out-of-benchmark stake in hybrid adjustable-rate mortgages (ARMs), which outpaced the fixed-rate mortgages that constitute the benchmark due to strong demand from institutional investors. Many institutional investors added to their holdings in hybrid ARM securities in response to their April 1, 2007, inclusion into two commonly employed Lehman Brothers benchmarks. Security selection among fixed-rate mortgage securities also was beneficial, with higher-coupon and "seasoned" mortgages performing well due to their lower prepayment risk. Some of the fund's seasoned and higher-coupon holdings were in the form of collateralized mortgage obligations (CMOs), whose cash flows are carved into classes - each with its own expected maturity and cash flow. On the flip side, the fund's modest out-of-index holdings in interest-only project loans issued by Ginnie Mae detracted from performance as they were hurt by fears of faster-than-expected prepayments.

The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.

Annual Report

Fidelity Ginnie Mae Fund

Investment Changes

Coupon Distribution as of July 31, 2007
	% of fund's investments	% of fund's investments 6 months ago
Less than 4%	4.5	4.1
4 - 4.99%	11.3	6.6
5 - 5.99%	42.3	46.4
6 - 6.99%	28.3	30.9
7 - 7.99%	4.7	7.8
8% and over	1.2	0.8

Coupon distribution shows the range of stated interest rates on the fund's investments, excluding short-term investments.

Weighted Average Maturity as of July 31, 2007
		6 months ago
Years	5.8	5.6

The weighted average maturity is based on the dollar-weighted average length of time until principal payments are expected or until securities reach maturity, taking into account any maturity shortening feature such as a call, refunding or redemption provision.

Duration as of July 31, 2007
		6 months ago
Years	4.3	3.4

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 net assets)
As of July 31, 2007*^A			As of January 31, 2007**^B
	Mortgage Securities 91.7%			Mortgage Securities 87.6%
	CMOs and Other Mortgage Related Securities 17.7%			CMOs and Other Mortgage Related Securities 14.5%
	Asset-Backed Securities 0.7%			Asset-Backed Securities 0.9%
	Short-Term Investments and Net Other Assets (10.1)%^(dagger)			Short-Term Investments and Net Other Assets (3.0)%^(dagger)
* GNMA Securities		94.5%	** GNMA Securities		95.2%
^A Futures and Swaps		(7.1)%	^BFutures and Swaps		0.0%

^(dagger) Short-Term Investments and Net Other Assets are not included in the pie chart.

Annual Report

Fidelity Ginnie Mae Fund

Investments July 31, 2007

Showing Percentage of Net Assets

U.S. Government Agency - Mortgage Securities - 91.7%
	Principal Amount (000s)		Value (000s)
Fannie Mae - 8.7%
3.585% 9/1/33 (b)	$ 1,542		$ 1,515
3.718% 6/1/33 (b)	4,807		4,793
3.757% 10/1/33 (b)	437		436
3.784% 6/1/33 (b)	5,736		5,745
3.809% 10/1/33 (b)	3,778		3,719
3.825% 4/1/33 (b)	1,191		1,196
3.991% 4/1/34 (b)	4,876		4,807
3.999% 12/1/33 (b)	24,889		24,615
4.004% 8/1/33 (b)	2,149		2,122
4.027% 3/1/34 (b)	8,711		8,591
4.034% 6/1/34 (b)	9,056		8,919
4.115% 4/1/34 (b)	5,786		5,713
4.124% 5/1/34 (b)	4,709		4,652
4.128% 2/1/35 (b)	15,112		14,905
4.178% 8/1/34 (b)	2,529		2,500
4.191% 9/1/33 (b)	2,800		2,790
4.226% 5/1/34 (b)	6,622		6,602
4.249% 1/1/34 (b)	1,092		1,082
4.28% 10/1/33 (b)	178		177
4.282% 3/1/33 (b)	443		445
4.3% 3/1/33 (b)	198		195
4.302% 6/1/33 (b)	226		228
4.321% 4/1/35 (b)	226		227
4.386% 10/1/34 (b)	2,101		2,076
4.406% 8/1/34 (b)	10,123		10,169
4.419% 5/1/35 (b)	1,267		1,263
4.502% 2/1/35 (b)	22,484		22,644
4.524% 7/1/35 (b)	1,478		1,472
4.53% 10/1/35 (b)	139		138
4.56% 1/1/34 (b)	11,057		10,984
4.575% 2/1/35 (b)	1,831		1,810
4.649% 8/1/35 (b)	2,480		2,472
4.723% 3/1/35 (b)	134		135
4.756% 1/1/35 (b)	1,470		1,458
4.781% 12/1/34 (b)	409		406
4.808% 2/1/33 (b)	579		585
4.829% 1/1/35 (b)	9,830		9,837
4.832% 10/1/35 (b)	1,015		1,009
4.87% 5/1/33 (b)	18		18
4.892% 9/1/34 (b)	721		718
4.968% 9/1/34 (b)	625		623
5.016% 7/1/34 (b)	187		187
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount (000s)		Value (000s)
Fannie Mae - continued
5.04% 10/1/36 (b)	$ 10,728		$ 10,753
5.052% 5/1/35 (b)	2,442		2,460
5.084% 9/1/34 (b)	367		366
5.087% 8/1/34 (b)	335		334
5.123% 3/1/34 (b)	7,121		7,114
5.17% 6/1/35 (b)	1,737		1,749
5.176% 8/1/33 (b)	557		557
5.176% 3/1/35 (b)	194		194
5.25% 7/1/35 (b)	1,794		1,794
5.258% 11/1/36 (b)	1,309		1,310
5.297% 7/1/35 (b)	213		214
5.324% 12/1/34 (b)	543		543
5.483% 6/1/47 (b)	1,049		1,052
5.499% 11/1/36 (b)	5,184		5,195
5.5% 11/1/13 to 3/1/20	16,877		16,797
5.526% 2/1/37 (b)	11,118		11,144
5.688% 4/1/37 (b)	5,600		5,626
5.831% 3/1/36 (b)	3,975		4,006
5.872% 3/1/36 (b)	3,771		3,784
5.95% 5/1/36 (b)	3,478		3,506
6.352% 8/1/36 (b)	3,460		3,502
6.5% 10/1/17 to 7/1/32	15,515		15,847
7% 11/1/16 to 3/1/17	1,836		1,907
7.5% 10/1/07 to 4/1/17	2,074		2,134
8.5% 12/1/27	250		269
9.5% 9/1/30	468		519
10.25% 10/1/18	12		13
11.5% 5/1/14 to 9/1/15	32		35
12.5% 11/1/13 to 7/1/16	66		74
13.25% 9/1/11	39		43
			276,819
Freddie Mac - 5.0%
3.754% 10/1/33 (b)	5,131		5,048
3.911% 6/1/33 (b)	7,076		7,033
4.179% 1/1/35 (b)	6,872		6,794
4.362% 6/1/35 (b)	13,873		13,742
4.382% 9/1/36 (b)	19,798		19,598
4.569% 6/1/33 (b)	2,240		2,240
4.576% 7/1/36 (b)	5,298		5,323
4.669% 6/1/35 (b)	10,644		10,624
4.784% 3/1/33 (b)	192		194
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount (000s)		Value (000s)
Freddie Mac - continued
4.873% 10/1/35 (b)	$ 2,819		$ 2,812
5.106% 3/1/36 (b)	12,018		11,969
5.272% 11/1/35 (b)	2,426		2,418
5.352% 10/1/35 (b)	8,150		8,127
5.362% 3/1/37 (b)	912		910
5.5% 11/1/17 to 1/1/25	13,169		12,902
5.776% 6/1/37 (b)	13,556		13,604
5.858% 5/1/37 (b)	1,048		1,053
6.6% 10/1/36 (b)	12,178		12,334
6.752% 9/1/36 (b)	21,947		22,248
8.5% 2/1/09 to 6/1/25	60		63
9% 7/1/08 to 4/1/21	91		94
9.5% 7/1/30 to 8/1/30	98		110
9.75% 12/1/08 to 4/1/13	6		7
10% 1/1/09 to 11/1/20	276		299
10.25% 2/1/09 to 11/1/16	93		97
10.5% 5/1/10	3		3
11.25% 2/1/10	10		11
11.75% 11/1/11	8		9
12% 5/1/10 to 2/1/17	61		68
12.5% 11/1/12 to 5/1/15	83		93
13% 5/1/14 to 11/1/14	11		12
13.5% 1/1/13 to 12/1/14	6		6
			159,845
Government National Mortgage Association - 78.0%
3.5% 3/20/34	1,237		1,057
3.5% 5/20/34 (b)	1,326		1,317
3.5% 5/20/35 (b)	1,795		1,766
3.5% 6/20/35 (b)	1,733		1,704
3.75% 4/20/34 (b)	20,066		19,972
3.75% 6/20/34 (b)	15,527		15,453
3.75% 4/20/35 (b)	635		626
4% 11/20/33	1,475		1,322
4% 4/20/35 (b)	2,838		2,835
4% 4/20/35 (b)	10,047		9,929
4% 5/20/35 (b)	11,374		11,240
4.25% 7/20/34 (b)	1,091		1,085
4.5% 4/15/18 to 4/20/34	139,505		131,244
4.5% 9/20/34 (b)	5,101		5,080
4.5% 3/20/35 (b)	1,089		1,081
4.5% 6/20/35 (b)	3,996		4,023
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount (000s)		Value (000s)
Government National Mortgage Association - continued
4.5% 12/20/36 (b)	$ 11,713		$ 11,503
4.75% 12/20/33 (b)	12,872		12,808
5% 8/15/18 to 4/20/36	368,172		350,803
5% 4/20/37 (b)	43,309		42,883
5.5% 12/20/18 to 4/15/35	388,686		380,129
5.5% 8/1/37 (a)	26,000		25,354
5.5% 8/1/37 (a)	50,000		48,758
5.5% 8/1/37 (a)	50,000		48,551
5.5% 8/1/37 (a)	135,000		131,646
5.5% 8/1/37 (a)	71,200		69,431
5.5% 8/1/37 (a)	67,000		65,058
5.5% 9/1/37 (a)	46,000		44,828
5.75% 8/20/35 (b)	746		747
6% 8/15/17 to 2/15/37	541,738		543,169
6% 8/1/37 (a)	20,000		19,953
6% 8/1/37 (a)	72,000		71,958
6% 8/1/37 (a)	26,000		25,939
6.5% 4/15/23 to 12/15/36	124,519		127,694
6.5% 8/1/37 (a)	16,000		16,295
6.5% 8/1/37 (a)	10,000		10,185
6.5% 8/1/37 (a)	37,000		37,683
7% 10/20/16 to 9/20/34	107,009		111,053
7.25% 9/15/27	259		271
7.395% 6/20/25 to 11/20/27	1,942		2,025
7.5% 9/15/07 to 9/20/32	44,404		46,657
8% 9/15/07 to 7/15/32	10,474		11,095
8.5% 7/15/08 to 2/15/31	4,031		4,317
9% 2/15/09 to 5/15/30	1,672		1,822
9.5% 12/20/15 to 4/20/17	599		658
10.5% 1/15/14 to 5/15/19	633		708
13% 2/15/11 to 1/15/15	125		143
13.5% 7/15/10 to 1/15/15	20		23
			2,473,881
TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES (Cost $2,937,435)		2,910,545
Asset-Backed Securities - 0.7%

Fannie Mae Grantor Trust Series 2005-T4 Class A1C, 5.47% 9/25/35 (b) (Cost $21,795)	21,795		21,941
Collateralized Mortgage Obligations - 17.1%
	Principal Amount (000s)		Value (000s)
U.S. Government Agency - 17.1%
Fannie Mae:
Series 2003-39 Class IA, 5.5% 10/25/22 (b)(c)	$ 4,420		$ 749
Series 2006-48 Class LF, 0% 8/25/34 (b)	747		759
target amortization class Series G94-2 Class D, 6.45% 1/25/24	3,252		3,321
Fannie Mae STRIP:
Series 331 Class 12, 6.5% 2/1/33 (c)	2,883		708
Series 339 Class 5, 5.5% 7/1/33 (c)	4,453		1,063
Series 343 Class 16, 5.5% 5/1/34 (c)	3,170		760
Freddie Mac Multi-class participation certificates guaranteed:
floater:
Series 2861 Class JF, 5.62% 4/15/17 (b)	2,881		2,896
Series 3094 Class UF, 0% 9/15/34 (b)	499		489
planned amortization class:
Series 2220 Class PD, 8% 3/15/30	4,367		4,554
Series 2787 Class OI, 5.5% 10/15/24 (c)	3,296		139
Series 40 Class K, 6.5% 8/17/24	1,790		1,842
sequential payer:
Series 2204 Class N, 7.5% 12/20/29	7,590		7,855
Series 2601 Class TI, 5.5% 10/15/22 (c)	18,572		3,215
Series 2750 Class ZT, 5% 2/15/34	6,072		5,232
Series 2866 Class CY, 4.5% 10/15/19	4,491		4,142
Series 2957 Class SW, 0.68% 4/15/35 (b)(c)	13,034		359
Ginnie Mae guaranteed Multi-family pass-thru securities sequential payer Series 2002-71:
Class Z, 5.5% 10/20/32	45,636		44,098
Class ZJ, 6% 10/20/32	23,254		22,997
Ginnie Mae guaranteed REMIC pass-thru securities:
floater:
Series 2001-22 Class FM, 5.67% 5/20/31 (b)	726		730
Series 2002-41 Class HF, 5.72% 6/16/32 (b)	789		796
Series 2007-22 Class TC, 0% 4/20/37 (b)	2,721		3,246
planned amortization class:
Series 1993-13 Class PD, 6% 5/20/29	18,000		18,116
Series 1994-4 Class KQ, 7.9875% 7/16/24	1,163		1,248
Series 2000-26 Class PK, 7.5% 9/20/30	3,135		3,256
Series 2001-65 Class PH, 6% 11/20/28	6,323		6,348
Series 2002-5 Class PD, 6.5% 5/16/31	10,072		10,117
Series 2002-50 Class PE, 6% 7/20/32	17,485		17,457
Series 2003-31 Class PI, 5.5% 4/16/30 (c)	4,598		367
Series 2003-34 Class IO, 5.5% 4/16/28 (c)	2,800		33
Collateralized Mortgage Obligations - continued
	Principal Amount (000s)		Value (000s)
U.S. Government Agency - continued
Ginnie Mae guaranteed REMIC pass-thru securities: - continued
planned amortization class:
Series 2003-4 Class LI, 5.5% 7/16/27 (c)	$ 723		$ 4
Series 2003-7 Class IN, 5.5% 1/16/28 (c)	5,228		151
Series 2003-70 Class LE, 5% 7/20/32	44,000		41,774
Series 2004-19:
Class DJ, 4.5% 3/20/34	2,890		2,834
Class DP, 5.5% 3/20/34	3,895		3,870
Series 2004-30:
Class PC, 5% 11/20/30	19,736		19,272
Class UA, 3.5% 2/20/32	5,669		5,486
Series 2004-64 Class KE, 5.5% 12/20/33	22,978		22,313
Series 2004-98 Class IG, 5.5% 2/20/30 (c)	2,581		392
Series 2005-17 Class IA, 5.5% 8/20/33 (c)	7,905		1,268
Series 2005-24 Class TC, 5.5% 3/20/35	5,403		5,084
Series 2005-54 Class BM, 5% 7/20/35	9,658		9,330
Series 2005-57 Class PB, 5.5% 7/20/35	5,673		5,354
Series 2005-58 Class NJ, 4.5% 8/20/35	41,635		40,822
Series 2006-50 Class JC, 5% 6/20/36	11,780		11,139
Series 2008-28 Class PC, 5.5% 4/20/34	18,652		18,297
sequential payer:
Series 1995-4 Class CQ, 8% 6/20/25	841		903
Series 2001-40 Class Z, 6% 8/20/31	8,550		8,550
Series 2002-18 Class ZB, 6% 3/20/32	8,857		8,910
Series 2002-29 Class SK, 8.25% 5/20/32 (b)	403		419
Series 2002-67 Class ZA, 6% 9/20/32	50,896		50,492
Series 2003-7 Class VP, 6% 11/20/13	5,000		5,036
Series 2004-65 Class VE, 5.5% 7/20/15	4,677		4,674
Series 2004-86 Class G, 6% 10/20/34	6,273		6,129
Series 2005-28 Class AJ, 5.5% 4/20/35	32,523		32,431
Series 2005-47 Class ZY, 6% 6/20/35	4,531		4,301
Series 2005-6 Class EX, 5.5% 11/20/34	1,001		941
Series 2005-82 Class JV, 5% 6/20/35	3,500		3,118
Series 1995-6 Class Z, 7% 9/20/25	2,436		2,561
Series 2003-11 Class S, 1.23% 2/16/33 (b)(c)	10,580		454
Series 2003-92 Class SN, 1.11% 10/16/33 (b)(c)	32,856		1,437
Series 2004-32 Class GS, 1.18% 5/16/34 (b)(c)	3,136		131
Series 2005-6 Class EY, 5.5% 11/20/33	1,016		950
Series 2006-13 Class DS, 3.12% 3/20/36 (b)	45,360		37,432
Collateralized Mortgage Obligations - continued
	Principal Amount (000s)		Value (000s)
U.S. Government Agency - continued
Ginnie Mae guaranteed REMIC pass-thru securities: - continued
Series 2007-18 Class S, 1.48% 4/16/37 (b)(c)	$ 50,528		$ 2,493
Series 2007-35 Class SC, 8.28% 6/16/37 (b)	17,096		18,296
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $557,473)		543,940
Commercial Mortgage Securities - 0.6%

Fannie Mae Series 1997-M1 Class N, 0.445% 10/17/36 (b)(c)	7,488		63
Fannie Mae subordinate REMIC pass-thru certificates:
Series 1998-M3 Class IB, 0.831% 1/17/38 (b)(c)	33,446		581
Series 1998-M4 Class N, 1.1496% 2/25/35 (b)(c)	13,988		181
Ginnie Mae guaranteed Multi-family pass-thru securities:
sequential payer Series 2001-58 Class X, 1.1724% 9/16/41 (b)(c)	157,655		3,941
Series 2001-12 Class X, 0.862% 7/16/40 (b)(c)	45,009		788
Ginnie Mae guaranteed REMIC pass-thru securities:
sequential payer Series 2002-81 Class IO, 1.8581% 9/16/42 (b)(c)	120,475		5,120
Series 2002-62 Class IO, 1.4307% 8/16/42 (b)(c)	87,347		3,276
Series 2002-85 Class X, 1.7456% 3/16/42 (b)(c)	65,556		3,817
TOTAL COMMERCIAL MORTGAGE SECURITIES (Cost $40,664)		17,767

Cash Equivalents - 9.2%
	Maturity Amount (000s)
Investments in repurchase agreements in a joint trading account at 5.3%, dated 7/31/07 due 8/1/07 (Collateralized by U.S. Government Obligations) # (Cost $290,292)	$ 290,335		290,292
TOTAL INVESTMENT PORTFOLIO - 119.3% (Cost $3,847,659)			3,784,485
NET OTHER ASSETS - (19.3)%			(612,184)
NET ASSETS - 100%		$ 3,172,301

Swap Agreements
	Expiration Date	Notional Amount (000s)	Value (000s)
Interest Rate Swaps
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed rate equal to 5.32% with Morgan Stanley, Inc.	July 2010	$ 40,000	$ (200)
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed rate equal to 5.43% with Credit Suisse First Boston	June 2009	65,000	(376)
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed rate equal to 5.524% with Credit Suisse First Boston	June 2009	121,000	(904)
		$ 226,000	$ (1,480)

Legend

(a) Security or a portion of the security purchased on a delayed delivery or when-issued basis.

(b) The coupon rate shown on floating or adjustable rate securities represents the rate at period end.

(c) Security represents right to receive monthly interest payments on an underlying pool of mortgages or assets. Principal shown is the outstanding par amount of the pool held as of the end of the period.

# Additional Information on each counterparty to the repurchase agreement is as follows:

Repurchase Agreement / Counterparty	Value (Amounts in thousands)
$290,292,000 due 8/01/07 at 5.30%
ABN AMRO Bank N.V., New York Branch	$ 7,039
Banc of America Securities LLC	62,643
Bank of America, NA	17,676
Barclays Capital, Inc.	32,421
Repurchase Agreement / Counterparty	Value (Amounts in thousands)
Bear Stearns & Co., Inc.	$ 30,970
Countrywide Securities Corp.	22,700
ING Financial Markets LLC	28,155
Societe Generale, New York Branch	28,155
UBS Securities LLC	49,271
WestLB AG	11,262
	$ 290,292

Income Tax Information

At July 31, 2007, the fund had a capital loss carryforward of approximately $55,811,000 of which $9,594,000 and $46,217,000 will expire on July 31, 2014 and 2015, respectively.

See accompanying notes which are an integral part of the financial statements.

Annual Report

Fidelity Ginnie Mae Fund

Financial Statements

Statement of Assets and Liabilities

Amounts in thousands (except per-share amount)	July 31, 2007

Assets
Investment in securities, at value (including repurchase agreements of $290,292) - See accompanying schedule: Unaffiliated issuers (cost $3,847,659)		$ 3,784,485
Cash		658
Receivable for investments sold Regular delivery		2,255
Delayed delivery		6,667
Receivable for fund shares sold		1,188
Interest receivable		15,964
Other receivables		59
Total assets		3,811,276

Liabilities
Payable for investments purchased Regular delivery	$ 17,086
Delayed delivery	613,216
Payable for fund shares redeemed	4,424
Distributions payable	1,501
Swap agreements, at value	1,480
Accrued management fee	834
Other affiliated payables	359
Other payables and accrued expenses	75
Total liabilities		638,975

Net Assets		$ 3,172,301
Net Assets consist of:
Paid in capital		$ 3,307,492
Distributions in excess of net investment income		(4,664)
Accumulated undistributed net realized gain (loss) on investments		(65,873)
Net unrealized appreciation (depreciation) on investments		(64,654)
Net Assets, for 298,134 shares outstanding		$ 3,172,301
Net Asset Value, offering price and redemption price per share ($3,172,301 ÷ 298,134 shares)		$ 10.64

See accompanying notes which are an integral part of the financial statements.

Annual Report

Statement of Operations

Amounts in thousands	Year ended July 31, 2007

Investment Income
Interest		$ 180,164

Expenses
Management fee	$ 10,497
Transfer agent fees	3,300
Fund wide operations fee	1,050
Independent trustees' compensation	11
Miscellaneous	6
Total expenses before reductions	14,864
Expense reductions	(63)	14,801
Net investment income		165,363
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investment securities:
Unaffiliated issuers	(27,956)
Swap agreements	1,526
Total net realized gain (loss)		(26,430)
Change in net unrealized appreciation (depreciation) on: Investment securities	35,141
Swap agreements	(2,980)
Delayed delivery commitments	1,063
Total change in net unrealized appreciation (depreciation)		33,224
Net gain (loss)		6,794
Net increase (decrease) in net assets resulting from operations		$ 172,157

See accompanying notes which are an integral part of the financial statements.

Annual Report

Fidelity Ginnie Mae Fund

Financial Statements - continued

Statement of Changes in Net Assets

Amounts in thousands	Year ended July 31, 2007	Year ended July 31, 2006
Increase (Decrease) in Net Assets
Operations
Net investment income	$ 165,363	$ 171,119
Net realized gain (loss)	(26,430)	(34,126)
Change in net unrealized appreciation (depreciation)	33,224	(76,350)
Net increase (decrease) in net assets resulting from operations	172,157	60,643
Distributions to shareholders from net investment income	(164,399)	(186,731)
Distributions to shareholders from net realized gain	-	(7,297)
Total distributions	(164,399)	(194,028)
Share transactions Proceeds from sales of shares	321,666	426,203
Reinvestment of distributions	145,593	172,335
Cost of shares redeemed	(667,711)	(1,133,635)
Net increase (decrease) in net assets resulting from share transactions	(200,452)	(535,097)
Total increase (decrease) in net assets	(192,694)	(668,482)

Net Assets
Beginning of period	3,364,995	4,033,477
End of period (including distributions in excess of net investment income of $4,664 and distributions in excess of net investment income of $10,001, respectively)	$ 3,172,301	$ 3,364,995
Other Information Shares
Sold	29,988	39,460
Issued in reinvestment of distributions	13,559	15,990
Redeemed	(62,274)	(105,330)
Net increase (decrease)	(18,727)	(49,880)

See accompanying notes which are an integral part of the financial statements.

Annual Report

Financial Highlights

Years ended July 31,	2007	2006	2005	2004	2003
Selected Per-Share Data
Net asset value, beginning of period	$ 10.62	$ 11.00	$ 11.00	$ 11.05	$ 11.11
Income from Investment Operations
Net investment income^B	.537	.497	.443	.404	.364
Net realized and unrealized gain (loss)	.017	(.315)	.004	.027	(.029)
Total from investment operations	.554	.182	.447	.431	.335
Distributions from net investment income	(.534)	(.542)	(.447)	(.391)	(.395)
Distributions from net realized gain	-	(.020)	-	(.090)	-
Total distributions	(.534)	(.562)	(.447)	(.481)	(.395)
Net asset value, end of period	$ 10.64	$ 10.62	$ 11.00	$ 11.00	$ 11.05
Total Return^A	5.29%	1.70%	4.11%	3.96%	3.02%
Ratios to Average Net Assets^C
Expenses before reductions	.45%	.45%	.57%	.60%	.57%
Expenses net of fee waivers, if any	.45%	.45%	.57%	.60%	.57%
Expenses net of all reductions	.45%	.45%	.57%	.60%	.57%
Net investment income	5.01%	4.61%	4.00%	3.64%	3.25%
Supplemental Data
Net assets, end of period (in millions)	$ 3,172	$ 3,365	$ 4,033	$ 3,977	$ 5,606
Portfolio turnover rate	165%	183%	160%	155%	262%

^A Total returns would have been lower had certain expenses not been reduced during the periods shown.

^B Calculated based on average shares outstanding during the period.

^C Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.

See accompanying notes which are an integral part of the financial statements.

Annual Report

Fidelity Intermediate Government Income Fund

Performance: The Bottom Line

Average Annual Total Returns

Periods ended July 31, 2007	Past 1 year	Past 5 years	Past 10 years
Fidelity Intermediate Govt Income Fund	5.14%	3.23%	5.11%

$10,000 Over 10 Years

Let's say hypothetically that $10,000 was invested in Fidelity Intermediate Government Income Fund on July 31, 1997. The chart shows how the value of your investment would have changed, and also shows how the Lehman Brothers Intermediate U.S. Government Index performed over the same period.

Annual Report

Fidelity Intermediate Government Income Fund

Management's Discussion of Fund Performance

Comments from Brett Kozlowski, Portfolio Manager of Fidelity® Intermediate Government Income Fund

The fund returned 5.14% during the past year, while its benchmark, the Lehman Brothers Intermediate U.S. Government Index, returned 5.62%. Given increased uncertainty related to subprime mortgages, and the potential impact on liquidity within the mortgage-backed securities market, bond-market volatility intensified during the final months of the period. Yields on interest rate swap contracts rose as investors reduced their exposure to swaps in favor of the relative safety of U.S. Treasuries, causing swaps to underperform. Fluctuations in the swap market are significant for the fund because the fund's government-sponsored enterprise (GSE) securities, as well as its out-of-index allocations to mortgage pass-throughs, collateralized mortgage obligations (CMOs) and hybrid adjustable-rate mortgage (ARM) securities, are highly correlated to swap yields. When swap prices decline relative to Treasuries, the prices of GSEs, CMOs and hybrid ARM bonds also tend to decline relative to Treasuries. So, while security selection among GSEs, CMOs, hybrid ARMs and mortgage pass-throughs contributed to the fund's results, returns from these holdings were dampened by weakness in the swap market. At the same time, however, I used interest rate swaps to help manage the fund's duration, or its sensitivity to interest rate changes. The strategy I employed helped the fund to benefit from a steeper yield curve and, by so doing, offset most of the negative impact of rising swap yields.

Annual Report

Fidelity Intermediate Government Income Fund

Investment Changes

Coupon Distribution as of July 31, 2007
	% of fund's investments	% of fund's investments 6 months ago
Less than 3%	1.7	2.4
3 - 3.99%	3.6	9.5
4 - 4.99%	41.2	42.1
5 - 5.99%	23.3	30.0
6 - 6.99%	5.9	8.0
7% and over	1.1	1.5

Coupon distribution shows the range of stated interest rates on the fund's investments, excluding short-term investments.

Weighted Average Maturity as of July 31, 2007
		6 months ago
Years	3.3	3.9

Duration as of July 31, 2007
		6 months ago
Years	3.4	3.2

Asset Allocation (% of fund's net assets)
As of July 31, 2007*			As of January 31, 2007**
	Mortgage Securities 28.3%			Mortgage Securities 12.1%
	CMOs and Other Mortgage Related Securities 8.6%			CMOs and Other Mortgage Related Securities 11.6%
	U.S. Treasury Obligations 43.4%			U.S. Treasury Obligations 32.8%
	U.S. Government Agency Obligations 25.4%			U.S. Government Agency Obligations 41.6%
	Asset-Backed Securities 0.7%			Asset-Backed Securities 0.9%
	Short-Term Investments and Net Other Assets (6.4)%^(dagger)			Short-Term Investments and Net Other Assets 1.0%
* Futures and Swaps		4.8%	**Futures and Swaps		0.0%

^(dagger) Short-Term Investments and Net Other Assets are not included in the pie chart.

Annual Report

Fidelity Intermediate Government Income Fund

Investments July 31, 2007

Showing Percentage of Net Assets

U.S. Government and Government Agency Obligations - 68.8%
	Principal Amount (000s)		Value (000s)
U.S. Government Agency Obligations - 25.4%
Fannie Mae:
3.25% 1/15/08	$ 370		$ 367
3.25% 2/15/09	745		727
4.125% 5/15/10	11,700		11,438
4.5% 10/15/08	2,905		2,889
4.75% 12/15/10 (b)	28,500		28,265
4.875% 4/15/09	1,391		1,390
5.125% 9/2/08	10,635		10,643
6.375% 6/15/09	3,770		3,866
7.25% 1/15/10	1,779		1,872
Federal Home Loan Bank:
4.5% 10/14/08	1,850		1,839
5.375% 8/19/11	16,960		17,140
5.8% 9/2/08	5,845		5,891
Freddie Mac:
3.625% 9/15/08	2,285		2,250
4.75% 3/5/09	12,047		12,013
5.125% 8/23/10	13,500		13,541
5.125% 4/18/11	2,360		2,363
5.25% 7/18/11	58		58
5.5% 8/23/17	15,500		15,629
5.625% 3/15/11	1,000		1,018
5.75% 3/15/09	4,000		4,050
Israeli State (guaranteed by U.S. Government through Agency for International Development):
6.6% 2/15/08	5,681		5,691
6.8% 2/15/12	7,500		7,817
Private Export Funding Corp.:
secured:
5.66% 9/15/11 (c)	9,000		9,166
5.685% 5/15/12	3,915		4,004
4.974% 8/15/13	3,435		3,410
Small Business Administration guaranteed development participation certificates Series 2004-20H Class 1, 5.17% 8/1/24	779		769
U.S. Department of Housing and Urban Development Government guaranteed participation certificates Series 1999-A, 6.06% 8/1/10	10,000		10,051
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS			178,157
U.S. Government and Government Agency Obligations - continued
	Principal Amount (000s)		Value (000s)
U.S. Treasury Inflation Protected Obligations - 2.4%
U.S. Treasury Inflation-Indexed Notes:
2.375% 4/15/11	$ 15,345		$ 15,255
2.5% 7/15/16	1,287		1,293
TOTAL U.S. TREASURY INFLATION PROTECTED OBLIGATIONS			16,548
U.S. Treasury Obligations - 41.0%
U.S. Treasury Notes:
3.375% 9/15/09	23,002		22,457
4.25% 11/15/14 (b)	31,500		30,589
4.5% 5/15/10 (d)	44,000		43,963
4.625% 11/15/16	3,000		2,963
4.75% 5/31/12	18,000		18,110
4.75% 5/15/14 (b)	14,058		14,100
4.875% 4/30/08 (b)	52,596		52,585
4.875% 6/30/09 (d)	30,007		30,170
4.875% 6/30/12 (d)	40,847		41,320
4.875% 8/15/16 (d)	8,897		8,952
5.125% 5/15/16 (b)	21,000		21,499
TOTAL U.S. TREASURY OBLIGATIONS			286,708
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (Cost $481,231)		481,413
U.S. Government Agency - Mortgage Securities - 28.3%

Fannie Mae - 18.9%
3.585% 9/1/33 (e)	336		330
3.718% 6/1/33 (e)	1,048		1,045
3.757% 10/1/33 (e)	90		90
3.784% 6/1/33 (e)	1,252		1,254
3.802% 6/1/33 (e)	86		86
3.877% 6/1/33 (e)	418		420
3.902% 5/1/34 (e)	666		656
3.91% 5/1/33 (e)	496		499
3.944% 5/1/34 (e)	542		534
3.947% 5/1/33 (e)	30		30
3.967% 9/1/33 (e)	943		931
3.998% 4/1/34 (e)	998		984
3.999% 10/1/18 (e)	71		70
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount (000s)		Value (000s)
Fannie Mae - continued
4% 9/1/13 to 5/1/20	$ 2,901		$ 2,727
4.004% 8/1/33 (e)	468		462
4.013% 4/1/33 (e)	29		29
4.027% 3/1/34 (e)	1,892		1,866
4.045% 6/1/33 (e)	1,182		1,178
4.063% 3/1/35 (e)	1,813		1,794
4.076% 2/1/35 (e)	48		48
4.115% 4/1/34 (e)	1,256		1,241
4.124% 5/1/34 (e)	1,024		1,011
4.166% 1/1/35 (e)	222		218
4.187% 11/1/34 (e)	1,271		1,274
4.249% 1/1/34 (e)	240		237
4.25% 2/1/35 (e)	100		98
4.264% 5/1/35 (e)	106		107
4.28% 10/1/33 (e)	39		38
4.282% 3/1/33 (e)	97		97
4.294% 8/1/33 (e)	184		184
4.295% 3/1/35 (e)	86		86
4.302% 6/1/33 (e)	51		51
4.304% 3/1/33 (e)	54		54
4.321% 4/1/35 (e)	48		48
4.343% 1/1/35 (e)	109		107
4.355% 10/1/19 (e)	114		112
4.36% 2/1/34 (e)	217		215
4.386% 10/1/34 (e)	473		467
4.396% 2/1/35 (e)	169		166
4.406% 8/1/34 (e)	2,213		2,223
4.411% 7/1/35 (e)	1,866		1,838
4.419% 5/1/35 (e)	281		280
4.429% 5/1/35 (e)	112		112
4.432% 3/1/35 (e)	165		163
4.441% 5/1/35 (e)	1,460		1,457
4.444% 8/1/34 (e)	2,426		2,400
4.445% 8/1/34 (e)	305		303
4.46% 8/1/35 (e)	1,514		1,511
4.481% 1/1/35 (e)	523		516
4.484% 11/1/33 (e)	174		172
4.494% 12/1/34 (e)	42		41
4.5% 5/1/18 to 10/1/18	973		932
4.503% 2/1/35 (e)	86		87
4.504% 2/1/35 (e)	49		49
4.512% 1/1/35 (e)	115		114
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount (000s)		Value (000s)
Fannie Mae - continued
4.519% 2/1/35 (e)	$ 1,268		$ 1,259
4.524% 7/1/35 (e)	320		319
4.53% 10/1/35 (e)	69		69
4.554% 9/1/34 (e)	2,211		2,190
4.569% 1/1/35 (e)	807		798
4.57% 7/1/35 (e)	319		320
4.575% 2/1/35 (e)	403		398
4.649% 8/1/35 (e)	541		539
4.651% 10/1/34 (e)	320		318
4.653% 3/1/35 (e)	693		698
4.687% 2/1/35 (e)	1,482		1,468
4.702% 10/1/34 (e)	301		299
4.719% 7/1/34 (e)	280		278
4.723% 3/1/35 (e)	29		29
4.733% 12/1/35 (e)	4,291		4,263
4.772% 1/1/35 (e)	464		460
4.781% 12/1/34 (e)	84		84
4.794% 4/1/35 (e)	1,273		1,270
4.8% 7/1/35 (e)	445		441
4.8% 7/1/36 (e)	534		535
4.801% 11/1/34 (e)	250		248
4.803% 6/1/35 (e)	368		369
4.803% 11/1/35 (e)	1,061		1,062
4.808% 2/1/33 (e)	119		120
4.808% 1/1/36 (e)	2,565		2,544
4.832% 10/1/35 (e)	209		208
4.849% 7/1/35 (e)	703		697
4.857% 10/1/34 (e)	983		977
4.87% 5/1/33 (e)	6		6
4.882% 10/1/35 (e)	160		160
4.894% 5/1/35 (e)	180		178
4.951% 8/1/34 (e)	745		742
5% 2/1/16 to 1/1/19	12,566		12,276
5.005% 2/1/34 (e)	781		774
5.016% 7/1/34 (e)	41		41
5.038% 12/1/32 (e)	1,015		1,012
5.052% 5/1/35 (e)	541		545
5.069% 9/1/34 (e)	702		700
5.084% 9/1/34 (e)	73		73
5.087% 8/1/34 (e)	72		72
5.093% 5/1/35 (e)	234		235
5.101% 10/1/35 (e)	663		660
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount (000s)		Value (000s)
Fannie Mae - continued
5.108% 10/1/35 (e)	$ 462		$ 459
5.165% 3/1/36 (e)	1,405		1,402
5.17% 6/1/35 (e)	380		383
5.176% 8/1/33 (e)	121		121
5.176% 3/1/35 (e)	49		48
5.258% 11/1/36 (e)	284		284
5.277% 4/1/36 (e)	547		552
5.294% 7/1/35 (e)	2,689		2,687
5.297% 7/1/35 (e)	46		47
5.324% 12/1/34 (e)	109		109
5.342% 2/1/36 (e)	103		103
5.356% 12/1/36 (e)	352		352
5.365% 2/1/36 (e)	812		812
5.387% 3/1/37 (e)	2,136		2,140
5.407% 2/1/37 (e)	295		296
5.449% 2/1/37 (e)	1,339		1,341
5.483% 6/1/47 (e)	230		231
5.488% 2/1/37 (e)	1,790		1,796
5.5% 1/1/09 to 3/1/20	11,786		11,718
5.533% 11/1/36 (e)	575		576
5.612% 2/1/36 (e)	321		323
5.67% 4/1/36 (e)	1,186		1,192
5.67% 6/1/36 (e)	775		779
5.688% 4/1/37 (e)	1,224		1,230
5.757% 4/1/36 (e)	628		632
5.804% 3/1/36 (e)	2,398		2,416
5.818% 1/1/36 (e)	298		298
5.831% 3/1/36 (e)	875		881
5.831% 5/1/36 (e)	1,859		1,874
5.897% 12/1/36 (e)	442		446
5.925% 6/1/36 (e)	6,627		6,688
5.934% 6/1/36 (e)	1,559		1,570
5.95% 5/1/36 (e)	760		767
6% 5/1/12 to 9/1/19	2,519		2,546
6.038% 4/1/36 (e)	4,959		5,013
6.226% 3/1/37 (e)	140		141
6.5% 6/1/16 to 3/1/35	5,238		5,336
7% 12/1/08 to 9/1/31	387		396
7.5% 5/1/37	424		440
9% 2/1/13	102		107
9.5% 11/15/09	118		122
10.25% 10/1/09 to 10/1/18	8		9
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount (000s)		Value (000s)
Fannie Mae - continued
11% 8/1/10 to 1/1/16	$ 312		$ 331
11.25% 5/1/14 to 1/1/16	56		63
11.5% 9/1/11 to 6/15/19	196		215
12.25% 7/1/12 to 8/1/13	10		11
12.5% 9/1/12 to 7/1/16	155		177
12.75% 10/1/11 to 6/1/15	108		117
13% 7/1/13 to 7/1/15	67		77
13.25% 9/1/11	63		70
13.5% 11/1/14 to 12/1/14	15		18
15% 4/1/12	3		3
			132,521
Freddie Mac - 9.2%
3.377% 7/1/33 (e)	916		907
4% 1/1/19 to 11/1/20	4,437		4,140
4.004% 5/1/33 (e)	1,564		1,561
4.179% 1/1/35 (e)	1,497		1,480
4.283% 2/1/35 (e)	258		259
4.288% 3/1/35 (e)	120		120
4.301% 12/1/34 (e)	163		160
4.424% 6/1/35 (e)	167		167
4.426% 2/1/34 (e)	127		126
4.426% 3/1/35 (e)	145		143
4.444% 3/1/35 (e)	158		156
4.5% 2/1/18 to 11/1/20	674		646
4.539% 2/1/35 (e)	270		266
4.569% 6/1/33 (e)	490		490
4.661% 2/1/35 (e)	3,721		3,673
4.701% 9/1/36 (e)	329		327
4.704% 9/1/35 (e)	3,901		3,882
4.784% 3/1/33 (e)	42		42
4.789% 2/1/36 (e)	136		134
4.837% 5/1/35 (e)	2,519		2,491
4.873% 10/1/35 (e)	617		615
4.922% 10/1/36 (e)	1,895		1,887
4.988% 4/1/35 (e)	640		643
5% 3/1/18 to 9/1/35	3,236		3,151
5.013% 7/1/35 (e)	1,545		1,535
5.128% 7/1/35 (e)	519		516
5.132% 4/1/35 (e)	543		540
5.272% 11/1/35 (e)	527		526
5.278% 2/1/36 (e)	41		41
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount (000s)		Value (000s)
Freddie Mac - continued
5.362% 3/1/37 (e)	$ 202		$ 202
5.489% 2/1/37 (e)	1,154		1,149
5.498% 1/1/36 (e)	449		448
5.5% 8/1/14 to 11/1/20	3,576		3,545
5.536% 1/1/36 (e)	680		680
5.553% 4/1/37 (e)	298		298
5.586% 3/1/36 (e)	1,975		1,977
5.673% 8/1/36 (e)	1,978		1,981
5.732% 4/1/36 (e)	4,650		4,658
5.779% 3/1/37 (e)	1,020		1,023
5.806% 5/1/37 (e)	2,349		2,358
5.809% 4/1/37 (e)	940		944
5.828% 6/1/37 (e)	765		769
5.858% 5/1/37 (e)	230		231
5.863% 5/1/37 (e)	1,330		1,336
5.963% 4/1/36 (e)	2,611		2,627
6% 7/1/16 to 2/1/19	852		861
6.084% 2/1/37 (e)	2,101		2,116
6.157% 12/1/36 (e)	2,386		2,400
6.5% 5/1/08	20		20
6.525% 9/1/36 (e)	1,866		1,884
8.5% 6/1/14 to 6/1/17	31		32
9% 11/1/09 to 8/1/16	37		39
9.5% 7/1/16 to 8/1/21	283		308
10% 7/1/09 to 3/1/21	609		666
10.5% 9/1/09 to 5/1/21	46		48
11% 2/1/11 to 9/1/20	35		39
11.25% 2/1/10 to 6/1/14	69		76
11.5% 10/1/15 to 8/1/19	51		56
11.75% 11/1/11 to 7/1/15	10		11
12% 10/1/09 to 11/1/19	133		146
12.25% 12/1/11 to 8/1/15	59		66
12.5% 10/1/09 to 6/1/19	653		730
12.75% 2/1/10 to 10/1/10	7		7
13% 9/1/10 to 5/1/17	101		115
13.25% 11/1/10 to 10/1/13	30		34
13.5% 11/1/10 to 8/1/11	33		37
14% 11/1/12 to 4/1/16	5		6
14.5% 12/1/10	1		1
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount (000s)		Value (000s)
Freddie Mac - continued
14.75% 3/1/10	$ 1		$ 1
			64,549
Government National Mortgage Association - 0.2%
8% 11/15/07 to 12/15/23	431		456
8.5% 6/15/16 to 2/15/17	8		8
10.5% 9/15/15 to 10/15/21	689		785
10.75% 12/15/09 to 3/15/10	8		8
11% 5/20/16 to 1/20/21	41		47
12.5% 12/15/10	2		2
13% 1/15/11 to 10/15/13	47		52
13.25% 8/15/14	10		11
13.5% 7/15/11 to 12/15/14	11		12
14% 6/15/11	6		7
			1,388
TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES (Cost $198,714)		198,458
Asset-Backed Securities - 0.7%

Fannie Mae Grantor Trust Series 2005-T4 Class A1C, 5.47% 9/25/35 (e) (Cost $4,763)	4,763		4,796
Collateralized Mortgage Obligations - 8.6%

U.S. Government Agency - 8.6%
Fannie Mae:
floater Series 1994-42 Class FK, 4.34% 4/25/24 (e)	3,603		3,431
planned amortization class:
Series 1988-21 Class G, 9.5% 8/25/18	88		95
Series 1994-12 Class PH, 6.25% 1/25/09	483		484
Series 2002-83 Class ME, 5% 12/25/17	5,150		5,004
Series 2003-28 Class KG, 5.5% 4/25/23	725		707
sequential payer Series 1993-238 Class C, 6.5% 12/25/08	2,141		2,142
Fannie Mae Grantor Trust sequential payer Series 2005-93 Class HD, 4.5% 11/25/19	152		148
Fannie Mae subordinate REMIC pass-thru certificates:
floater:
Series 2001-38 Class QF, 6.3% 8/25/31 (e)	712		729
Collateralized Mortgage Obligations - continued
	Principal Amount (000s)		Value (000s)
U.S. Government Agency - continued
Fannie Mae subordinate REMIC pass-thru certificates: - continued
floater:
Series 2002-60 Class FV, 6.32% 4/25/32 (e)	$ 251		$ 258
Series 2002-74 Class FV, 5.77% 11/25/32 (e)	3,550		3,576
Series 2002-75 Class FA, 6.32% 11/25/32 (e)	514		529
planned amortization class:
Series 2002-11 Class UC, 6% 3/25/17	1,214		1,227
Series 2002-16 Class PG, 6% 4/25/17	1,273		1,287
Series 2002-18 Class PC, 5.5% 4/25/17	1,045		1,045
Series 2002-71 Class UC, 5% 11/25/17	3,155		3,070
Series 2003-128 Class NE, 4% 12/25/16	1,260		1,197
Series 2003-85 Class GD, 4.5% 9/25/18	610		581
Series 2004-80 Class LD, 4% 1/25/19	980		923
Series 2004-81:
Class KC, 4.5% 4/25/17	690		676
Class KD, 4.5% 7/25/18	1,315		1,262
sequential payer:
Series 2002-56 Class MC, 5.5% 9/25/17	438		438
Series 2003-18 Class EY, 5% 6/25/17	2,084		2,059
Series 2002-50 Class LE, 7% 12/25/29	1		1
Freddie Mac planned amortization class Series 2356 Class GD, 6% 9/15/16	482		488
Freddie Mac Multi-class participation certificates guaranteed:
floater:
Series 2526 Class FC, 5.72% 11/15/32 (e)	857		863
Series 2630 Class FL, 5.82% 6/15/18 (e)	58		59
planned amortization class:
Series 2640 Class GE, 4.5% 7/15/18	3,690		3,521
Series 2695 Class DG, 4% 10/15/18	1,635		1,507
Series 2752 Class PW, 4% 4/15/22	2,000		1,975
Series 2802 Class OB, 6% 5/15/34	1,355		1,350
Series 2810 Class PD, 6% 6/15/33	1,020		1,018
Series 2831 Class PB, 5% 7/15/19	1,975		1,905
Series 2866 Class XE, 4% 12/15/18	1,875		1,768
sequential payer:
Series 1929 Class EZ, 7.5% 2/17/27	2,311		2,400
Series 2570 Class CU, 4.5% 7/15/17	219		213
Series 2572 Class HK, 4% 2/15/17	319		309
Series 2617 Class GW, 3.5% 6/15/16	1,697		1,667
Series 2860 Class CP, 4% 10/15/17	236		229
Series 2866 Class N, 4.5% 12/15/18	1,340		1,321
Collateralized Mortgage Obligations - continued
	Principal Amount (000s)		Value (000s)
U.S. Government Agency - continued
Freddie Mac Multi-class participation certificates guaranteed: - continued
sequential payer:
Series 2937 Class HJ, 5% 10/15/19	$ 1,015		$ 999
Series 2998 Class LY, 5.5% 7/15/25	295		280
Series 3007 Class EW, 5.5% 7/15/25	1,125		1,067
Series 3013 Class VJ, 5% 1/15/14	1,987		1,962
Series 2769 Class BU, 5% 3/15/34	1,020		922
Ginnie Mae guaranteed REMIC pass-thru securities planned amortization class Series 2005-58 Class NJ, 4.5% 8/20/35	3,465		3,397
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $60,794)		60,089

Cash Equivalents - 32.2%
	Maturity Amount (000s)
Investments in repurchase agreements in a joint trading account at 5.3%, dated 7/31/07 due 8/1/07:
(Collateralized by U.S. Government Obligations) #	$ 78,861		78,849
(Collateralized by U.S. Government Obligations) # (a)	146,519		146,497
TOTAL CASH EQUIVALENTS (Cost $225,346)		225,346
TOTAL INVESTMENT PORTFOLIO - 138.6% (Cost $970,848)			970,102
NET OTHER ASSETS - (38.6)%			(270,047)
NET ASSETS - 100%		$ 700,055

Swap Agreements
	Expiration Date	Notional Amount (000s)	Value (000s)
Interest Rate Swaps
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed equal to 5.484% with Deutsche Bank	June 2010	$ 4,000	$ (38)
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed rate equal to 5.35% with Bank of America	March 2037	1,800	66
Receive semi-annually a fixed rate equal to 5.44% and pay quarterly a floating rate based on 3-month LIBOR with JPMorgan Chase, Inc.	July 2010	7,000	57
Receive semi-annually a fixed rate equal to 5.467% and pay quarterly a floating rate based on 3-month LIBOR with JPMorgan Chase, Inc.	July 2011	1,500	14
Receive semi-annually a fixed rate equal to 5.505% and pay quarterly a floating rate based on 3-month LIBOR with Credit Suisse First Boston	July 2012	11,000	114
Receive semi-annually a fixed rate equal to 5.6025% and pay quarterly a floating rate based on 3-month LIBOR with Bank of America	June 2011	11,000	158
Receive semi-annually a fixed rate equal to 5.706% and pay quarterly a floating rate based on 3-month LIBOR with Deutsche Bank	June 2017	3,000	46
Receive semi-annually a fixed rate equal to 5.76% and pay quarterly a floating rate based on 3-month LIBOR with Credit Suisse First Boston	June 2016	2,500	52
Receive semi-annually a fixed rate equal to 5.79% and pay quarterly a floating rate based on 3-month LIBOR with Goldman Sachs	July 2016	3,100	71
		$ 44,900	$ 540

Legend

(a) Includes investment made with cash collateral received from securities on loan.

(b) Security or a portion of the security is on loan at period end.

(c) 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 end of the period, the value of these securities amounted to $9,166,000 or 1.3% of net assets.

(d) Security or a portion of the security purchased on a delayed delivery or when-issued basis.

(e) The coupon rate shown on floating or adjustable rate securities represents the rate at period end.

# Additional Information on each counterparty to the repurchase agreement is as follows:

Repurchase Agreement / Counterparty	Value (Amounts in thousands)
$78,849,000 due 8/01/07 at 5.30%
ABN AMRO Bank N.V., New York Branch	$ 1,912
Banc of America Securities LLC	17,016
Bank of America, NA	4,801
Barclays Capital, Inc.	8,806
Bear Stearns & Co., Inc.	8,412
Countrywide Securities Corp.	6,166
ING Financial Markets LLC	7,647
Societe Generale, New York Branch	7,647
UBS Securities LLC	13,383
WestLB AG	3,059
	$ 78,849
$146,497,000 due 8/01/07 at 5.30%
Bank of America, NA	$ 44,486
Barclays Capital, Inc.	102,011
	$ 146,497

Income Tax Information

At July 31, 2007, the fund had a capital loss carryforward of approximately $40,571,000 of which $11,911,000, $7,507,000, $3,266,000, $414,000, $6,019,000 and $11,454,000 will expire on July 31, 2008, 2009, 2012, 2013, 2014 and 2015, respectively.

See accompanying notes which are an integral part of the financial statements.

Annual Report

Fidelity Intermediate Government Income Fund

Financial Statements

Statement of Assets and Liabilities

Amounts in thousands (except per-share amount)	July 31, 2007

Assets
Investment in securities, at value (including securities loaned of $142,374 and repurchase agreements of $225,346) - See accompanying schedule: Unaffiliated issuers (cost $970,848)		$ 970,102
Cash		1
Receivable for investments sold		1,396
Receivable for fund shares sold		283
Interest receivable		7,062
Swap agreements, at value		540
Total assets		979,384

Liabilities
Payable for investments purchased Regular delivery	$ 7,312
Delayed delivery	124,411
Payable for fund shares redeemed	512
Distributions payable	331
Accrued management fee	183
Other affiliated payables	83
Collateral on securities loaned, at value	146,497
Total liabilities		279,329

Net Assets		$ 700,055
Net Assets consist of:
Paid in capital		$ 742,449
Undistributed net investment income		1,908
Accumulated undistributed net realized gain (loss) on investments		(44,096)
Net unrealized appreciation (depreciation) on investments		(206)
Net Assets, for 70,231 shares outstanding		$ 700,055
Net Asset Value, offering price and redemption price per share ($700,055 ÷ 70,231 shares)		$ 9.97

See accompanying notes which are an integral part of the financial statements.

Annual Report

Fidelity Intermediate Government Income Fund

Financial Statements - continued

Statement of Operations

Amounts in thousands	Year ended July 31, 2007

Investment Income
Interest		$ 34,779

Expenses
Management fee	$ 2,302
Transfer agent fees	722
Fund wide operations fee	230
Independent trustees' compensation	3
Miscellaneous	1
Total expenses before reductions	3,258
Expense reductions	(21)	3,237
Net investment income		31,542
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investment securities:
Unaffiliated issuers	(5,294)
Swap agreements	189
Total net realized gain (loss)		(5,105)
Change in net unrealized appreciation (depreciation) on: Investment securities	9,371
Swap agreements	540
Total change in net unrealized appreciation (depreciation)		9,911
Net gain (loss)		4,806
Net increase (decrease) in net assets resulting from operations		$ 36,348

See accompanying notes which are an integral part of the financial statements.

Annual Report

Statement of Changes in Net Assets

Amounts in thousands	Year ended July 31, 2007	Year ended July 31, 2006
Increase (Decrease) in Net Assets
Operations
Net investment income	$ 31,542	$ 33,845
Net realized gain (loss)	(5,105)	(12,088)
Change in net unrealized appreciation (depreciation)	9,911	(5,860)
Net increase (decrease) in net assets resulting from operations	36,348	15,897
Distributions to shareholders from net investment income	(32,742)	(31,447)
Share transactions Proceeds from sales of shares	66,477	83,463
Reinvestment of distributions	28,271	26,830
Cost of shares redeemed	(157,163)	(219,836)
Net increase (decrease) in net assets resulting from share transactions	(62,415)	(109,543)
Total increase (decrease) in net assets	(58,809)	(125,093)

Net Assets
Beginning of period	758,864	883,957
End of period (including undistributed net investment income of $1,908 and undistributed net investment income of $3,867, respectively)	$ 700,055	$ 758,864
Other Information Shares
Sold	6,665	8,353
Issued in reinvestment of distributions	2,831	2,687
Redeemed	(15,756)	(22,008)
Net increase (decrease)	(6,260)	(10,968)

See accompanying notes which are an integral part of the financial statements.

Annual Report

Financial Highlights

Years ended July 31,	2007	2006	2005	2004	2003
Selected Per-Share Data
Net asset value, beginning of period	$ 9.92	$ 10.11	$ 10.18	$ 10.17	$ 10.11
Income from Investment Operations
Net investment income^B	.435	.414	.330	.274	.329
Net realized and unrealized gain (loss)	.067	(.219)	(.084)	.014	.056
Total from investment operations	.502	.195	.246	.288	.385
Distributions from net investment income	(.452)	(.385)	(.316)	(.278)	(.325)
Net asset value, end of period	$ 9.97	$ 9.92	$ 10.11	$ 10.18	$ 10.17
Total Return^A	5.14%	1.97%	2.43%	2.84%	3.80%
Ratios to Average Net Assets^C
Expenses before reductions	.45%	.45%	.57%	.60%	.60%
Expenses net of fee waivers, if any	.45%	.45%	.57%	.60%	.60%
Expenses net of all reductions	.45%	.45%	.57%	.60%	.60%
Net investment income	4.36%	4.14%	3.23%	2.67%	3.18%
Supplemental Data
Net assets, end of period (in millions)	$ 700	$ 759	$ 884	$ 963	$ 1,283
Portfolio turnover rate	121%	97%	90%	152%	229%

^A Total returns would have been lower had certain expenses not been reduced during the periods shown.

^B Calculated based on average shares outstanding during the period.

See accompanying notes which are an integral part of the financial statements.

Annual Report

Notes to Financial Statements

For the period ended July 31, 2007

(Amounts in thousands except ratios)

1. Organization.

Fidelity Ginnie Mae Fund and Fidelity Intermediate Government Income Fund (the Funds) are funds of Fidelity Income Fund (the trust). The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Each Fund is authorized to issue an unlimited number of shares.

2. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Funds:

Security Valuation. Investments are valued and net asset value per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Wherever possible, each Fund uses independent pricing services approved by the Board of Trustees to value their investments. Debt securities, including restricted securities, for which quotes are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices.

When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. The frequency of when fair value pricing is used is unpredictable. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities. Investments in open-end mutual funds are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.

Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.

Annual Report

Notes to Financial Statements - continued

(Amounts in thousands except ratios)

2. Significant Accounting Policies - continued

Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for Fidelity Ginnie Mae Fund, Independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.

Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements.

Dividends 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 regulations, which may differ from generally accepted accounting principles.

Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.

Book-tax differences are primarily due to swap agreements, prior period premium and discount on debt securities, market discount, deferred trustees compensation, financing transactions, capital loss carryforwards, losses deferred due to wash sales and excise tax regulations.

The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows for each Fund:

	Cost for Federal Income Tax Purposes	Unrealized Appreciation	Unrealized Depreciation	Net Unrealized Appreciation/ (Depreciation)
Ginnie Mae Fund	$ 3,858,765	$ 12,577	$ (86,857)	$ (74,280)
Intermediate Government Income Fund	969,583	4,006	(3,487)	519

Annual Report

2. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

	Undistributed Ordinary Income	Undistributed Long-term Capital Gain	Capital Loss Carryforward
Ginnie Mae Fund	$ 2,996	$ -	$ (55,811)
Intermediate Government Income Fund	1,082	-	(40,571)

The tax character of distributions paid was as follows:

July 31, 2007	Ordinary Income	Long-term Capital Gains	Total
Ginnie Mae Fund	$ 164,399	$ -	$ 164,399
Intermediate Government Income Fund	32,742	-	32,742
July 31, 2006	Ordinary Income	Long-term Capital Gains	Total
Ginnie Mae Fund	$ 186,731	$ 7,297	$ 194,028
Intermediate Government Income Fund	31,447	-	31,447

New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Funds' net assets, results of operations and financial statement disclosures.

In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Funds' financial statement disclosures.

3. Operating Policies.

Repurchase Agreements. Fidelity Management & Research Company (FMR) has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits certain Funds and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. Certain Funds may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government

Annual Report

Notes to Financial Statements - continued

(Amounts in thousands except ratios)

3. Operating Policies - continued

Repurchase Agreements - continued

securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Each applicable Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.

Delayed Delivery Transactions and When-Issued Securities. Certain Funds may purchase or sell securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. The value of the securities purchased on a delayed delivery or when-issued basis are identified as such in each applicable Fund's Schedule of Investments. Certain Funds may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, each applicable Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. The payables and receivables associated with the purchases and sales of delayed delivery securities having the same coupon, settlement date and broker are offset. Delayed delivery or when-issued securities that have been purchased from and sold to different brokers are reflected as both payables and receivables in each applicable fund's Statement of Assets and Liabilities under the caption "Delayed delivery." Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.

Restricted Securities. Certain Funds may 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. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.

Swap Agreements. Certain Funds may invest in swaps for the purpose of managing their exposure to interest rate, credit or market risk.

Annual Report

3. Operating Policies - continued

Swap Agreements - continued

Interest rate swaps are agreements to exchange cash flows periodically based on a notional principal amount, for example, the exchange of fixed rate interest payments for floating rate interest payments. Periodic payments received or made by each applicable Fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively. The primary risk associated with interest rate swaps is that unfavorable changes in the fluctuation of interest rates could adversely impact a fund.

Swaps are marked-to-market daily based on dealer-supplied valuations and changes in value are recorded as unrealized appreciation (depreciation). Gains or losses are realized upon early termination of the swap agreement. Collateral, in the form of cash or securities, may be required to be held in segregated accounts with a fund's custodian in compliance with swap contracts. Risks may exceed amounts recognized on each applicable Fund's Statement of Assets and Liabilities. These risks include changes in the returns of the underlying instruments, failure of the counterparties to perform under the contracts' terms and the possible lack of liquidity with respect to the swap agreements. Details of swap agreements open at period end are included in each applicable Fund's Schedule of Investments under the caption "Swap Agreements."

Mortgage Dollar Rolls. To earn additional income, certain Funds may employ trading strategies which involve the sale and simultaneous agreement to repurchase similar securities ("mortgage dollar rolls") or the purchase and simultaneous agreement to sell similar securities ("reverse mortgage dollar rolls"). The securities traded are mortgage securities and bear the same interest rate but may be collateralized by different pools of mortgages. During the period between the sale and repurchase in a mortgage dollar roll transaction, a fund will not be entitled to receive interest and principal payments on the securities sold but will invest the proceeds of the sale in other securities which may enhance the yield and total return. In addition, the difference between the sale price and the future purchase price is recorded as an adjustment to investment income. During the period between the purchase and subsequent sale in a reverse mortgage dollar roll transaction a fund is entitled to interest and principal payments on the securities purchased. The price differential between the purchase and sale is recorded as an adjustment to investment income. Losses may arise due to changes in the value of the securities or if the counterparty does not perform under the terms of the agreement. If the counterparty files for bankruptcy or becomes insolvent, a fund's right to repurchase or sell securities may be limited.

Annual Report

Notes to Financial Statements - continued

(Amounts in thousands except ratios)

4. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and a group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:

	Individual Rate	Group Rate	Total
Ginnie Mae Fund	.20%	.12%	.32%
Intermediate Government Income Fund	.20%	.12%	.32%

Transfer Agent Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FSC receives an asset-based fee of .10% of each Fund's average net assets. FSC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.

Fundwide Operations Fee. Pursuant to the Fundwide Operations and Expense Agreement (FWOE), FMR has agreed to provide for fund level expenses (which do not include transfer agent, the compensation of the independent trustees, interest (including commitment fees), taxes or extraordinary expenses, if any) in return for a FWOE fee equal to .35% less the total amount of the management fee. The FWOE paid by the Fund is reduced by an amount equal to the fees and expenses paid to the independent trustees. For the period, the FWOE fees were equivalent to the following annual rates expressed as a percentage of average net assets:

Ginnie Mae Fund	.03%
Intermediate Government Income Fund	.03%

5. Committed Line of Credit.

Certain Funds participate with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro rata portion of the line of credit, which is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:

Ginnie Mae Fund	6
Intermediate Government Income Fund	1

During the period, there were no borrowings on this line of credit.

Annual Report

6. Security Lending.

Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of interest income. Net income from lending portfolio securities during the period amounted to:

Intermediate Government Income Fund

$ 197

7. Expense Reductions.

Through arrangements with each applicable Fund's custodian and transfer agent, credits realized as a result of uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.

	Management Fee expense reduction	Transfer Agent expense reduction

Ginnie Mae Fund	$ 2	$ 61
Intermediate Government Income Fund	2	19

8. Other.

The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.

Annual Report

Report of Independent Registered Public Accounting Firm

To the Trustees of Fidelity Income Fund and the Shareholders of Fidelity Ginnie Mae Fund and Fidelity Intermediate Government Income Fund:

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Fidelity Ginnie Mae Fund and Fidelity Intermediate Government Income Fund (funds of Fidelity Income Fund) at July 31, 2007, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Income Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at July 31, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Boston, Massachusetts
September 21, 2007

Annual Report

Trustees and Officers

The Trustees, Members of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 353 funds advised by FMR or an affiliate. Mr. Curvey oversees 317 funds advised by FMR or an affiliate.

The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.

The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.

Interested Trustees*:

Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.

Name, Age; Principal Occupation
Edward C. Johnson 3d (77)
	Year of Election or Appointment:1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as President (2006-present), Chief Executive Officer, Chairman, and a Director of FMR Corp.; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001-present) and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of Fidelity International Limited (FIL).
James C. Curvey (72)
	Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) or Member of the Advisory Board (2007-present) of other investment companies advised by FMR. Mr. Curvey is Vice Chairman (2006-present) and Director of FMR Corp. Mr. Curvey joined Fidelity in 1982 and served in numerous senior management positions, including President and Chief Operating Officer of FMR Corp. (1997-2000) and President of Fidelity Strategic Investments (2000-2002). In addition, he serves as a member of the Board of Directors of Geerlings & Wade, Inc. (wine distribution).

* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trusts or various entities under common control with FMR.

Independent Trustees:

Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.

Name, Age; Principal Occupation
Dennis J. Dirks (59)
	Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005-present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present).
Albert R. Gamper, Jr. (65)
	Year of Election or Appointment: 2006 Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987-1989; 1999-2001; 2002-2004), Chief Executive Officer (1987-2004), and President (1989-2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001-present), Chairman of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System.
George H. Heilmeier (71)
	Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), and HRL Laboratories (private research and development, 2004-present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences, and the Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002), Compaq (1994-2002), Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002), INET Technologies Inc. (telecommunications network surveillance, 2001-2004), and Teletech Holdings (customer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display, and a member of the Consumer Electronics Hall of Fame.
James H. Keyes (66)
	Year of Election or Appointment: 2007 Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993-2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002-present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions).
Marie L. Knowles (60)
	Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare service, 2002-present). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California.
Ned C. Lautenbach (63)
	Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Sony Corporation (2006-present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations.
Cornelia M. Small (63)
	Year of Election or Appointment: 2005 Ms. Small is a member (2000-present) and Chairperson (2002-present) of the Investment Committee, and a member (2002-present) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors of Scudder, Stevens & Clark (1990-1997) and Scudder Kemper Investments (1997-1999). In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy.
William S. Stavropoulos (68)
	Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), and Chairman of the Executive Committee (2000-2004). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate, 2002-present), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc., a private equity investment firm. He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science.
Kenneth L. Wolfe (68)
	Year of Election or Appointment: 2005 Prior to his retirement in 2001, Mr. Wolfe was Chairman and Chief Executive Officer of Hershey Foods Corporation (1993-2001). He currently serves as a member of the boards of Adelphia Communications Corporation (2003-present), Bausch & Lomb, Inc., and Revlon Inc. (2004-present).

Advisory Board Members and Executive Officers:

Correspondence intended for Mr. Mauriello may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.

Name, Age; Principal Occupation
Peter S. Lynch (63)
	Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Income Fund. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund.
Joseph Mauriello (62)
	Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Income Fund. Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd., (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc., (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007).
Kimberley H. Monasterio (43)
	Year of Election or Appointment: 2007 President and Treasurer of Ginnie Mae and Intermediate Government Income. Ms. Monasterio also serves as President and Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2004-present). Previously, Ms. Monasterio served as Deputy Treasurer of the Fidelity funds (2004-2006). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000-2004) and Chief Financial Officer (2002-2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000-2004).
Boyce I. Greer (51)
	Year of Election or Appointment: 2006 Vice President of Ginnie Mae and Intermediate Government Income. Mr. Greer also serves as Vice President of certain Equity Funds (2005-present), certain Asset Allocation Funds (2005-present), Fixed-Income Funds (2006-present), and Money Market Funds (2006-present). Mr. Greer is also a Trustee of other investment companies advised by FMR (2003-present). He is an Executive Vice President of FMR (2005-present) and FMR Co., Inc. (2005-present), and Senior Vice President of Fidelity Investments Money Management, Inc. (2006-present). Previously, Mr. Greer served as a Director and Managing Director of Strategic Advisers, Inc. (2002-2005), and Executive Vice President (2000-2002) and Money Market Group Leader (1997-2002) of the Fidelity Investments Fixed Income Division. He also served as Vice President of Fidelity's Money Market Funds (1997-2002), Senior Vice President of FMR (1997-2002), and Vice President of FIMM (1998-2002).
David L. Murphy (59)
	Year of Election or Appointment: 2005 Vice President of Ginnie Mae and Intermediate Government Income. Mr. Murphy also serves as Vice President of Fidelity's Money Market Funds (2002-present), certain Asset Allocation Funds (2003-present), Fixed-Income Funds (2005-present), and Balanced Funds (2005-present). He serves as Senior Vice President (2000-present) and Head (2004-present) of the Fidelity Investments Fixed Income Division. Mr. Murphy is also a Senior Vice President of Fidelity Investments Money Management, Inc. (2003-present) and an Executive Vice President of FMR (2005-present). Previously, Mr. Murphy served as Money Market Group Leader (2002-2004), Bond Group Leader (2000-2002), and Vice President of Fidelity's Taxable Bond Funds (2000-2002) and Fidelity's Municipal Bond Funds (2001-2002).
Thomas J. Silvia (46)
	Year of Election or Appointment: 2005 Vice President of Ginnie Mae and Intermediate Government Income. Mr. Silvia also serves as Vice President of Fidelity's Fixed-Income Funds (2005-present), certain Balanced Funds (2005-present), certain Asset Allocation Funds (2005-present), and Senior Vice President and Bond Group Leader of the Fidelity Investments Fixed-Income Division (2005-present). Previously, Mr. Silvia served as Director of Fidelity's Taxable Bond portfolio managers (2002-2004) and a portfolio manager in the Bond Group (1997-2004).
William Irving (43)
	Year of Election or Appointment: 2004 Vice President of Ginnie Mae. Dr. Irving also serves as Vice President of other funds advised by FMR. Prior to assuming his current responsibilities, Dr. Irving worked as a quantitative analyst and portfolio manager.
Brett Kozlowski (32)
	Year of Election or Appointment: 2006 Vice President of Intermediate Government Income. Mr. Kozlowski also serves as Vice President of other funds advised by FMR. Prior to assuming his current responsibilities, Mr. Kozlowski worked as an analyst and a trader in the Fixed-Income Group.
Eric D. Roiter (58)
	Year of Election or Appointment: 1998 Secretary of Ginnie Mae and Intermediate Government Income. Mr. Roiter also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001-present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001-present), Fidelity Research & Analysis Company (2001-present), and Fidelity Investments Money Management, Inc. (2001-present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003-present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998-2005).
Scott C. Goebel (39)
	Year of Election or Appointment: 2007 Assistant Secretary of Ginnie Mae and Intermediate Government Income. Mr. Goebel also serves as Assistant Secretary of other Fidelity funds (2007-present), Vice President and Secretary of FDC (2006-present), and is an employee of FMR.
R. Stephen Ganis (41)
	Year of Election or Appointment: 2006 Anti-Money Laundering (AML) officer of Ginnie Mae and Intermediate Government Income. Mr. Ganis also serves as AML officer of other Fidelity funds (2006-present) and FMR Corp. (2003-present). Before joining Fidelity Investments, Mr. Ganis practiced law at Goodwin Procter, LLP (2000-2002).
Joseph B. Hollis (59)
	Year of Election or Appointment: 2006 Chief Financial Officer of Ginnie Mae and Intermediate Government Income. Mr. Hollis also serves as Chief Financial Officer of other Fidelity funds. Mr. Hollis is President of Fidelity Pricing and Cash Management Services (FPCMS) (2005-present). Mr. Hollis also serves as President and Director of Fidelity Service Company, Inc. (2006-present). Previously, Mr. Hollis served as Senior Vice President of Cash Management Services (1999-2002) and Investment Management Operations (2002-2005).
Kenneth A. Rathgeber (60)
	Year of Election or Appointment: 2004 Chief Compliance Officer of Ginnie Mae and Intermediate Government Income. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004-present) and Executive Vice President of Risk Oversight for Fidelity Investments (2002-present). He is Chief Compliance Officer of FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). Previously, Mr. Rathgeber served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998-2002).
Bryan A. Mehrmann (46)
	Year of Election or Appointment: 2005 Deputy Treasurer of Ginnie Mae and Intermediate Government Income. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004).
Kenneth B. Robins (37)
	Year of Election or Appointment: 2005 Deputy Treasurer of Ginnie Mae and Intermediate Government Income. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004) and a Senior Manager (1999-2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000-2002).
Robert G. Byrnes (40)
	Year of Election or Appointment: 2005 Assistant Treasurer of Ginnie Mae and Intermediate Government Income. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003).
Peter L. Lydecker (53)
	Year of Election or Appointment: 2004 Assistant Treasurer of Ginnie Mae and Intermediate Government Income. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR.
Gary W. Ryan (48)
	Year of Election or Appointment: 2005 Assistant Treasurer of Ginnie Mae and Intermediate Government Income. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999-2005).

Annual Report

Distributions

A percentage of the dividends distributed during the fiscal year for the following funds was derived from interest on U.S. Government securities which is generally exempt from state income tax:

Intermediate Government Income

24.83%

The funds hereby designates the amounts noted below as distributions paid during the period January 1, 2007 to July 31, 2007, as qualifying to be taxed as interest-related dividends for nonresident alien shareholders:

Fund
Ginnie Mae	$95,971,830
Intermediate Government Income	$21,223,374

The fund will notify shareholders in January 2008 of amounts for use in preparing 2007 income tax returns.

Annual Report

Board Approval of Investment Advisory Contracts and Management Fees

Fidelity Ginnie Mae Fund / Fidelity Intermediate Government Income Fund

Each year, typically in June, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for each fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.

The Board meets regularly each month except August and takes into account throughout the year matters bearing on Advisory Contracts. The Board, acting directly and through its separate committees, considers at each of its meetings factors that are relevant to the annual renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has adopted a written charter outlining the structure and purposes of the committee. One such committee, the Fixed-Income Contract Committee, meets periodically as needed throughout the year to consider matters specifically related to the annual renewal of Advisory Contracts. The committee requests and receives information on, and makes recommendations to the Independent Trustees concerning, the approval and annual review of the Advisory Contracts.

At its June 2007 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the Advisory Contracts for each fund. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of the management fee and total expenses of each fund; (iii) the total costs of the services to be provided by and the profits to be realized by the investment adviser and its affiliates from the relationship with each fund; (iv) the extent to which economies of scale would be realized as each fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved amendments to each fund's agreements with foreign sub-advisers to clarify that each sub-adviser provides services as an independent contractor.

In determining whether to renew the Advisory Contracts for each fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contracts is consistent with Fidelity's fiduciary duty under applicable law. In addition to evaluating the specific factors noted above, the Board, in reaching its determination, is aware that shareholders in each fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that each fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, managed by Fidelity.

Annual Report

Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the funds' portfolio managers and the funds' investment objectives and disciplines. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.

Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers. In addition, the Board considered the trading resources that are an integrated part of the fixed-income portfolio management investment process.

Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures.

The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.

Annual Report

Board Approval of Investment Advisory Contracts and
Management Fees - continued

Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of a fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that, since the last Advisory Contract renewals in June 2006, Fidelity has taken a number of actions that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fee on Fidelity Advisor Floating Rate High Income Fund; (iii) contractually agreeing to reduce the management fees on Fidelity's California, Massachusetts, New Jersey, and New York AMT Tax-Free Money Market Funds, launching new Institutional Classes and Service Classes of these funds, and contractually agreeing to impose expense limitations on these funds; (iv) eliminating the exchange fee on the Fidelity Select Portfolios and reducing the pricing and bookkeeping fee rates for these funds; (v) reducing the maximum transfer agency fee rates on high income funds and certain equity funds; (vi) proposing amended management contracts that, if approved by shareholders, will add a performance adjustment component to the management fees paid by 18 Fidelity Advisor equity funds; (vii) contractually agreeing to reduce fees for Ultra-Short Central Fund and the money market Central Funds; (viii) waiving the Fidelity Advisor funds' contingent deferred sales charge on certain redemptions made through systematic withdrawal programs; and (ix) amending the management contracts for equity and fixed-income funds whose management contracts incorporate a "group fee" structure by adding four new fee "breakpoints" to the group fee rate schedules.

Investment Performance. The Board considered whether each fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed each fund's absolute investment performance, as well as each fund's relative investment performance measured against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by the Board over multiple periods. For each fund, the following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2006, the fund's cumulative total returns, the cumulative total returns of a broad-based securities market index ("benchmark"), and a range of cumulative total returns of a peer group of mutual funds identified by Lipper Inc. as having an investment objective similar to that of the fund. The box within each chart shows the 25th percentile return (bottom of box) and the 75th percentile return (top of box) of the peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten number noted below each chart corresponds to the percentile box and represents the percentage of funds in the peer group whose performance was equal to or lower than that of the fund.

Annual Report

Fidelity Ginnie Mae Fund

The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of the fund was in the first quartile for all the periods shown. The Board also stated that the relative investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions to be taken by FMR to improve the fund's below-benchmark performance.

Fidelity Intermediate Government Income Fund

Annual Report

Board Approval of Investment Advisory Contracts and
Management Fees - continued

The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of the fund was in the second quartile for the one-year period and the first quartile for the three- and five-year periods. The Board also stated that the relative investment performance of the fund was lower than its benchmark for all the periods shown.

Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to each fund will benefit each fund's shareholders, particularly in light of the Board's view that each fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.

Competitiveness of Management Fee and Total Fund Expenses. The Board considered each fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.

The Board considered two proprietary management fee comparisons for the 12-month periods shown in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group" and, for the reasons explained above, is broader than the Lipper peer group used by the Board for performance comparisons. The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a TMG % of 8% means that 92% of the funds in the Total Mapped Group had higher management fees than a fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee ranked, is also included in the charts and considered by the Board.

Annual Report

Fidelity Ginnie Mae Fund

Fidelity Intermediate Government Income Fund

The Board noted that each fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2006.

Furthermore, the Board considered that it had approved an amendment (effective June 1, 2005) to each fund's management contract that lowered the fund's individual fund fee rate from 30 basis points to 20 basis points. The Board considered that each fund's chart reflects the fund's lower management fee for 2005, as if the lower rate were in effect for the entire year.

Annual Report

Board Approval of Investment Advisory Contracts and
Management Fees - continued

Based on its review, the Board concluded that each fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.

In its review of each fund's total expenses, the Board considered the fund's management fee as well as other fund expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses of each fund compared to competitive fund median expenses. Each fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.

The Board also considered that the current contractual arrangements for each fund (i) have the effect of setting the total "fund-level" expenses (including, among certain other expenses, the management fee) at 35 basis points, (ii) lower and limit the "class-level" transfer agent fee to 10 basis points, and (iii) limit each fund's total expenses to 45 basis points. These contractual arrangements may not be increased without Board and shareholder approval.

The Board noted that each fund's total expenses ranked below its competitive median for 2006.

The Board recognized that each fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. In connection with the renewal of each fund's management contract, the Board approved amendments to each fund's management contract that added four new fee breakpoints to the group fee rate schedule for assets under FMR's management above $1,386 billion. The Board considered that the group fee rate declines under both the present and amended schedules, but that under the amended schedule, the group fee rate declines faster as assets under FMR's management exceed $1,386 billion. The Board noted, however, that because the current contractual arrangements set the total fund-level expenses at 35 basis points, increases or decreases in the management fee due to changes in the group fee rate will not impact total expenses.

In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.

Annual Report

Based on its review, the Board concluded that each fund's total expenses were reasonable in light of the services that the fund and its shareholders receive and the other factors considered.

Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing each fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.

On an annual basis, FMR presents to the Board Fidelity's profitability for each fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.

PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.

The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the funds' business.

The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of each fund and determined that the amount of profit is a fair entrepreneurial profit for the management of each fund.

Annual Report

Board Approval of Investment Advisory Contracts and
Management Fees - continued

Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on several topics, including (i) Fidelity's fund profitability methodology, profitability by investment discipline, and profitability trends within certain funds; (ii) Fidelity's compensation structure relative to competitors and its effect on profitability; (iii) funds and accounts managed by Fidelity other than the Fidelity funds, including fee arrangements; (iv) the total expenses of certain funds and classes relative to competitors; (v) fund performance trends; (vi) fall-out benefits received by certain Fidelity affiliates; and (vii) Fidelity's fee structures.

Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.

Annual 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 Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.

(phone_graphic)

Fidelity Automated
Service Telephone (FAST®)
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

* 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.

Annual Report

To Visit Fidelity

For directions and hours,
please call 1-800-544-9797.

Arizona

7001 West Ray Road
Chandler, AZ

15445 N. Scottsdale Road
Scottsdale, AZ

California

815 East Birch Street
Brea, CA

1411 Chapin Avenue
Burlingame, CA

851 East Hamilton Avenue
Campbell, CA

19200 Von Karman Avenue
Irvine, CA

601 Larkspur Landing Circle
Larkspur, CA

10100 Santa Monica Blvd.
Los Angeles, CA

27101 Puerta Real
Mission Viejo, CA

73-575 El Paseo
Palm Desert, CA

251 University Avenue
Palo Alto, CA

123 South Lake Avenue
Pasadena, CA

16995 Bernardo Ctr. Drive
Rancho Bernardo, CA

1220 Roseville Parkway
Roseville, CA

1740 Arden Way
Sacramento, CA

7676 Hazard Center Drive
San Diego, CA

11943 El Camino Real
San Diego, CA

8 Montgomery Street
San Francisco, CA

3793 State Street
Santa Barbara, CA

1200 Wilshire Boulevard
Santa Monica, CA

21701 Hawthorne Boulevard
Torrance, CA

2001 North Main Street
Walnut Creek, CA

6300 Canoga Avenue
Woodland Hills, CA

Colorado

1625 Broadway
Denver, CO

9185 Westview Road
Lone Tree, CO

Connecticut

48 West Putnam Avenue
Greenwich, CT

265 Church Street
New Haven, CT

300 Atlantic Street
Stamford, CT

29 South Main Street
West Hartford, CT

Delaware

400 Delaware Avenue
Wilmington, DE

Florida

4400 N. Federal Highway
Boca Raton, FL

121 Alhambra Plaza
Coral Gables, FL

2948 N. Federal Highway
Ft. Lauderdale, FL

4671 Town Center Parkway
Jacksonville, FL

1907 West State Road 434
Longwood, FL

8880 Tamiami Trail, North
Naples, FL

3501 PGA Boulevard
Palm Beach Gardens, FL

3550 Tamiami Trail, South
Sarasota, FL

1502 N. Westshore Blvd.
Tampa, FL

2465 State Road 7
Wellington, FL

Georgia

3445 Peachtree Road, N.E.
Atlanta, GA

1000 Abernathy Road
Atlanta, GA

Illinois

One North LaSalle Street
Chicago, IL

875 North Michigan Ave.
Chicago, IL

1415 West 22nd Street
Oak Brook, IL

1572 East Golf Road
Schaumburg, IL

3232 Lake Avenue
Wilmette, IL

Indiana

4729 East 82nd Street
Indianapolis, IN

Kansas

5400 College Boulevard
Overland Park, KS

Maine

Three Canal Plaza
Portland, ME

Maryland

7315 Wisconsin Avenue
Bethesda, MD

One W. Pennsylvania Ave.
Towson, MD

Massachusetts

801 Boylston Street
Boston, MA

155 Congress Street
Boston, MA

300 Granite Street
Braintree, MA

44 Mall Road
Burlington, MA

238 Main Street
Cambridge, MA

405 Cochituate Road
Framingham, MA

416 Belmont Street
Worcester, MA

Annual Report

Michigan

500 E. Eisenhower Pkwy.
Ann Arbor, MI

280 Old N. Woodward Ave.
Birmingham, MI

43420 Grand River Avenue
Novi, MI

29155 Northwestern Hwy.
Southfield, MI

Minnesota

7600 France Avenue South
Edina, MN

Missouri

1524 South Lindbergh Blvd.
St. Louis, MO

Nevada

2225 Village Walk Drive
Henderson, NV

New Jersey

150 Essex Street
Millburn, NJ

56 South Street
Morristown, NJ

396 Route 17, North
Paramus, NJ

3518 Route 1 North
Princeton, NJ

530 Broad Street
Shrewsbury, NJ

New York

1055 Franklin Avenue
Garden City, NY

37 West Jericho Turnpike
Huntington Station, NY

1271 Avenue of the Americas
New York, NY

980 Madison Avenue
New York, NY

61 Broadway
New York, NY

350 Park Avenue
New York, NY

200 Fifth Avenue
New York, NY

733 Third Avenue
New York, NY

11 Penn Plaza
New York, NY

2070 Broadway
New York, NY

1075 Northern Blvd.
Roslyn, NY

799 Central Park Avenue
Scarsdale, NY

North Carolina

4611 Sharon Road
Charlotte, NC

7011 Fayetteville Road
Durham, NC

Ohio

3805 Edwards Road
Cincinnati, OH

1324 Polaris Parkway
Columbus, OH

28699 Chagrin Boulevard
Woodmere Village, OH

Oregon

7493 SW Bridgeport Road
Tigard, OR

Pennsylvania

600 West DeKalb Pike
King of Prussia, PA

1735 Market Street
Philadelphia, PA

12001 Perry Highway
Wexford, PA

Rhode Island

47 Providence Place
Providence, RI

Tennessee

6150 Poplar Avenue
Memphis, TN

Texas

10000 Research Boulevard
Austin, TX

4001 Northwest Parkway
Dallas, TX

12532 Memorial Drive
Houston, TX

2701 Drexel Drive
Houston, TX

6560 Fannin Street
Houston, TX

6500 N. MacArthur Blvd.
Irving, TX

6005 West Park Boulevard
Plano, TX

14100 San Pedro
San Antonio, TX

1576 East Southlake Blvd.
Southlake, TX

19740 IH 45 North
Spring, TX

Utah

279 West South Temple
Salt Lake City, UT

Virginia

1861 International Drive
McLean, VA

Washington

411 108th Avenue, N.E.
Bellevue, WA

1518 6th Avenue
Seattle, WA

Washington, DC

1900 K Street, N.W.
Washington, DC

Wisconsin

595 North Barker Road
Brookfield, WI

Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC

Annual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

Fidelity Research & Analysis Company

Fidelity Investments
Money Management, Inc.

Fidelity Investments Japan Limited

Fidelity International Investment Advisors

Fidelity International Investment Advisors
(U.K.) Limited

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Service Agent

Fidelity Service Company, Inc.

Boston, MA

Custodian

The Bank of New York

New York, NY

The Fidelity Telephone Connection

Mutual Fund 24-Hour Service

Exchanges/Redemptions
and Account Assistance 1-800-544-6666

Product Information 1-800-544-6666

Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)

TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)

Fidelity Automated Service
Telephone (FAST®) (automated graphic) 1-800-544-5555

(automated graphic) Automated line for quickest service

GMIG-UANN-0907
1.844592.100

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

Fidelity®

Government Income

Fund

Annual Report

July 31, 2007

(2_fidelity_logos) (Registered_Trademark)

Chairman's Message	<Click Here>	Ned Johnson's message to shareholders.
Performance	<Click Here>	How the fund has done over time.
Management's Discussion	<Click Here>	The manager's review of fund performance, strategy and outlook.
Shareholder Expense Example	<Click Here>	An example of shareholder expenses.
Investment Changes	<Click Here>	A summary of major shifts in the fund's investments over the past six months.
Investments	<Click Here>	A complete list of the fund's investments with their market values.
Financial Statements	<Click Here>	Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights.
Notes	<Click Here>	Notes to the financial statements.
Report of Independent Registered Public Accounting Firm	<Click Here>
Trustees and Officers	<Click Here>
Distributions	<Click Here>
Board Approval of Investment Advisory Contracts and Management Fees	<Click Here>

Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.

Other third party marks appearing herein are the property of their respective owners.

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.

Annual Report

This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.

NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE

Neither the fund nor Fidelity Distributors Corporation is a bank.

Annual Report

Chairman's Message

(photo_of_Edward_C_Johnson_3d)

Dear Shareholder:

Sincerely,

/s/Edward C. Johnson 3d

Edward C. Johnson 3d

Annual Report

Performance: The Bottom Line

Average annual total return reflects the change in the value of an investment, assuming reinvestment of Government Income's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.

Average Annual Total Returns

Periods ended July 31, 2007	Past 1 year	Past 5 years	Past 10 years
Government Income	5.22%	3.75%	5.33%

$10,000 Over 10 Years

Let's say hypothetically that $10,000 was invested in Government Income on July 31, 1997. The chart shows how the value of your investment would have changed, and also shows how the Lehman Brothers® U.S. Government Index performed over the same period.

Annual Report

Management's Discussion of Fund Performance

Comments from William Irving, Portfolio Manager of Fidelity® Government Income Fund

For the 12 months ending July 31, 2007, Government Income returned 5.22%, while the Lehman Brothers 75% U.S. Government/25% U.S. Mortgage-Backed Securities Index gained 5.75%. The fund's performance relative to the index was helped by its yield-curve positioning, which refers to how we allocated investments across a range of bond maturities. In particular, our overweighting in better-performing intermediate bonds in the two- to five-year range and our underweighting in lagging 10- to 20-year bonds worked in our favor. In the mortgage sector, our overweighted position in hybrid adjustable-rate mortgages (ARMs) helped because they generally outpaced the fixed-rate mortgages that dominate the benchmark, due to strong demand from institutional investors, who recently bought the bonds prior to their inclusion in the Lehman Brothers U.S. Aggregate Index and the Lehman Brothers U.S. Mortgage-Backed Securities Index. On the flip side, sector selection generally worked against us. An out-of-index position in Treasury Inflation-Protected Securities hurt because they lagged the index. Elsewhere, the fund also suffered from its underweighting in plain-vanilla Treasury securities, which outpaced mortgage-backed securities, in which we were overweighted. Our slightly larger-than-index weighting in agency securities had little effect on the fund's relative performance, as they generally kept pace with the index.

Annual Report

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2007 to July 31, 2007).

Actual Expenses

The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.

Hypothetical Example for Comparison Purposes

The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.

Annual Report

Shareholder Expense Example - continued

	Beginning Account Value February 1, 2007	Ending Account Value July 31, 2007	Expenses Paid During Period* February 1, 2007 to July 31, 2007
Class A
Actual	$ 1,000.00	$ 1,021.70	$ 4.01
Hypothetical^A	$ 1,000.00	$ 1,020.83	$ 4.01
Class T
Actual	$ 1,000.00	$ 1,021.70	$ 4.01
Hypothetical^A	$ 1,000.00	$ 1,020.83	$ 4.01
Class B
Actual	$ 1,000.00	$ 1,018.10	$ 7.56
Hypothetical^A	$ 1,000.00	$ 1,017.31	$ 7.55
Class C
Actual	$ 1,000.00	$ 1,017.80	$ 7.80
Hypothetical^A	$ 1,000.00	$ 1,017.06	$ 7.80
Government Income
Actual	$ 1,000.00	$ 1,023.50	$ 2.26
Hypothetical^A	$ 1,000.00	$ 1,022.56	$ 2.26
Institutional Class
Actual	$ 1,000.00	$ 1,023.10	$ 2.66
Hypothetical^A	$ 1,000.00	$ 1,022.17	$ 2.66

^A 5% return per year before expenses

	Annualized Expense Ratio
Class A	.80%
Class T	.80%
Class B	1.51%
Class C	1.56%
Government Income	.45%
Institutional Class	.53%

Annual Report

Investment Changes

Coupon Distribution as of July 31, 2007
	% of fund's investments	% of fund's investments 6 months ago
Less than 2%	1.7	2.5
2 - 2.99%	0.0	1.2
3 - 3.99%	2.8	3.0
4 - 4.99%	34.2	31.0
5 - 5.99%	21.7	24.3
6 - 6.99%	15.6	15.8
7% and over	2.8	3.0

Coupon distribution shows the range of stated interest rates on the fund's investments, excluding short-term investments.

Weighted Average Maturity as of July 31, 2007
		6 months ago
Years	4.9	4.9

Duration as of July 31, 2007
		6 months ago
Years	4.7	4.1

Asset Allocation (% of fund's net assets)
As of July 31, 2007*			As of January 31, 2007**
	Mortgage Securities 32.0%			Mortgage Securities 29.2%
	CMOs and Other Mortgage Related Securities 7.9%			CMOs and Other Mortgage Related Securities 11.4%
	U.S. Treasury Obligations 34.7%			U.S. Treasury Obligations 29.8%
	U.S. Government Agency Obligations 27.5%			U.S. Government Agency Obligations 32.1%
	Asset-Backed Securities 0.5%			Asset-Backed Securities 0.7%
	Short-Term Investments and Net Other Assets^(dagger) (2.6)%			Short-Term Investments and Net Other Assets^(dagger) (3.2)%
* Futures and Swaps		4.4%	** Futures and Swaps		0.3%

^(dagger) Short-Term Investments and Net Other Assets are not included in the pie chart.

Annual Report

Investments July 31, 2007

Showing Percentage of Net Assets

U.S. Government and Government Agency Obligations - 62.2%
	Principal Amount (000s)		Value (000s)
U.S. Government Agency Obligations - 27.5%
Fannie Mae:
3.25% 8/15/08	$ 4,812		$ 4,725
3.25% 2/15/09 (b)	143,050		139,526
4.25% 5/15/09	11,235		11,108
4.5% 10/15/08	81,560		81,101
4.75% 12/15/10	233,801		231,870
4.875% 4/15/09	43,350		43,305
5.125% 9/2/08	78,770		78,833
5.125% 4/15/11	187,000		187,460
5.375% 6/12/17	124,591		124,477
6.375% 6/15/09	55,710		57,121
6.625% 9/15/09	36,820		38,047
7.25% 1/15/10	25,086		26,393
Federal Home Loan Bank:
4.5% 10/14/08	56,475		56,140
5.375% 8/19/11	35,350		35,724
5.8% 9/2/08	26,570		26,779
Freddie Mac:
3.875% 6/15/08	2,791		2,761
4.75% 3/5/09	113,806		113,487
4.75% 3/5/12	10,000		9,851
5% 1/30/14	25,000		24,700
5.125% 4/18/11	31,220		31,266
5.25% 7/18/11	29,000		29,129
5.5% 8/23/17	100,000		100,832
5.625% 3/15/11	48,555		49,446
5.75% 1/15/12	1,686		1,727
6.625% 9/15/09	155,000		160,166
Israeli State (guaranteed by U.S. Government through Agency for International Development):
5.5% 9/18/23	110,500		111,982
6.6% 2/15/08	20,957		20,995
6.8% 2/15/12	30,000		31,268
Overseas Private Investment Corp. U.S. Government guaranteed participation certificates:
6.77% 11/15/13	6,650		6,716
6.99% 5/21/16	21,433		22,966
Private Export Funding Corp.:
secured:
5.66% 9/15/11 (c)	18,000		18,332
5.685% 5/15/12	24,035		24,581
6.67% 9/15/09	3,500		3,624
U.S. Government and Government Agency Obligations - continued
	Principal Amount (000s)		Value (000s)
U.S. Government Agency Obligations - continued
Private Export Funding Corp.: - continued
4.974% 8/15/13	$ 22,940		$ 22,775
Small Business Administration guaranteed development participation certificates:
Series 2002-20J Class 1, 4.75% 10/1/22	6,759		6,559
Series 2002-20K Class 1, 5.08% 11/1/22	14,321		14,131
Series 2003 P10B, 5.136% 8/10/13	11,281		11,165
Series 2004-20H Class 1, 5.17% 8/1/24	4,033		3,981
Tennessee Valley Authority 5.375% 4/1/56	8,429		8,064
U.S. Department of Housing and Urban Development Government guaranteed participation certificates Series 1999-A, 5.96% 8/1/09	18,380		18,434
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS			1,991,547
U.S. Treasury Obligations - 34.7%
U.S. Treasury Bonds:
6.125% 8/15/29 (b)	293,102		337,365
6.25% 8/15/23	1,500		1,701
8% 11/15/21	146,794		191,406
U.S. Treasury Notes:
4.25% 8/15/13 (b)	20,010		19,605
4.25% 11/15/13	37,610		36,778
4.25% 8/15/14 (b)(f)	161,550		157,070
4.25% 11/15/14 (b)	77,185		74,954
4.25% 8/15/15 (b)	84,500		81,608
4.375% 12/15/10	5,230		5,201
4.5% 4/30/09 (b)	100,000		99,813
4.5% 4/30/12	86,000		85,604
4.5% 11/15/15 (b)	111,800		109,739
4.5% 5/15/17 (b)	72,000		70,464
4.625% 11/15/09	81,000		81,095
4.625% 10/31/11	11,000		11,015
4.625% 2/29/12	4,500		4,505
4.625% 11/15/16 (b)	224,000		221,270
4.75% 1/31/12 (b)	188,250		189,485
4.75% 5/31/12	35,000		35,213
4.75% 5/15/14 (b)	167,723		168,221
4.875% 10/31/08 (b)	180,000		180,281
4.875% 5/15/09 (b)	113,432		113,964
4.875% 6/30/09	128,000		128,690
U.S. Government and Government Agency Obligations - continued
	Principal Amount (000s)		Value (000s)
U.S. Treasury Obligations - continued
U.S. Treasury Notes: - continued
4.875% 5/31/11	$ 20,740		$ 20,951
4.875% 6/30/12 (b)	61,471		62,182
5.125% 6/30/11	23,214		23,666
TOTAL U.S. TREASURY OBLIGATIONS			2,511,846
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (Cost $4,494,382)		4,503,393
U.S. Government Agency - Mortgage Securities - 32.0%

Fannie Mae - 26.4%
3.729% 10/1/33 (g)	704		695
3.75% 1/1/34 (g)	657		648
3.75% 4/1/34 (g)	11,938		11,739
3.757% 10/1/33 (g)	720		717
3.802% 6/1/33 (g)	549		551
3.825% 4/1/33 (g)	1,988		1,996
3.847% 10/1/33 (g)	30,880		30,833
3.877% 6/1/33 (g)	2,681		2,690
3.902% 5/1/34 (g)	6,663		6,565
3.91% 5/1/33 (g)	4,715		4,742
3.913% 9/1/33 (g)	11,186		11,086
3.944% 5/1/34 (g)	5,281		5,200
3.947% 5/1/33 (g)	230		229
3.967% 9/1/33 (g)	9,140		9,031
3.998% 4/1/34 (g)	10,531		10,379
3.999% 10/1/18 (g)	508		502
4% 9/1/13 to 6/1/20	27,020		25,401
4.013% 4/1/33 (g)	187		188
4.033% 6/1/34 (g)	9,627		9,485
4.063% 3/1/35 (g)	17,948		17,760
4.076% 2/1/35 (g)	372		373
4.114% 5/1/33 (g)	8,396		8,412
4.166% 1/1/35 (g)	1,571		1,544
4.187% 11/1/34 (g)	12,876		12,913
4.205% 6/1/34 (g)	10,741		10,600
4.249% 1/1/34 (g)	2,105		2,084
4.25% 2/1/35 (g)	767		755
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount (000s)		Value (000s)
Fannie Mae - continued
4.264% 5/1/35 (g)	$ 773		$ 774
4.28% 10/1/33 (g)	332		330
4.282% 3/1/33 (g)	831		835
4.283% 6/1/34 (g)	11,653		11,534
4.294% 8/1/33 (g)	1,342		1,344
4.295% 3/1/35 (g)	656		660
4.3% 3/1/33 (g)	276		272
4.302% 6/1/33 (g)	430		433
4.304% 3/1/33 (g)	370		364
4.321% 4/1/35 (g)	381		382
4.343% 1/1/35 (g)	832		820
4.355% 10/1/19 (g)	1,207		1,192
4.36% 2/1/34 (g)	1,313		1,301
4.386% 10/1/34 (g)	4,044		3,996
4.396% 2/1/35 (g)	1,047		1,031
4.411% 7/1/35 (g)	19,301		19,009
4.419% 5/1/35 (g)	2,123		2,117
4.429% 5/1/35 (g)	616		617
4.432% 3/1/35 (g)	1,101		1,085
4.445% 8/1/34 (g)	2,165		2,148
4.481% 1/1/35 (g)	5,530		5,460
4.484% 11/1/33 (g)	1,650		1,638
4.494% 12/1/34 (g)	458		452
4.5% 2/1/18 to 4/1/20	16,046		15,376
4.503% 2/1/35 (g)	635		639
4.504% 2/1/35 (g)	333		336
4.512% 1/1/35 (g)	876		867
4.519% 2/1/35 (g)	11,901		11,819
4.524% 7/1/35 (g)	2,513		2,504
4.53% 10/1/35 (g)	416		415
4.554% 9/1/34 (g)	19,342		19,158
4.57% 7/1/35 (g)	3,098		3,108
4.575% 2/1/35 (g)	3,589		3,548
4.614% 7/1/34 (g)	26,137		26,045
4.651% 10/1/34 (g)	3,356		3,327
4.653% 3/1/35 (g)	614		619
4.702% 10/1/34 (g)	2,776		2,755
4.719% 7/1/34 (g)	1,970		1,957
4.723% 3/1/35 (g)	253		255
4.733% 12/1/35 (g)	64,285		63,872
4.772% 1/1/35 (g)	4,800		4,761
4.779% 12/1/35 (g)	4,486		4,465
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount (000s)		Value (000s)
Fannie Mae - continued
4.781% 12/1/34 (g)	$ 686		$ 681
4.794% 4/1/35 (g)	12,356		12,330
4.8% 7/1/35 (g)	4,715		4,669
4.801% 11/1/34 (g)	2,315		2,299
4.803% 6/1/35 (g)	3,587		3,597
4.803% 11/1/35 (g)	10,309		10,315
4.808% 2/1/33 (g)	1,141		1,152
4.808% 1/1/36 (g)	25,970		25,762
4.832% 10/1/35 (g)	2,001		1,988
4.849% 7/1/35 (g)	10,016		9,930
4.857% 10/1/34 (g)	8,122		8,076
4.86% 7/1/34 (g)	6,286		6,256
4.87% 5/1/33 (g)	36		36
4.894% 5/1/35 (g)	1,781		1,768
4.899% 8/1/34 (g)	5,359		5,333
5% 12/1/15 to 12/1/35 (e)	228,426		218,572
5.005% 2/1/34 (g)	8,241		8,166
5.016% 7/1/34 (g)	355		353
5.052% 5/1/35 (g)	4,154		4,184
5.069% 9/1/34 (g)	5,765		5,750
5.084% 9/1/34 (g)	735		733
5.087% 8/1/34 (g)	626		625
5.108% 10/1/35 (g)	4,553		4,531
5.135% 7/1/34 (g)	2,204		2,200
5.137% 8/1/36 (g)	31,468		31,432
5.162% 1/1/37 (g)	5,998		5,975
5.165% 3/1/36 (g)	14,153		14,126
5.17% 6/1/35 (g)	2,942		2,961
5.176% 8/1/33 (g)	1,042		1,043
5.176% 3/1/35 (g)	388		388
5.242% 5/1/35 (g)	5,794		5,790
5.277% 4/1/36 (g)	5,513		5,562
5.297% 7/1/35 (g)	396		399
5.31% 3/1/36 (g)	38,095		38,087
5.324% 12/1/34 (g)	1,042		1,042
5.356% 12/1/36 (g)	3,536		3,530
5.365% 2/1/36 (g)	8,514		8,518
5.394% 7/1/35 (g)	2,589		2,590
5.407% 2/1/37 (g)	3,127		3,130
5.449% 2/1/37 (g)	14,139		14,163
5.5% 4/1/09 to 12/1/35	404,307		395,248
5.5% 8/20/22 (d)	13,000		12,857
5.518% 1/1/34 (g)	77		77
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount (000s)		Value (000s)
Fannie Mae - continued
5.612% 2/1/36 (g)	$ 3,401		$ 3,417
5.67% 4/1/36 (g)	12,513		12,576
5.67% 6/1/36 (g)	8,147		8,191
5.757% 4/1/36 (g)	6,620		6,664
5.804% 3/1/36 (g)	8,634		8,698
5.807% 5/1/36 (g)	3,745		3,775
5.818% 1/1/36 (g)	2,679		2,686
5.831% 5/1/36 (g)	19,628		19,791
5.854% 6/1/35 (g)	2,147		2,164
5.872% 3/1/36 (g)	8,089		8,116
5.897% 12/1/36 (g)	4,655		4,689
5.9% 3/1/36 (g)	7,602		7,671
5.925% 6/1/36 (g)	14,806		14,942
5.94% 5/1/36 (g)	5,459		5,511
6% 5/1/12 to 7/1/33 (e)	104,928		104,948
6% 8/1/22 (d)	23,000		23,160
6% 8/1/37 (d)	65,000		64,465
6% 8/1/37 (d)	107,000		106,119
6% 8/14/37 (d)	48,000		47,605
6.038% 4/1/36 (g)	52,142		52,707
6.106% 4/1/36 (g)	28,823		29,145
6.226% 3/1/37 (g)	1,495		1,508
6.314% 10/1/36 (g)	23,129		23,379
6.352% 8/1/36 (g)	7,422		7,512
6.5% 2/1/12 to 1/1/35	25,718		26,177
6.58% 9/1/36 (g)	10,877		11,031
7% 7/1/13 to 7/1/32	5,688		5,916
7.5% 8/1/10 to 4/1/29	155		160
8% 1/1/22	9		9
8.5% 1/1/15 to 7/1/31	617		651
9% 11/1/11 to 5/1/14	646		649
9.5% 11/15/09 to 10/1/20	893		968
10% 8/1/10	2		2
11% 8/1/10	14		15
11.25% 5/1/14	9		10
11.5% 6/15/19 to 1/15/21	1,428		1,593
12.5% 8/1/15 to 3/1/16	3		3
			1,913,585
Freddie Mac - 5.0%
3.377% 7/1/33 (g)	9,295		9,201
4% 5/1/19 to 11/1/20	26,657		24,871
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount (000s)		Value (000s)
Freddie Mac - continued
4.283% 2/1/35 (g)	$ 1,796		$ 1,799
4.288% 3/1/35 (g)	842		842
4.301% 12/1/34 (g)	1,107		1,087
4.424% 6/1/35 (g)	1,284		1,278
4.426% 2/1/34 (g)	780		771
4.426% 3/1/35 (g)	1,054		1,035
4.444% 3/1/35 (g)	1,076		1,059
4.5% 2/1/18 to 8/1/33	17,105		16,227
4.539% 2/1/35 (g)	1,585		1,560
4.701% 9/1/36 (g)	3,473		3,449
4.704% 9/1/35 (g)	26,676		26,548
4.737% 2/1/34 (g)	8,503		8,358
4.784% 3/1/33 (g)	361		366
4.789% 2/1/36 (g)	1,410		1,392
4.922% 10/1/36 (g)	19,855		19,768
4.988% 4/1/35 (g)	4,699		4,722
5% 1/1/09 to 9/1/35	13,435		12,779
5.021% 4/1/35 (g)	527		517
5.128% 7/1/35 (g)	5,138		5,103
5.132% 4/1/35 (g)	4,463		4,439
5.278% 2/1/36 (g)	313		311
5.489% 2/1/37 (g)	12,155		12,106
5.498% 1/1/36 (g)	4,438		4,433
5.5% 8/1/14 to 11/1/36	56,405		55,704
5.536% 1/1/36 (g)	6,600		6,597
6% 7/1/16 to 11/1/33	31,292		31,441
6.489% 10/1/36 (g)	10,873		11,010
6.5% 11/1/10 to 10/1/36	48,678		49,550
6.538% 2/1/37 (g)	18,692		18,820
6.618% 12/1/36 (g)	18,478		18,674
7% 4/1/11	4		4
7.5% 5/1/11 to 7/1/16	2,286		2,384
8% 1/1/10 to 6/1/11	1		1
8.5% 8/1/08 to 9/1/29	232		248
9% 8/1/08 to 10/1/20	110		116
9.5% 6/1/09 to 8/1/21	358		388
9.75% 8/1/14	153		162
10% 7/1/09 to 8/1/21	37		40
11% 7/1/13 to 5/1/14	70		77
12% 8/1/13 to 3/1/15	3		3
12.25% 4/1/11 to 9/1/13	3		4
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount (000s)		Value (000s)
Freddie Mac - continued
12.5% 2/1/10 to 6/1/19	$ 35		$ 38
13% 8/1/10 to 6/1/15	9		10
			359,292
Government National Mortgage Association - 0.6%
4.25% 7/20/34 (g)	1,091		1,085
6% 7/15/08 to 12/15/10	1,510		1,523
6.5% 2/15/24 to 10/15/35	23,880		24,483
6.5% 8/1/37 (d)	10,000		10,185
6.5% 8/1/37 (d)	2,000		2,037
6.5% 8/1/37 (d)	4,000		4,074
7% 10/15/26 to 8/15/32	113		117
7.5% 1/15/08 to 8/15/29	137		144
8% 11/15/07 to 12/15/23	1,465		1,553
8.5% 10/15/08 to 1/15/25	14		14
9% 12/15/09	1		1
9.5% 2/15/25	1		1
10.5% 4/15/14 to 1/20/18	105		118
13.5% 7/15/11	8		9
			45,344
TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES (Cost $2,338,955)		2,318,221
Asset-Backed Securities - 0.5%

Fannie Mae Grantor Trust Series 2005-T4 Class A1C, 5.47% 9/25/35 (g) (Cost $37,634)	37,634		37,887
Collateralized Mortgage Obligations - 7.9%

U.S. Government Agency - 7.9%
Fannie Mae:
planned amortization class:
Series 1992-168 Class KB, 7% 10/25/22	1,537		1,591
Series 1993-109 Class NZ, 6% 7/25/08	938		937
Series 1993-207 Class H, 6.5% 11/25/23	18,360		18,860
Series 1993-240 Class PD, 6.25% 12/25/13	6,432		6,520
Series 1994-23:
Class PG, 6% 4/25/23	5,761		5,763
Class PZ, 6% 2/25/24	10,056		10,038
Series 1994-27 Class PJ, 6.5% 6/25/23	319		318
Collateralized Mortgage Obligations - continued
	Principal Amount (000s)		Value (000s)
U.S. Government Agency - continued
Fannie Mae: - continued
planned amortization class:
Series 1996-28 Class PK, 6.5% 7/25/25	$ 4,114		$ 4,220
Series 2003-28 Class KG, 5.5% 4/25/23	4,940		4,816
Series 2006-45 Class OP, 6/25/36 (i)	6,641		4,880
Series 2006-62 Class KP, 4/25/36 (i)	13,648		9,648
sequential payer Series 1997-41 Class J, 7.5% 6/18/27	3,010		3,189
Series 2003-22 6% 4/25/33 (h)	20,731		4,920
Fannie Mae Grantor Trust:
planned amortization class Series 2005-81 Class PC, 5.5% 9/25/35	2,150		2,056
sequential payer Series 2005-93 Class HD, 4.5% 11/25/19	1,428		1,391
Fannie Mae subordinate REMIC pass-thru certificates:
floater:
Series 2001-38 Class QF, 6.3% 8/25/31 (g)	762		780
Series 2002-49 Class FB, 5.92% 11/18/31 (g)	1,203		1,224
Series 2002-60 Class FV, 6.32% 4/25/32 (g)	502		516
Series 2002-75 Class FA, 6.32% 11/25/32 (g)	1,028		1,058
Series 2004-54 Class FE, 6.47% 2/25/33 (g)	522		524
planned amortization class:
Series 2002-18 Class PC, 5.5% 4/25/17	1,170		1,170
Series 2003-113:
Class PD, 4% 2/25/17	23,515		22,334
Class PE, 4% 11/25/18	7,545		6,815
Series 2003-128 Class NE, 4% 12/25/16	13,100		12,442
Series 2004-21 Class QE, 4.5% 11/25/32	1,500		1,394
Series 2004-80 Class LD, 4% 1/25/19	10,160		9,569
Series 2005-102 Class CO, 11/25/35 (i)	6,783		5,005
Series 2006-12 Class BO, 10/25/35 (i)	31,149		22,967
Series 2006-37 Class OW, 5/25/36 (i)	7,297		5,413
sequential payer:
Series 2001-20 Class Z, 6% 5/25/31	24,462		24,478
Series 2001-46 Class ZG, 6% 9/25/31	8,550		8,560
Series 2004-3 Class BA, 4% 7/25/17	723		696
Series 2004-86 Class KC, 4.5% 5/25/19	3,213		3,122
Series 2004-91 Class AH, 4.5% 5/25/29	6,395		6,220
Series 2005-117, Class JN, 4.5% 1/25/36	645		564
Series 2002-50 Class LE, 7% 12/25/29	5		5
Series 2005-14 Class SE, 0.73% 3/25/35 (g)(h)	21,743		677
Series 2007-36:
Class GO, 4/25/37 (i)	1,469		1,102
Collateralized Mortgage Obligations - continued
	Principal Amount (000s)		Value (000s)
U.S. Government Agency - continued
Fannie Mae subordinate REMIC pass-thru certificates: - continued
Series 2007-36:
Class PO, 4/25/37 (i)	$ 3,261		$ 2,427
Class SB, 1.28% 4/25/37 (g)(h)	42,342		2,114
Class SG, 1.28% 4/25/37 (g)(h)	19,112		971
Series 2007-66 Class SA, 7.68% 7/25/37 (g)	5,575		5,775
Freddie Mac:
planned amortization class:
Series 1413 Class J, 4% 11/15/07	100		99
Series 2115 Class PE, 6% 1/15/14	1,037		1,039
Series 2356 Class GD, 6% 9/15/16	636		643
Series 3149 Class OD, 5/15/36 (i)	35,541		25,496
sequential payer Series 2114 Class ZM, 6% 1/15/29	2,704		2,729
Freddie Mac Manufactured Housing participation certificates guaranteed:
floater Series 1686 Class FA, 6.275% 2/15/24 (g)	1,017		1,036
planned amortization class Series 1681 Class PJ, 7% 12/15/23	8,867		9,097
Series 1560 Class PN, 7% 12/15/12	6,638		6,661
Freddie Mac Multi-class participation certificates guaranteed:
floater:
Series 2389 Class DA, 6.22% 11/15/30 (g)	765		767
Series 2448 Class FT, 6.32% 3/15/32 (g)	1,182		1,212
Series 2530 Class FE, 5.92% 2/15/32 (g)	697		705
Series 2630 Class FL, 5.82% 6/15/18 (g)	550		556
Series 3008 Class SM, 0% 7/15/35 (g)	377		381
planned amortization class:
Series 1141 Class G, 9% 9/15/21	435		461
Series 1614 Class L, 6.5% 7/15/23	5,333		5,412
Series 1671 Class G, 6.5% 8/15/23	1,191		1,196
Series 2006-15 Class OP, 3/25/36 (i)	8,127		5,738
Series 2543 Class PM, 5.5% 8/15/18	250		250
Series 2625 Class QX, 2.25% 3/15/22	72		72
Series 2640:
Class GE, 4.5% 7/15/18	7,310		6,975
Class QG, 2% 4/15/22	86		85
Series 2660 Class ML, 3.5% 7/15/22	6,346		6,289
Series 2682 Class LD, 4.5% 10/15/33	777		676
Series 2752 Class PW, 4% 4/15/22	2,515		2,484
Series 2802 Class OB, 6% 5/15/34	10,455		10,415
Collateralized Mortgage Obligations - continued
	Principal Amount (000s)		Value (000s)
U.S. Government Agency - continued
Freddie Mac Multi-class participation certificates guaranteed: - continued
planned amortization class:
Series 2810 Class PD, 6% 6/15/33	$ 995		$ 993
Series 2866 Class XE, 4% 12/15/18	19,350		18,246
Series 2937 Class KC, 4.5% 2/15/20	19,686		18,524
Series 2966 Class XC, 5.5% 1/15/31	25,111		24,877
Series 3077 Class TO, 4/15/35 (i)	17,855		12,817
Series 3110 Class OP, 9/15/35 (i)	16,826		12,131
Series 3119, 2/15/36 (i)	20,299		14,338
Series 3121 Class KO, 3/15/36 (i)	7,162		5,453
Series 3123 Class LO, 3/15/36 (i)	13,128		9,225
Series 3145 Class GO, 4/15/36 (i)	11,854		8,368
Series 3151 5/15/36 (i)	12,724		8,910
sequential payer:
Series 2546 Class MJ, 5.5% 3/15/23	2,861		2,741
Series 2570 Class CU, 4.5% 7/15/17	2,060		2,013
Series 2587 Class AD, 4.71% 3/15/33	5,785		4,891
Series 2601 Class TB, 5.5% 4/15/23	869		831
Series 2617 Class GW, 3.5% 6/15/16	4,132		4,057
Series 2675 Class CB, 4% 5/15/16	2,018		1,958
Series 2677 Class HG, 3% 8/15/12	1,169		1,158
Series 2683 Class JA, 4% 10/15/16	2,104		2,036
Series 2685 Class ND, 4% 10/15/18	9,064		8,147
Series 2750 Class ZT, 5% 2/15/34	1,020		879
Series 2773 Class HC, 4.5% 4/15/19	704		644
Series 2809 Class UA, 4% 12/15/14	3,028		2,980
Series 2849 Class AL, 5% 5/15/18	7,819		7,684
Series 2860 Class CP, 4% 10/15/17	2,474		2,403
Series 2866 Class N, 4.5% 12/15/18	7,093		6,991
Series 2937 Class HJ, 5% 10/15/19	9,618		9,472
Series 2998 Class LY, 5.5% 7/15/25	2,011		1,908
Series 3007 Class EW, 5.5% 7/15/25	8,875		8,421
Series 3013 Class VJ, 5% 1/15/14	1,981		1,957
Series 2769 Class BU, 5% 3/15/34	5,744		5,191
Series 2863 Class DB, 4% 9/15/14	1,319		1,251
Series 2957 Class SW, 0.68% 4/15/35 (g)(h)	29,878		823
Series 3002 Class SN, 1.18% 7/15/35 (g)(h)	29,958		1,283
target amortization class:
Series 2156 Class TC, 6.25% 5/15/29	9,895		10,184
Series 2877 Class JC, 5% 10/15/34	1,413		1,382
Collateralized Mortgage Obligations - continued
	Principal Amount (000s)		Value (000s)
U.S. Government Agency - continued
Ginnie Mae guaranteed REMIC pass-thru securities planned amortization class:
Series 1997-8 Class PE, 7.5% 5/16/27	$ 4,821		$ 5,135
Series 2005-58 Class NJ, 4.5% 8/20/35	21,605		21,183
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $575,569)		569,028
Cash Equivalents - 27.6%
	Maturity Amount (000s)
Investments in repurchase agreements in a joint trading account at 5.3%, dated 7/31/07 due 8/1/07:
(Collateralized by U.S. Government Obligations) #	$ 13,512		13,510
(Collateralized by U.S. Government Obligations) # (a)	1,985,314		1,985,022
TOTAL CASH EQUIVALENTS (Cost $1,998,532)		1,998,532
TOTAL INVESTMENT PORTFOLIO - 130.2% (Cost $9,445,072)			9,427,061
NET OTHER ASSETS - (30.2)%			(2,185,321)
NET ASSETS - 100%		$ 7,241,740

Swap Agreements
	Expiration Date	Notional Amount (000s)	Value (000s)
Interest Rate Swaps
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed rate equal to 5.57% with Goldman Sachs	August 2017	$ 100,000	$ (443)
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed rate equal to 5.96% with Morgan Stanley, Inc.	July 2037	27,500	(1,027)
Receive semi-annually a fixed rate equal to 5.035% and pay quarterly a floating rate based on 3-month LIBOR with Deutsche Bank	April 2010	225,000	(723)
Receive semi-annually a fixed rate equal to 5.51% and pay quarterly a floating rate based on 3-month LIBOR with Morgan Stanley, Inc.	July 2010	140,000	1,409
Receive semi-annually a fixed rate equal to 5.706% and pay quarterly a floating rate based on 3-month LIBOR with Deutsche Bank	June 2017	75,000	1,148
		$ 567,500	$ 364

Legend

(a) Includes investment made with cash collateral received from securities on loan.

(b) Security or a portion of the security is on loan at period end.

(d) Security or a portion of the security purchased on a delayed delivery or when-issued basis.

(e) A portion of the security is subject to a forward commitment to sell.

(f) Security or a portion of the security has been segregated as collateral for open swap agreements. At the period end, the value of securities pledged amounted to $2,382,000.

(g) The coupon rate shown on floating or adjustable rate securities represents the rate at period end.

(h) Security represents right to receive monthly interest payments on an underlying pool of mortgages or assets. Principal shown is the outstanding par amount of the pool held as of the end of the period.

(i) Principal Only Strips represent the right to receive the monthly principal payments on an underlying pool of mortgage loans.

# Additional Information on each counterparty to the repurchase agreement is as follows:

Repurchase Agreement / Counterparty	Value (Amounts in thousands)
$13,510,000 due 8/01/07 at 5.30%
ABN AMRO Bank N.V., New York Branch	$ 328
Banc of America Securities LLC	2,916
Bank of America, NA	823
Barclays Capital, Inc.	1,509
Bear Stearns & Co., Inc.	1,441
Countrywide Securities Corp.	1,056
ING Financial Markets LLC	1,310
Societe Generale, New York Branch	1,310
UBS Securities LLC	2,293
WestLB AG	524
	$ 13,510
$1,985,022,000 due 8/01/07 at 5.30%
Bank of America, NA	$ 602,780
Barclays Capital, Inc.	1,382,242
	$ 1,985,022

Income Tax Information

At July 31, 2007, the fund had a capital loss carryforward of approximately $93,664,000 of which $831,000, $561,000, $1,882,000, $28,692,000, and $61,698,000 will expire on July 31, 2011, 2012, 2013, 2014 and 2015, respectively.

Of the loss carryforwards expiring July 31, 2011, 2012, 2013, and 2014, $831,000, $561,000, $1,882,000, and $17,977,000, respectively, was acquired in the merger and is available to offset future capital gains of the fund to the extent provided by regulations.

See accompanying notes which are an integral part of the financial statements.

Annual Report

Financial Statements

Statement of Assets and Liabilities

Amounts in thousands (except per-share amounts)	July 31, 2007

Assets
Investment in securities, at value (including securities loaned of $1,920,947 and repurchase agreements of $1,998,532) - See accompanying schedule: Unaffiliated issuers (cost $9,445,072)		$ 9,427,061
Commitment to sell securities on a delayed delivery basis	$ (238,522)
Receivable for securities sold on a delayed delivery basis	237,005	(1,517)
Receivable for investments sold, regular delivery		5,988
Cash		8,931
Receivable for fund shares sold		4,128
Interest receivable		71,447
Swap agreements, at value		364
Total assets		9,516,402

Liabilities
Payable for investments purchased Regular delivery	$ 6,703
Delayed delivery	269,464
Payable for fund shares redeemed	4,894
Distributions payable	664
Accrued management fee	1,888
Distribution fees payable	131
Other affiliated payables	888
Other payables and accrued expenses	5,008
Collateral on securities loaned, at value	1,985,022
Total liabilities		2,274,662

Net Assets		$ 7,241,740
Net Assets consist of:
Paid in capital		$ 7,382,737
Undistributed net investment income		1,411
Accumulated undistributed net realized gain (loss) on investments		(123,244)
Net unrealized appreciation (depreciation) on investments		(19,164)
Net Assets		$ 7,241,740

See accompanying notes which are an integral part of the financial statements.

Annual Report

Statement of Assets and Liabilities - continued

Amounts in thousands (except per-share amounts)	July 31, 2007

Calculation of Maximum Offering Price Class A: Net Asset Value and redemption price per share ($145,299 ÷ 14,516 shares)		$ 10.01

Maximum offering price per share (100/96.00 of $10.01)		$ 10.43
Class T: Net Asset Value and redemption price per share ($180,781 ÷ 18,060 shares)		$ 10.01

Maximum offering price per share (100/96.00 of $10.01)		$ 10.43
Class B: Net Asset Value and offering price per share ($43,307 ÷ 4,326 shares)^A		$ 10.01

Class C: Net Asset Value and offering price per share ($39,391 ÷ 3,935 shares)^A		$ 10.01

Government Income: Net Asset Value, offering price and redemption price per share ($6,117,821 ÷ 611,879 shares)		$ 10.00

Institutional Class: Net Asset Value, offering price and redemption price per share ($715,141 ÷ 71,448 shares)		$ 10.01

^ARedemption price per share is equal to net asset value less any applicable contingent deferred sales charge.

See accompanying notes which are an integral part of the financial statements.

Annual Report

Financial Statements - continued

Statement of Operations

Amounts in thousands	Year ended July 31, 2007

Investment Income
Interest		$ 328,118

Expenses
Management fee	$ 21,463
Transfer agent fees	7,506
Distribution fees	1,223
Fund wide operations fee	2,122
Independent trustees' compensation	22
Miscellaneous	13
Total expenses before reductions	32,349
Expense reductions	(545)	31,804
Net investment income		296,314
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investment securities:
Unaffiliated issuers	(41,739)
Futures contracts	1,498
Swap agreements	492
Total net realized gain (loss)		(39,749)
Change in net unrealized appreciation (depreciation) on: Investment securities	69,326
Swap agreements	(3,916)
Delayed delivery commitments	(1,455)
Total change in net unrealized appreciation (depreciation)		63,955
Net gain (loss)		24,206
Net increase (decrease) in net assets resulting from operations		$ 320,520

See accompanying notes which are an integral part of the financial statements.

Annual Report

Statement of Changes in Net Assets

Amounts in thousands	Year ended July 31, 2007	Year ended July 31, 2006
Increase (Decrease) in Net Assets
Operations
Net investment income	$ 296,314	$ 235,825
Net realized gain (loss)	(39,749)	(63,122)
Change in net unrealized appreciation (depreciation)	63,955	(93,536)
Net increase (decrease) in net assets resulting from operations	320,520	79,167
Distributions to shareholders from net investment income	(303,351)	(223,332)
Distributions to shareholders from net realized gain	(2,616)	-
Total distributions	(305,967)	(223,332)
Share transactions - net increase (decrease)	1,895,812	348,165
Total increase (decrease) in net assets	1,910,365	204,000

Net Assets
Beginning of period	5,331,375	5,127,375
End of period (including undistributed net investment income of $1,411 and undistributed net investment income of $11,750, respectively)	$ 7,241,740	$ 5,331,375

See accompanying notes which are an integral part of the financial statements.

Annual Report

Financial Highlights - Class A

Period ended July 31,	2007^E
Selected Per-Share Data
Net asset value, beginning of period	$ 9.98
Income from Investment Operations
Net investment income^D	.311
Net realized and unrealized gain (loss)	.033
Total from investment operations	.344
Distributions from net investment income	(.314)
Net asset value, end of period	$ 10.01
Total Return^{A, B, C}	3.49%
Ratios to Average Net Assets^F
Expenses before reductions	.78%^H
Expenses net of fee waivers, if any	.78%^H
Expenses net of all reductions	.77%^H
Net investment income	4.08%^H
Supplemental Data
Net assets, end of period (in millions)	$ 145
Portfolio turnover rate	164%^G

^A Total returns for periods of less than one year are not annualized.

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Total returns do not include the effect of the sales charges.

^D Calculated based on average shares outstanding during the period.

^E For the period October 24, 2006 (commencement of sale of shares) to July 31, 2007.

^F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

^G The portfolio turnover rate does not include the assets acquired in the merger.

^H Annualized

See accompanying notes which are an integral part of the financial statements.

Annual Report

Financial Highlights - Class T

Period ended July 31,	2007^E
Selected Per-Share Data
Net asset value, beginning of period	$ 9.98
Income from Investment Operations
Net investment income^D	.306
Net realized and unrealized gain (loss)	.036
Total from investment operations	.342
Distributions from net investment income	(.312)
Net asset value, end of period	$ 10.01
Total Return^{A, B, C}	3.46%
Ratios to Average Net Assets^F
Expenses before reductions	.79%^H
Expenses net of fee waivers, if any	.79%^H
Expenses net of all reductions	.79%^H
Net investment income	4.02%^H
Supplemental Data
Net assets, end of period (in millions)	$ 181
Portfolio turnover rate	164%^G

^A Total returns for periods of less than one year are not annualized.

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Total returns do not include the effect of the sales charges.

^D Calculated based on average shares outstanding during the period.

^E For the period October 24, 2006 (commencement of sale of shares) to July 31, 2007.

^G The portfolio turnover rate does not include the assets acquired in the merger.

^H Annualized

See accompanying notes which are an integral part of the financial statements.

Annual Report

Financial Highlights - Class B

Period ended July 31,	2007^E
Selected Per-Share Data
Net asset value, beginning of period	$ 9.98
Income from Investment Operations
Net investment income^D	.251
Net realized and unrealized gain (loss)	.037
Total from investment operations	.288
Distributions from net investment income	(.258)
Net asset value, end of period	$ 10.01
Total Return^{A, B, C}	2.91%
Ratios to Average Net Assets^F
Expenses before reductions	1.50%^H
Expenses net of fee waivers, if any	1.50%^H
Expenses net of all reductions	1.50%^H
Net investment income	3.30%^H
Supplemental Data
Net assets, end of period (in millions)	$ 43
Portfolio turnover rate	164%^G

^A Total returns for periods of less than one year are not annualized.

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Total returns do not include the effect of the contingent deferred sales charge.

^D Calculated based on average shares outstanding during the period.

^E For the period October 24, 2006 (commencement of sale of shares) to July 31, 2007.

^G The portfolio turnover rate does not include the assets acquired in the merger.

^H Annualized

See accompanying notes which are an integral part of the financial statements.

Annual Report

Financial Highlights - Class C

Period ended July 31,	2007^E
Selected Per-Share Data
Net asset value, beginning of period	$ 9.98
Income from Investment Operations
Net investment income^D	.249
Net realized and unrealized gain (loss)	.033
Total from investment operations	.282
Distributions from net investment income	(.252)
Net asset value, end of period	$ 10.01
Total Return^{A, B, C}	2.85%
Ratios to Average Net Assets^F
Expenses before reductions	1.55%^H
Expenses net of fee waivers, if any	1.55%^H
Expenses net of all reductions	1.55%^H
Net investment income	3.26%^H
Supplemental Data
Net assets, end of period (in millions)	$ 39
Portfolio turnover rate	164%^G

^A Total returns for periods of less than one year are not annualized.

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Total returns do not include the effect of the contingent deferred sales charge.

^D Calculated based on average shares outstanding during the period.

^E For the period October 24, 2006 (commencement of sale of shares) to July 31, 2007.

^G The portfolio turnover rate does not include the assets acquired in the merger.

^H Annualized

See accompanying notes which are an integral part of the financial statements.

Annual Report

Financial Highlights - Government Income

Years ended July 31,	2007	2006	2005	2004	2003
Selected Per-Share Data
Net asset value, beginning of period	$ 9.95	$ 10.20	$ 10.13	$ 10.16	$ 10.30
Income from Investment Operations
Net investment income^B	.443	.429	.329	.307	.374
Net realized and unrealized gain (loss)	.068	(.274)	.097	.124	(.014)
Total from investment operations	.511	.155	.426	.431	.360
Distributions from net investment income	(.456)	(.405)	(.321)	(.301)	(.370)
Distributions from net realized gain	(.005)	-	(.035)	(.160)	(.130)
Total distributions	(.461)	(.405)	(.356)	(.461)	(.500)
Net asset value, end of period	$ 10.00	$ 9.95	$ 10.20	$ 10.13	$ 10.16
Total Return^A	5.22%	1.56%	4.24%	4.30%	3.45%
Ratios to Average Net Assets^C
Expenses before reductions	.45%	.45%	.58%	.63%	.65%
Expenses net of fee waivers, if any	.45%	.45%	.58%	.63%	.65%
Expenses net of all reductions	.44%	.44%	.58%	.63%	.65%
Net investment income	4.42%	4.27%	3.21%	3.01%	3.56%
Supplemental Data
Net assets, end of period (in millions)	$ 6,118	$ 5,331	$ 5,127	$ 4,168	$ 3,622
Portfolio turnover rate	164%^D	108%	114%	224%	253%

^A Total returns would have been lower had certain expenses not been reduced during the periods shown.

^B Calculated based on average shares outstanding during the period.

^C Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

^D The portfolio turnover rate does not include the assets acquired in the merger.

See accompanying notes which are an integral part of the financial statements.

Annual Report

Financial Highlights - Institutional Class

Period ended July 31,	2007^D
Selected Per-Share Data
Net asset value, beginning of period	$ 9.98
Income from Investment Operations
Net investment income^C	.329
Net realized and unrealized gain (loss)	.034
Total from investment operations	.363
Distributions from net investment income	(.333)
Net asset value, end of period	$ 10.01
Total Return^{A, B}	3.67%
Ratios to Average Net Assets^E
Expenses before reductions	.53%^G
Expenses net of fee waivers, if any	.53%^G
Expenses net of all reductions	.53%^G
Net investment income	4.32%^G
Supplemental Data
Net assets, end of period (in millions)	$ 715
Portfolio turnover rate	164%^F

^A Total returns for periods of less than one year are not annualized.

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Calculated based on average shares outstanding during the period.

^D For the period October 24, 2006 (commencement of sale of shares) to July 31, 2007.

^E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

^F The portfolio turnover rate does not include the assets acquired in the merger.

^G Annualized

See accompanying notes which are an integral part of the financial statements.

Annual Report

Notes to Financial Statements

For the period ended July 31, 2007

(Amounts in thousands except ratios)

1. Organization.

Fidelity Government Income Fund (the Fund) is a fund of Fidelity Income Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust.

The Fund offers Class A, Class T, Class B, Class C, Government Income, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. The Fund commenced sales of Class A, Class T, Class B, Class C and Institutional Class shares and the existing class was designated Government Income on October 24, 2006. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.

2. Significant Accounting Policies.

Security Valuation. Investments are valued and net asset value per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments. Debt securities, including restricted securities, for which quotes are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices.

Annual Report

2. Significant Accounting Policies - continued

Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements.

Dividends are declared daily and paid monthly from net investment income. Distributions from realized gains, if any, are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.

Book-tax differences are primarily due to swap agreements, prior period premium and discount on debt securities, market discount, deferred trustees compensation, financing transactions, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.

The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:

Unrealized appreciation	$ 41,525
Unrealized depreciation	(59,427)
Net unrealized appreciation (depreciation)	(17,902)
Undistributed ordinary income	257
Capital loss carryforward	(93,664)

Cost for federal income tax purposes	$ 9,444,963

Annual Report

Notes to Financial Statements - continued

(Amounts in thousands except ratios)

2. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

The tax character of distributions paid was as follows:

	July 31, 2007	July 31, 2006
Ordinary Income	$ 305,967	$ 223,332

New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.

3. Operating Policies.

Repurchase Agreements. Fidelity Management & Research Company (FMR) has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.

Annual Report

3. Operating Policies - continued

Delayed Delivery Transactions and When-Issued Securities - continued

for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. The value of the securities purchased on a delayed delivery or when-issued basis are identified as such in the Fund's Schedule of Investments. The Fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. The payables and receivables associated with the purchases and sales of delayed delivery securities having the same coupon, settlement date and broker are offset. Delayed delivery or when-issued securities that have been purchased from and sold to different brokers are reflected as both payables and receivables in the fund's Statement of Assets and Liabilities under the caption "Delayed delivery." Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.

Futures Contracts. The Fund may use futures contracts to manage its exposure to the bond market and to fluctuations in interest rates. Buying futures tends to increase a fund's exposure to the underlying instrument, while selling futures tends to decrease a fund's exposure to the underlying instrument or hedge other fund investments. Upon entering into a futures contract, a fund is required to deposit with a clearing broker, no later than the following business day, an amount ("initial margin") equal to a certain percentage of the face value of the contract. The initial margin may be in the form of cash or securities and is transferred to a segregated account on settlement date. Subsequent payments ("variation margin") are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized gains or losses. Realized gains (losses) are recorded upon the expiration or closing of the futures contract. Securities deposited to meet margin requirements are identified in the Schedule of Investments. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contract's terms. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded.

Restricted Securities. The Fund may 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. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.

Annual Report

Notes to Financial Statements - continued

(Amounts in thousands except ratios)

3. Operating Policies - continued

Swap Agreements. The Fund may invest in swaps for the purpose of managing its exposure to interest rate, credit or market risk.

Interest rate swaps are agreements to exchange cash flows periodically based on a notional principal amount, for example, the exchange of fixed rate interest payments for floating rate interest payments. Periodic payments received or made by the Fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively. The primary risk associated with interest rate swaps is that unfavorable changes in the fluctuation of interest rates could adversely impact a fund.

Swaps are marked-to-market daily based on dealer-supplied valuations and changes in value are recorded as unrealized appreciation (depreciation). Gains or losses are realized upon early termination of the swap agreement. Collateral, in the form of cash or securities, may be required to be held in segregated accounts with a fund's custodian in compliance with swap contracts. Risks may exceed amounts recognized on the Statement of Assets and Liabilities. These risks include changes in the returns of the underlying instruments, failure of the counterparties to perform under the contracts' terms and the possible lack of liquidity with respect to the swap agreements. Details of swap agreements open at period end are included in the Fund's Schedule of Investments under the caption "Swap Agreements."

Mortgage Dollar Rolls. To earn additional income, the Fund may employ trading strategies which involve the sale and simultaneous agreement to repurchase similar securities ("mortgage dollar rolls") or the purchase and simultaneous agreement to sell similar securities ("reverse mortgage dollar rolls"). The securities traded are mortgage securities and bear the same interest rate but may be collateralized by different pools of mortgages. During the period between the sale and repurchase in a mortgage dollar roll transaction, a fund will not be entitled to receive interest and principal payments on the securities sold but will invest the proceeds of the sale in other securities which may enhance the yield and total return. In addition, the difference between the sale price and the future purchase price is recorded as an adjustment to investment income. During the period between the purchase and subsequent sale in a reverse mortgage dollar roll transaction a fund is entitled to interest and principal payments on the securities purchased. The price differential between the purchase and sale is recorded as an adjustment to investment income. Losses may arise due to changes in the value of the securities or if the counterparty does not perform under the terms of the agreement. If the counterparty files for bankruptcy or becomes insolvent, a fund's right to repurchase or sell securities may be limited.

Annual Report

4. Fees and Other Transactions with Affiliates.

Management Fee and Expense Contract. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and a group fee rate that averaged .12% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .32% of the Fund's average net assets.

In addition, effective October 27, 2006 under a new expense contract, FMR pays all class-level expenses for Government Income class, so that the total expense, except the compensation of the independent Trustees and certain other expenses such as interest expense, including commitment fees, do not exceed .45% of the Class' average net assets. This agreement does not apply to any of the other classes and any change or modification that would increase expenses can only be made with shareholder approval.

Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:

	Distribution Fee	Service Fee	Paid to FDC	Retained by FDC
Class A	0%	.25%	$ 199	$ 34
Class T	0%	.25%	355	-
Class B	.65%	.25%	350	253
Class C	.75%	.25%	319	-
			$ 1,223	$ 287

On January 18, 2007, the Board of Trustees approved an increase in Class A's Service fee from .15% to .25%, effective April 1, 2007.

Sales Load. FDC receives a front-end sales charge of up to 4.00% for selling Class A and Class T shares, (4.75% for Class A and 3.50% for Class T shares prior to April 1, 2007), some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C,.75% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.

Annual Report

Notes to Financial Statements - continued

(Amounts in thousands except ratios)

4. Fees and Other Transactions with Affiliates - continued

Sales Load - continued

For the period, sales charge amounts retained by FDC were as follows:

	Retained by FDC
Class A	$ 12
Class T	5
Class B*	90
Class C*	2
	$ 109

* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund, except for Government Income. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the transfer agent for Government Income shares. FIIOC and FSC receive account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC and FSC pay for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class to FIIOC or FSC, were as follows:

	Amount	% of Average Net Assets
Class A	$ 232	.23*
Class T	275	.19*
Class B	97	.25*
Class C	64	.20*
Government Income	5,931	.10
Institutional Class	907	.18*
	$ 7,506

* Annualized

Fundwide Operations Fee. Pursuant to the Fundwide Operations and Expense Agreement (FWOE), FMR has agreed to provide for fund level expenses (which do not include transfer agent, Rule 12b-1 fees, compensation of the independent trustees, interest (including commitment fees), taxes or extraordinary expenses, if any) in return for a FWOE fee equal to .35% less the total amount of the management fee. The FWOE paid by the Fund is reduced by an amount equal to the fees and expenses paid to the independent trustees. For the period, the FWOE fee was equivalent to an annual rate of .03% of average net assets.

Annual Report

5. Committed Line of Credit.

The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $12 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.

6. Security Lending.

The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of interest income. Net income from lending portfolio securities during the period amounted to $2,400.

7. Expense Reductions.

Through arrangements with the Fund's custodian and each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's management fee by $11. During the period, credits reduced each class' transfer agent expense as noted in the table below.

	Transfer Agent expense reduction
Class A	$ 9
Class T	1
Government Income	509
Institutional Class	15
	$ 534

Annual Report

Notes to Financial Statements - continued

(Amounts in thousands except ratios)

8. Other.

The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

FIIOC, a transfer agent of the Fund, notified the Fund that the Fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund which did not result in a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. FIIOC has remediated affected shareholders.

At the end of the period, Fidelity Freedom 2010 and Fidelity Freedom 2020 were the owners of record of approximately 14% and 14% of the total outstanding shares of Fidelity Government Income Fund. The Fidelity Freedom Funds were the owners of record, in aggregate, of approximately 44% of the total outstanding shares of Fidelity Government Income Fund.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

	Year ended July 31, 2007^A	Year ended July 31, 2006
From net investment income
Class A	$ 4,138	$ -
Class T	5,771	-
Class B	1,298	-
Class C	1,042	-
Government Income	269,231	223,332
Institutional Class	21,871	-
Total	$ 303,351	$ 233,332
From net realized gain
Government Income	$ 2,616	$ -

^A Distributions for Class A, Class T, Class B, Class C and Institutional Class are for the period October 24, 2006 (commencement of sale of shares) to July 31, 2007.

Annual Report

10. Share Transactions.

Transactions for each class of shares were as follows:

	Shares		Dollars
	Years ended July 31,		Years ended July 31,
	2007^A	2006	2007^A	2006
Class A
Shares sold	5,668	-	$ 56,865	$ -
Issued in exchange for shares of Fidelity Advisor Government Investment Fund	11,639	-	116,974	-
Reinvestment of distributions	374	-	3,759	-
Shares redeemed	(3,165)	-	(31,770)	-
Net increase (decrease)	14,516	-	$ 145,828	$ -
Class T
Shares sold	3,593	-	$ 36,101	$ -
Issued in exchange for shares of Fidelity Advisor Government Investment Fund	19,997	-	200,973	-
Reinvestment of distributions	549	-	5,508	-
Shares redeemed	(6,079)	-	(60,985)	-
Net increase (decrease)	18,060	-	$ 181,597	$ -
Class B
Shares sold	524	-	$ 5,289	$ -
Issued in exchange for shares of Fidelity Advisor Government Investment Fund	5,890	-	59,191	-
Reinvestment of distributions	104	-	1,045	-
Shares redeemed	(2,192)	-	(22,000)	-
Net increase (decrease)	4,326	-	$ 43,525	$ -
Class C
Shares sold	517	-	$ 5,201	$ -
Issued in exchange for shares of Fidelity Advisor Government Investment Fund	4,449	-	44,717	-
Reinvestment of distributions	64	-	643	-
Shares redeemed	(1,095)	-	(10,981)	-
Net increase (decrease)	3,935	-	$ 39,580	$ -
Government Income
Shares sold	105,528	127,904	$ 1,058,863	$ 1,289,378
Issued in exchange for shares of Spartan Government Income Fund	71,077	-	713,611	-
Reinvestment of distributions	26,531	21,894	266,315	219,740
Shares redeemed	(127,164)	(116,476)	(1,271,926)	(1,160,953)
Net increase (decrease)	75,972	33,322	$ 766,863	$ 348,165

^AShare transactions for Class A, Class T, Class B, Class C and Institutional Class are for the period October 24, 2006 (commencement of sale of shares) to July 31, 2007.

Annual Report

Notes to Financial Statements - continued

(Amounts in thousands except ratios)

10. Share Transactions - continued

	Shares		Dollars
	Years ended July 31,		Years ended July 31,
	2007^A	2006	2007^A	2006
Institutional Class
Shares sold	16,978	-	$ 170,642	$ -
Issued in exchange for shares of Fidelity Advisor Government Investment Fund	57,200	-	574,860	-
Reinvestment of distributions	2,169	-	21,772	-
Shares redeemed	(4,899)	-	(48,855)	-
Net increase (decrease)	71,448	-	$ 718,419	$ -

^AShare transactions for Class A, Class T, Class B, Class C and Institutional Class are for the period October 24, 2006 (commencement of sale of shares) to July 31, 2007.

11. Merger Information.

On October 27, 2006, the Fund acquired all of the assets and assumed all of the liabilities of Fidelity Advisor Government Investment Fund and Spartan Government Income Fund pursuant to an agreement and plan of reorganization approved by the shareholders on September 20, 2006. The acquisition was accomplished by an exchange of 11,639, 19,997, 5,890, 4,449, and 57,200 shares of Class A, Class T, Class B, Class C and Institutional Class of the Fund, respectively, for 11,840, 20,358, 6,003, 4,531, and 58,535 shares then outstanding of Class A, Class T, Class B, Class C and Institutional Class (valued at $9.88, $9.87, $9.86, $9.87, and $9.82, per share for Class A, Class T, Class B, Class C and Institutional Class, respectively) of Fidelity Advisor Government Investment Fund. Further, the acquisition was accomplished by an exchange of 71,077 shares of Government Income class for the 66,115 shares then outstanding (valued at $10.79 per share) of Spartan Government Income Fund. The reorganization qualified as a tax-free reorganization for federal income tax purposes with no gain or loss recognized to the funds or their shareholders. Fidelity Advisor Government Investment Fund's net assets, including $1,514 of unrealized depreciation, and Spartan Government Income Fund's net assets, including $3,295 of unrealized depreciation, were combined with the Fund's net assets of $5,214,485 for total net assets after the acquisition of $6,924,811.

Annual Report

Report of Independent Registered Public Accounting Firm

To the Trustees of Fidelity Income Fund and the Shareholders of Fidelity Government Income Fund:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Fidelity Government Income Fund (a fund of Fidelity Income Fund) at July 31, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Government Income Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at July 31, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Boston, Massachusetts

September 17, 2007

Annual Report

Trustees and Officers

The Trustees, Members of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs th fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for James C. Curvey, each of the Trustees oversees 353 funds advised by FMR or an affiliate. Mr. Curvey oversees 317 funds advised by FMR or an affiliate.

The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.

Interested Trustees*:

Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.

Name, Age; Principal Occupation
Edward C. Johnson 3d (77)
	Year of Election or Appointment:1984 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as President (2006-present), Chief Executive Officer, Chairman, and a Director of FMR Corp.; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001-present) and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of Fidelity International Limited (FIL).
James C. Curvey (72)
	Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) or Member of the Advisory Board (2007-present) of other investment companies advised by FMR. Mr. Curvey is Vice Chairman (2006-present) and Director of FMR Corp. Mr. Curvey joined Fidelity in 1982 and served in numerous senior management positions, including President and Chief Operating Officer of FMR Corp. (1997-2000) and President of Fidelity Strategic Investments (2000-2002). In addition, he serves as a member of the Board of Directors of Geerlings & Wade, Inc. (wine distribution).

* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trusts or various entities under common control with FMR.

Independent Trustees:

Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.

Name, Age; Principal Occupation
Dennis J. Dirks (59)
	Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005-present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present).
Albert R. Gamper, Jr. (65)
	Year of Election or Appointment: 2006 Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987-1989; 1999-2001; 2002-2004), Chief Executive Officer (1987-2004), and President (1989-2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001-present), Chairman of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System.
George H. Heilmeier (71)
	Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), and HRL Laboratories (private research and development, 2004-present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences, and the Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002), Compaq (1994-2002), Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002), INET Technologies Inc. (telecommunications network surveillance, 2001-2004), and Teletech Holdings (customer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display, and a member of the Consumer Electronics Hall of Fame.
James H. Keyes (66)
	Year of Election or Appointment: 2007 Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993-2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002-present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions).
Marie L. Knowles (60)
	Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare service, 2002-present). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California.
Ned C. Lautenbach (63)
	Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Sony Corporation (2006-present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations.
Cornelia M. Small (63)
	Year of Election or Appointment: 2005 Ms. Small is a member (2000-present) and Chairperson (2002-present) of the Investment Committee, and a member (2002-present) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors of Scudder, Stevens & Clark (1990-1997) and Scudder Kemper Investments (1997-1999). In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy.
William S. Stavropoulos (68)
	Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), and Chairman of the Executive Committee (2000-2004). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate, 2002-present), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc., a private equity investment firm. He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science.
Kenneth L. Wolfe (68)
	Year of Election or Appointment: 2005 Prior to his retirement in 2001, Mr. Wolfe was Chairman and Chief Executive Officer of Hershey Foods Corporation (1993-2001). He currently serves as a member of the boards of Adelphia Communications Corporation (2003-present), Bausch & Lomb, Inc., and Revlon Inc. (2004-present).

Advisory Board Members and Executive Officers:

Name, Age; Principal Occupation
Peter S. Lynch (63)
	Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Income Fund. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund.
Joseph Mauriello (62)
	Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Income Fund. Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd., (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc., (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007).
Kimberley H. Monasterio (43)
	Year of Election or Appointment: 2007 President and Treasurer of Government Income. Ms. Monasterio also serves as President and Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2004-present). Previously, Ms. Monasterio served as Deputy Treasurer of the Fidelity funds (2004-2006). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000-2004) and Chief Financial Officer (2002-2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000-2004).
Boyce I. Greer (51)
	Year of Election or Appointment: 2006 Vice President of Government Income. Mr. Greer also serves as Vice President of certain Equity Funds (2005-present), certain Asset Allocation Funds (2005-present), Fixed-Income Funds (2006-present), and Money Market Funds (2006-present). Mr. Greer is also a Trustee of other investment companies advised by FMR (2003-present). He is an Executive Vice President of FMR (2005-present) and FMR Co., Inc. (2005-present), and Senior Vice President of Fidelity Investments Money Management, Inc. (2006-present). Previously, Mr. Greer served as a Director and Managing Director of Strategic Advisers, Inc. (2002-2005), and Executive Vice President (2000-2002) and Money Market Group Leader (1997-2002) of the Fidelity Investments Fixed Income Division. He also served as Vice President of Fidelity's Money Market Funds (1997-2002), Senior Vice President of FMR (1997-2002), and Vice President of FIMM (1998-2002).
David L. Murphy (59)
	Year of Election or Appointment: 2005 Vice President of Government Income. Mr. Murphy also serves as Vice President of Fidelity's Money Market Funds (2002-present), certain Asset Allocation Funds (2003-present), Fixed-Income Funds (2005-present), and Balanced Funds (2005-present). He serves as Senior Vice President (2000-present) and Head (2004-present) of the Fidelity Investments Fixed Income Division. Mr. Murphy is also a Senior Vice President of Fidelity Investments Money Management, Inc. (2003-present) and an Executive Vice President of FMR (2005-present). Previously, Mr. Murphy served as Money Market Group Leader (2002-2004), Bond Group Leader (2000-2002), and Vice President of Fidelity's Taxable Bond Funds (2000-2002) and Fidelity's Municipal Bond Funds (2001-2002).
Thomas J. Silvia (46)
	Year of Election or Appointment: 2005 Vice President of Government Income. Mr. Silvia also serves as Vice President of Fidelity's Fixed-Income Funds (2005-present), certain Balanced Funds (2005-present), certain Asset Allocation Funds (2005-present), and Senior Vice President and Bond Group Leader of the Fidelity Investments Fixed-Income Division (2005-present). Previously, Mr. Silvia served as Director of Fidelity's Taxable Bond portfolio managers (2002-2004) and a portfolio manager in the Bond Group (1997-2004).
William Irving (43)
	Year of Election or Appointment: 2007 Vice President of Government Income. Dr. Irving also serves as Vice President of other funds advised by FMR. Prior to assuming his current responsibilities, Dr. Irving worked as a quantitative analyst and portfolio manager.
Eric D. Roiter (58)
	Year of Election or Appointment: 1998 Secretary of Government Income. Mr. Roiter also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001-present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001-present), Fidelity Research & Analysis Company (2001-present), and Fidelity Investments Money Management, Inc. (2001-present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003-present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998-2005).
Scott C. Goebel (39)
	Year of Election or Appointment: 2007 Assistant Secretary of Government Income. Mr. Goebel also serves as Assistant Secretary of other Fidelity funds (2007-present), Vice President and Secretary of FDC (2006-present), and is an employee of FMR.
R. Stephen Ganis (41)
	Year of Election or Appointment: 2006 Anti-Money Laundering (AML) officer of Government Income. Mr. Ganis also serves as AML officer of other Fidelity funds (2006-present) and FMR Corp. (2003-present). Before joining Fidelity Investments, Mr. Ganis practiced law at Goodwin Procter, LLP (2000-2002).
Joseph B. Hollis (59)
	Year of Election or Appointment: 2006 Chief Financial Officer of Government Income. Mr. Hollis also serves as Chief Financial Officer of other Fidelity funds. Mr. Hollis is President of Fidelity Pricing and Cash Management Services (FPCMS) (2005-present). Mr. Hollis also serves as President and Director of Fidelity Service Company, Inc. (2006-present). Previously, Mr. Hollis served as Senior Vice President of Cash Management Services (1999-2002) and Investment Management Operations (2002-2005).
Kenneth A. Rathgeber (60)
	Year of Election or Appointment: 2004 Chief Compliance Officer of Government Income. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004-present) and Executive Vice President of Risk Oversight for Fidelity Investments (2002-present). He is Chief Compliance Officer of FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). Previously, Mr. Rathgeber served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998-2002).
Bryan A. Mehrmann (46)
	Year of Election or Appointment: 2005 Deputy Treasurer of Government Income. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004).
Kenneth B. Robins (37)
	Year of Election or Appointment: 2005 Deputy Treasurer of Government Income. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004) and a Senior Manager (1999-2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000-2002).
Robert G. Byrnes (40)
	Year of Election or Appointment: 2005 Assistant Treasurer of Government Income. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003).
Peter L. Lydecker (53)
	Year of Election or Appointment: 2004 Assistant Treasurer of Government Income. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR.
Gary W. Ryan (48)
	Year of Election or Appointment: 2005 Assistant Treasurer of Government Income. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999-2005).

Annual Report

Distributions

A total of 15.00% of the dividends distributed during the fiscal year was derived from interest on U.S. Government securities which is generally exempt from state income tax.

The fund designates $231,780,564 of distributions paid during the period January 1, 2007 to July 31, 2007 as qualifying to be taxed as interest-related dividends for nonresident alien shareholders.

The fund will notify shareholders in January 2008 of amounts for use in preparing 2007 income tax returns.

Annual Report

Board Approval of Investment Advisory Contracts and Management Fees

Fidelity Government Income Fund

Each year, typically in June, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.

The Board meets regularly each month except August and takes into account throughout the year matters bearing on Advisory Contracts. The Board, acting directly and through its separate committees, considers at each of its meetings factors that are relevant to the annual renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has adopted a written charter outlining the structure and purposes of the committee. One such committee, the Fixed-Income Contract Committee, meets periodically as needed throughout the year to consider matters specifically related to the annual renewal of Advisory Contracts. The committee requests and receives information on, and makes recommendations to the Independent Trustees concerning, the approval and annual review of the Advisory Contracts.

At its June 2007 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the Advisory Contracts for the fund. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the management fee and total expenses of the fund; (iii) the total costs of the services to be provided by and the profits to be realized by the investment adviser and its affiliates from the relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved amendments to the fund's agreements with foreign sub-advisers to clarify that each sub-adviser provides services as an independent contractor.

In determining whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. In addition to evaluating the specific factors noted above, the Board, in reaching its determination, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.

Annual Report

Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the background of the fund's portfolio manager and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.

Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures.

Annual Report

Board Approval of Investment Advisory Contracts and
Management Fees - continued

Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that, since the last Advisory Contract renewals in June 2006, Fidelity has taken a number of actions that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fee on Fidelity Advisor Floating Rate High Income Fund; (iii) contractually agreeing to reduce the management fees on Fidelity's California, Massachusetts, New Jersey, and New York AMT Tax-Free Money Market Funds, launching new Institutional Classes and Service Classes of these funds, and contractually agreeing to impose expense limitations on these funds; (iv) eliminating the exchange fee on the Fidelity Select Portfolios and reducing the pricing and bookkeeping fee rates for these funds; (v) reducing the maximum transfer agency fee rates on high income funds and certain equity funds; (vi) proposing amended management contracts that, if approved by shareholders, will add a performance adjustment component to the management fees paid by 18 Fidelity Advisor equity funds; (vii) contractually agreeing to reduce fees for Ultra-Short Central Fund and the money market Central Funds; (viii) waiving the Fidelity Advisor funds' contingent deferred sales charge on certain redemptions made through systematic withdrawal programs; and (ix) amending the management contracts for equity and fixed-income funds whose management contracts incorporate a "group fee" structure by adding four new fee "breakpoints" to the group fee rate schedules.

Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance for Fidelity Government Income (retail class), as well as the fund's relative investment performance for Fidelity Government Income (retail class) measured against (i) a proprietary custom index, and (ii) a peer group of mutual funds deemed appropriate by the Board over multiple periods. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2006, the cumulative total returns of Fidelity Government Income (retail class), the cumulative total returns of a proprietary custom index ("benchmark"), and a range of cumulative total returns of a peer group of mutual funds identified by Lipper Inc. as having an investment objective similar to that of the fund. (The Advisor classes of the fund had less than one year of performance as of December 31, 2006.) The box within each chart shows the 25th percentile return (bottom of box) and the 75th percentile return (top of box) of the peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten number noted below each chart corresponds to the percentile box and represents the percentage of funds in the peer group whose performance was equal to or lower than that of Fidelity Government Income (retail class). The fund's proprietary custom index is an index developed by FMR that represents the performance of the fund's general investment categories.

Annual Report

Fidelity Government Income Fund

The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of Fidelity Government Income (retail class) was in the first quartile for all the periods shown. The Board also stated that the relative investment performance of the fund was lower than its benchmark for all the periods shown. The Board discussed with FMR actions to be taken by FMR to improve the fund's below-benchmark performance.

Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.

Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared.

Annual Report

Board Approval of Investment Advisory Contracts and
Management Fees - continued

The Board considered two proprietary management fee comparisons for the 12-month periods shown in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group" and, for the reasons explained above, is broader than the Lipper peer group used by the Board for performance comparisons. The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps. "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a TMG % of 8% means that 92% of the funds in the Total Mapped Group had higher management fees than the fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee ranked, is also included in the chart and considered by the Board.

Fidelity Government Income Fund

The Board noted that the fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2006.

Annual Report

Furthermore, the Board considered that it had approved an amendment (effective June 1, 2005) to the fund's management contract that lowered the fund's individual fund fee rate from 30 basis points to 20 basis points. The Board considered that the fund's chart reflects the fund's lower management fee for 2005, as if the lower rate were in effect for the entire year.

Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.

In its review of each class's total expenses, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, such as transfer agent fees, pricing and bookkeeping fees, fund-paid 12b-1 fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses. As part of its review, the Board also considered current and historical total expenses of each class of the fund compared to competitive fund median expenses. Each class of the fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.

The Board also considered that the current contractual arrangements for the fund (i) have the effect of setting the total "fund-level" expenses (including, among certain other expenses, the management fee) for each class at 35 basis points, (ii) lower and limit the "class-level" transfer agent fee for Fidelity Government Income (retail class) to 10 basis points, and (iii) limit the total expenses for Fidelity Government Income (retail class) to 45 basis points. These contractual arrangements may not be increased without the approval of the Board and the shareholders of the applicable class. The fund's Advisor classes are subject to different "class-level" expenses (transfer agent fees and 12b-1 fees).

The Board noted that the total expenses of each class ranked below its competitive median for 2006.

The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. In connection with the renewal of the fund's management contract, the Board approved amendments to the fund's management contract that added four new fee breakpoints to the group fee rate schedule for assets under FMR's management above $1,386 billion. The Board considered that the group fee rate declines under both the present and amended schedules, but that under the amended schedule, the group fee rate declines faster as assets under FMR's management exceed $1,386 billion. The Board noted, however, that because the current contractual arrangements set the total fund-level expenses for each class at 35 basis points, increases or decreases in the management fee due to changes in the group fee rate will not impact total expenses.

Annual Report

Board Approval of Investment Advisory Contracts and
Management Fees - continued

Based on its review, the Board concluded that the total expenses of each class of the fund were reasonable in light of the services that the fund and its shareholders receive and the other factors considered.

Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing the fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.

On an annual basis, FMR presents to the Board Fidelity's profitability for the fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.

The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.

Annual Report

Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions, including (Advisor classes only) reductions that occur through operation of the transfer agent agreement. The transfer agent fee varies in part based on the number of accounts in the fund. If the number of accounts decreases or the average account size increases, the overall transfer agent fee rate decreases. The Board concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.

Annual Report

Managing Your Investments

By Phone

(phone_graphic)

Fidelity Automated
Service Telephone (FAST®)
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

Annual Report

To Write Fidelity

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
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015

Selling shares

Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035

Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015

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 770001
Cincinnati, OH 45277-0035

Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015

General Correspondence

Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500

Annual Report

To Visit Fidelity

For directions and hours,
please call 1-800-544-9797.

Arizona

7001 West Ray Road
Chandler, AZ

15445 N. Scottsdale Road
Scottsdale, AZ

California

815 East Birch Street
Brea, CA

1411 Chapin Avenue
Burlingame, CA

851 East Hamilton Avenue
Campbell, CA

19200 Von Karman Avenue
Irvine, CA

601 Larkspur Landing Circle
Larkspur, CA

10100 Santa Monica Blvd.
Los Angeles, CA

27101 Puerta Real
Mission Viejo, CA

73-575 El Paseo
Palm Desert, CA

251 University Avenue
Palo Alto, CA

123 South Lake Avenue
Pasadena, CA

16995 Bernardo Ctr. Drive
Rancho Bernardo, CA

1220 Roseville Parkway
Roseville, CA

1740 Arden Way
Sacramento, CA

7676 Hazard Center Drive
San Diego, CA

11943 El Camino Real
San Diego, CA

8 Montgomery Street
San Francisco, CA

3793 State Street
Santa Barbara, CA

1200 Wilshire Boulevard
Santa Monica, CA

21701 Hawthorne Boulevard
Torrance, CA

2001 North Main Street
Walnut Creek, CA

6300 Canoga Avenue
Woodland Hills, CA

Colorado

1625 Broadway
Denver, CO

9185 Westview Road
Lone Tree, CO

Connecticut

48 West Putnam Avenue
Greenwich, CT

265 Church Street
New Haven, CT

300 Atlantic Street
Stamford, CT

29 South Main Street
West Hartford, CT

Delaware

400 Delaware Avenue
Wilmington, DE

Florida

4400 N. Federal Highway
Boca Raton, FL

121 Alhambra Plaza
Coral Gables, FL

2948 N. Federal Highway
Ft. Lauderdale, FL

4671 Town Center Parkway
Jacksonville, FL

1907 West State Road 434
Longwood, FL

8880 Tamiami Trail, North
Naples, FL

3501 PGA Boulevard
Palm Beach Gardens, FL

3550 Tamiami Trail, South
Sarasota, FL

1502 N. Westshore Blvd.
Tampa, FL

2465 State Road 7
Wellington, FL

Georgia

3445 Peachtree Road, N.E.
Atlanta, GA

1000 Abernathy Road
Atlanta, GA

Illinois

One North LaSalle Street
Chicago, IL

875 North Michigan Ave.
Chicago, IL

1415 West 22nd Street
Oak Brook, IL

1572 East Golf Road
Schaumburg, IL

3232 Lake Avenue
Wilmette, IL

Indiana

4729 East 82nd Street
Indianapolis, IN

Kansas

5400 College Boulevard
Overland Park, KS

Maine

Three Canal Plaza
Portland, ME

Maryland

7315 Wisconsin Avenue
Bethesda, MD

One W. Pennsylvania Ave.
Towson, MD

Massachusetts

801 Boylston Street
Boston, MA

155 Congress Street
Boston, MA

300 Granite Street
Braintree, MA

44 Mall Road
Burlington, MA

238 Main Street
Cambridge, MA

405 Cochituate Road
Framingham, MA

416 Belmont Street
Worcester, MA

Annual Report

Michigan

500 E. Eisenhower Pkwy.
Ann Arbor, MI

280 Old N. Woodward Ave.
Birmingham, MI

43420 Grand River Avenue
Novi, MI

29155 Northwestern Hwy.
Southfield, MI

Minnesota

7600 France Avenue South
Edina, MN

Missouri

1524 South Lindbergh Blvd.
St. Louis, MO

Nevada

2225 Village Walk Drive
Henderson, NV

New Jersey

150 Essex Street
Millburn, NJ

56 South Street
Morristown, NJ

396 Route 17, North
Paramus, NJ

3518 Route 1 North
Princeton, NJ

530 Broad Street
Shrewsbury, NJ

New York

1055 Franklin Avenue
Garden City, NY

37 West Jericho Turnpike
Huntington Station, NY

1271 Avenue of the Americas
New York, NY

980 Madison Avenue
New York, NY

61 Broadway
New York, NY

350 Park Avenue
New York, NY

200 Fifth Avenue
New York, NY

733 Third Avenue
New York, NY

11 Penn Plaza
New York, NY

2070 Broadway
New York, NY

1075 Northern Blvd.
Roslyn, NY

799 Central Park Avenue
Scarsdale, NY

North Carolina

4611 Sharon Road
Charlotte, NC

7011 Fayetteville Road
Durham, NC

Ohio

3805 Edwards Road
Cincinnati, OH

1324 Polaris Parkway
Columbus, OH

28699 Chagrin Boulevard
Woodmere Village, OH

Oregon

7493 SW Bridgeport Road
Tigard, OR

Pennsylvania

600 West DeKalb Pike
King of Prussia, PA

1735 Market Street
Philadelphia, PA

12001 Perry Highway
Wexford, PA

Rhode Island

47 Providence Place
Providence, RI

Tennessee

6150 Poplar Avenue
Memphis, TN

Texas

10000 Research Boulevard
Austin, TX

4001 Northwest Parkway
Dallas, TX

12532 Memorial Drive
Houston, TX

2701 Drexel Drive
Houston, TX

6560 Fannin Street
Houston, TX

6500 N. MacArthur Blvd.
Irving, TX

6005 West Park Boulevard
Plano, TX

14100 San Pedro
San Antonio, TX

1576 East Southlake Blvd.
Southlake, TX

19740 IH 45 North
Spring, TX

Utah

279 West South Temple
Salt Lake City, UT

Virginia

1861 International Drive
McLean, VA

Washington

411 108th Avenue, N.E.
Bellevue, WA

1518 6th Avenue
Seattle, WA

Washington, DC

1900 K Street, N.W.
Washington, DC

Wisconsin

595 North Barker Road
Brookfield, WI

Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC

Annual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

Fidelity Research & Analysis Company

Fidelity Investments
Money Management, Inc.

Fidelity International Investment Advisors

Fidelity International Investment Advisors
(U.K.) Limited

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Service Agent

Fidelity Service Company, Inc.

Boston, MA

Custodian

The Bank of New York

New York, NY

The Fidelity Telephone Connection

Mutual Fund 24-Hour Service

Exchanges/Redemptions
and Account Assistance 1-800-544-6666

Product Information 1-800-544-6666

Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)

TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)

Fidelity Automated Service
Telephone (FAST®)(automated graphic) 1-800-544-5555

(automated graphic) Automated line for quickest service

GVT-UANN-0907
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(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

(Fidelity Investment logo)(registered trademark)
Fidelity Advisor

Government Income

Fund - Class A, Class T, Class B
and Class C

Annual Report

July 31, 2007

Class A, Class T, Class B, and Class C are classes of Fidelity^® Government Income Fund

(2_fidelity_logos) (Registered_Trademark)

Chairman's Message	<Click Here>	Ned Johnson's message to shareholders.
Performance	<Click Here>	How the fund has done over time.
Management's Discussion	<Click Here>	The manager's review of fund performance, strategy and outlook.
Shareholder Expense Example	<Click Here>	An example of shareholder expenses.
Investment Changes	<Click Here>	A summary of major shifts in the fund's investments over the past six months.
Investments	<Click Here>	A complete list of the fund's investments with their market values.
Financial Statements	<Click Here>	Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights.
Notes	<Click Here>	Notes to the financial statements.
Report of Independent Registered Public Accounting Firm	<Click Here>
Trustees and Officers	<Click Here>
Distributions	<Click Here>
Board Approval of Investment Advisory Contracts and Management Fees	<Click Here>

To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.

Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.

Other third party marks appearing herein are the property of their respective owners.

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.

Annual Report

NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE

Neither the fund nor Fidelity Distributors Corporation is a bank.

Annual Report

Chairman's Message

(photo_of_Edward_C_Johnson_3d)

Dear Shareholder:

Sincerely,

/s/Edward C. Johnson 3d

Edward C. Johnson 3d

Annual Report

Fidelity Advisor Government Income Fund - Class A, T, B, and C

Performance: The Bottom Line

Average Annual Total Returns

Periods ended July 31, 2007	Past 1 year	Past 5 years	Past 10 years
Class A (incl. 4.00% sales charge) ^{A (dagger)}	0.85%	2.87%	4.89%
Class T (incl. 4.00% sales charge) ^{B (dagger)}	0.83%	2.87%	4.88%
Class B (incl. contingent deferred sales charge)^C	-0.53%	3.26%	5.26%
Class C (incl. contingent deferred sales charge)^D	3.41%	3.59%	5.25%

^A As of April 1, 2007, Class A shares bear a 0.25% 12b-1 fee. The initial offering of Class A shares took place on October 24, 2006. Returns between October 24, 2006 and March 31, 2007 reflect a 0.15% 12b-1 fee. Returns prior to October 24, 2006 are those of Government Income, the original retail class of the fund, which does not bear a 12b-1 fee. Had Class A shares' current 12b-1 fee been reflected, returns prior to April 1, 2007 would have been lower.

^B Class T shares bear a 0.25% 12b-1 fee. The initial offering of Class T shares took place on October 24, 2006. Returns prior to October 24, 2006 are those of Government Income, the original retail class of the fund, which does not bear a 12b-1 fee. Had Class T shares' 12b-1 fee been reflected, returns prior to October 24, 2006 would have been lower.

^C Class B shares bear a 0.90% 12b-1 fee. The initial offering of Class B shares took place on October 24, 2006. Returns prior to October 24, 2006 are those of Government Income, the original retail class of the fund, which does not bear a 12b-1 fee. Had Class B shares' 12b-1 fee been reflected, returns prior to October 24, 2006 would have been lower. Class B shares' contingent deferred sales charges included in the past one year, past five years, and past ten years total return figures are 5%, 2%, and 0%, respectively.

^D Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on October 24, 2006. Returns prior to October 24, 2006 are those of Government Income, the original retail class of the fund, which does not bear a 12b-1 fee. Had Class C shares' 12b-1 fee been reflected, returns prior to October 24, 2006 would have been lower. Class C shares' contingent deferred sales charges included in the past one year, past five years, and past ten years total return figures are 1%, 0%, and 0%, respectively.

* The current sales charge is as of April 1, 2007. Prior to April 1, 2007, the sales charge was 4.75% for Class A and 3.50% for Class T.

Annual Report

$10,000 Over 10 Years

Let's say hypothetically that $10,000 was invested in Fidelity Advisor Government Income Fund - Class T on July 31, 1997, and the current 4.00% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the Lehman Brothers U.S. Government Index performed over the same period. The initial offering of Class T took place on October 24, 2006. See the previous page for additional information regarding the performance of Class T.

Annual Report

Management's Discussion of Fund Performance

Comments from William Irving, Portfolio Manager of Fidelity Advisor Government Income Fund

During the past year, the fund (excluding sales charges) lagged the 5.75% return of the Lehman Brothers 75% U.S. Government/25% U.S. Mortgage-Backed Securities Index. (For specific performance information on the fund's Class A, Class T, Class B and Class C shares, please refer to the performance section of this report.) The fund's return relative to the index was helped by its yield-curve positioning, which refers to how we allocated investments across a range of bond maturities. In particular, our overweighting in better-performing intermediate bonds in the two- to five-year range and our underweighting in lagging 10- to 20-year bonds worked in our favor. In the mortgage sector, our overweighted position in hybrid adjustable-rate mortgages (ARMs) helped because they generally outpaced the fixed-rate mortgages that dominate the benchmark, due to strong demand from institutional investors, who recently bought the bonds prior to their inclusion in the Lehman Brothers U.S. Aggregate Index and the Lehman Brothers U.S. Mortgage-Backed Securities Index. On the flip side, sector selection generally worked against us. An out-of-index position in Treasury Inflation-Protected Securities hurt because they lagged the index. Elsewhere, the fund also suffered from its underweighting in plain-vanilla Treasury securities, which outpaced mortgage-backed securities, in which we were overweighted. Our slightly larger-than-index weighting in agency securities had little effect on the fund's relative performance, as they generally kept pace with the index.

Annual Report

Shareholder Expense Example

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2007 to July 31, 2007).

Actual Expenses

Hypothetical Example for Comparison Purposes

Annual Report

	Beginning Account Value February 1, 2007	Ending Account Value July 31, 2007	Expenses Paid During Period* February 1, 2007 to July 31, 2007
Class A
Actual	$ 1,000.00	$ 1,021.70	$ 4.01
Hypothetical^A	$ 1,000.00	$ 1,020.83	$ 4.01
Class T
Actual	$ 1,000.00	$ 1,021.70	$ 4.01
Hypothetical^A	$ 1,000.00	$ 1,020.83	$ 4.01
Class B
Actual	$ 1,000.00	$ 1,018.10	$ 7.56
Hypothetical^A	$ 1,000.00	$ 1,017.31	$ 7.55
Class C
Actual	$ 1,000.00	$ 1,017.80	$ 7.80
Hypothetical^A	$ 1,000.00	$ 1,017.06	$ 7.80
Government Income
Actual	$ 1,000.00	$ 1,023.50	$ 2.26
Hypothetical^A	$ 1,000.00	$ 1,022.56	$ 2.26
Institutional Class
Actual	$ 1,000.00	$ 1,023.10	$ 2.66
Hypothetical^A	$ 1,000.00	$ 1,022.17	$ 2.66

^A 5% return per year before expenses

	Annualized Expense Ratio
Class A	.80%
Class T	.80%
Class B	1.51%
Class C	1.56%
Government Income	.45%
Institutional Class	.53%

Annual Report

Investment Changes

Coupon Distribution as of July 31, 2007
	% of fund's investments	% of fund's investments 6 months ago
Less than 2%	1.7	2.5
2 - 2.99%	0.0	1.2
3 - 3.99%	2.8	3.0
4 - 4.99%	34.2	31.0
5 - 5.99%	21.7	24.3
6 - 6.99%	15.6	15.8
7% and over	2.8	3.0

Coupon distribution shows the range of stated interest rates on the fund's investments, excluding short-term investments.

Weighted Average Maturity as of July 31, 2007
		6 months ago
Years	4.9	4.9

Duration as of July 31, 2007
		6 months ago
Years	4.7	4.1

Asset Allocation (% of fund's net assets)
As of July 31, 2007*			As of January 31, 2007**
	Mortgage Securities 32.0%			Mortgage Securities 29.2%
	CMOs and Other Mortgage Related Securities 7.9%			CMOs and Other Mortgage Related Securities 11.4%
	U.S. Treasury Obligations 34.7%			U.S. Treasury Obligations 29.8%
	U.S. Government Agency Obligations 27.5%			U.S. Government Agency Obligations 32.1%
	Asset-Backed Securities 0.5%			Asset-Backed Securities 0.7%
	Short-Term Investments and Net Other Assets^(dagger) (2.6)%			Short-Term Investments and Net Other Assets^(dagger) (3.2)%
* Futures and Swaps		4.4%	** Futures and Swaps		0.3%

^(dagger) Short-Term Investments and Net Other Assets are not included in the pie chart.

Annual Report

Investments July 31, 2007

Showing Percentage of Net Assets

U.S. Government and Government Agency Obligations - 62.2%
	Principal Amount (000s)		Value (000s)
U.S. Government Agency Obligations - 27.5%
Fannie Mae:
3.25% 8/15/08	$ 4,812		$ 4,725
3.25% 2/15/09 (b)	143,050		139,526
4.25% 5/15/09	11,235		11,108
4.5% 10/15/08	81,560		81,101
4.75% 12/15/10	233,801		231,870
4.875% 4/15/09	43,350		43,305
5.125% 9/2/08	78,770		78,833
5.125% 4/15/11	187,000		187,460
5.375% 6/12/17	124,591		124,477
6.375% 6/15/09	55,710		57,121
6.625% 9/15/09	36,820		38,047
7.25% 1/15/10	25,086		26,393
Federal Home Loan Bank:
4.5% 10/14/08	56,475		56,140
5.375% 8/19/11	35,350		35,724
5.8% 9/2/08	26,570		26,779
Freddie Mac:
3.875% 6/15/08	2,791		2,761
4.75% 3/5/09	113,806		113,487
4.75% 3/5/12	10,000		9,851
5% 1/30/14	25,000		24,700
5.125% 4/18/11	31,220		31,266
5.25% 7/18/11	29,000		29,129
5.5% 8/23/17	100,000		100,832
5.625% 3/15/11	48,555		49,446
5.75% 1/15/12	1,686		1,727
6.625% 9/15/09	155,000		160,166
Israeli State (guaranteed by U.S. Government through Agency for International Development):
5.5% 9/18/23	110,500		111,982
6.6% 2/15/08	20,957		20,995
6.8% 2/15/12	30,000		31,268
Overseas Private Investment Corp. U.S. Government guaranteed participation certificates:
6.77% 11/15/13	6,650		6,716
6.99% 5/21/16	21,433		22,966
Private Export Funding Corp.:
secured:
5.66% 9/15/11 (c)	18,000		18,332
5.685% 5/15/12	24,035		24,581
6.67% 9/15/09	3,500		3,624
U.S. Government and Government Agency Obligations - continued
	Principal Amount (000s)		Value (000s)
U.S. Government Agency Obligations - continued
Private Export Funding Corp.: - continued
4.974% 8/15/13	$ 22,940		$ 22,775
Small Business Administration guaranteed development participation certificates:
Series 2002-20J Class 1, 4.75% 10/1/22	6,759		6,559
Series 2002-20K Class 1, 5.08% 11/1/22	14,321		14,131
Series 2003 P10B, 5.136% 8/10/13	11,281		11,165
Series 2004-20H Class 1, 5.17% 8/1/24	4,033		3,981
Tennessee Valley Authority 5.375% 4/1/56	8,429		8,064
U.S. Department of Housing and Urban Development Government guaranteed participation certificates Series 1999-A, 5.96% 8/1/09	18,380		18,434
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS			1,991,547
U.S. Treasury Obligations - 34.7%
U.S. Treasury Bonds:
6.125% 8/15/29 (b)	293,102		337,365
6.25% 8/15/23	1,500		1,701
8% 11/15/21	146,794		191,406
U.S. Treasury Notes:
4.25% 8/15/13 (b)	20,010		19,605
4.25% 11/15/13	37,610		36,778
4.25% 8/15/14 (b)(f)	161,550		157,070
4.25% 11/15/14 (b)	77,185		74,954
4.25% 8/15/15 (b)	84,500		81,608
4.375% 12/15/10	5,230		5,201
4.5% 4/30/09 (b)	100,000		99,813
4.5% 4/30/12	86,000		85,604
4.5% 11/15/15 (b)	111,800		109,739
4.5% 5/15/17 (b)	72,000		70,464
4.625% 11/15/09	81,000		81,095
4.625% 10/31/11	11,000		11,015
4.625% 2/29/12	4,500		4,505
4.625% 11/15/16 (b)	224,000		221,270
4.75% 1/31/12 (b)	188,250		189,485
4.75% 5/31/12	35,000		35,213
4.75% 5/15/14 (b)	167,723		168,221
4.875% 10/31/08 (b)	180,000		180,281
4.875% 5/15/09 (b)	113,432		113,964
4.875% 6/30/09	128,000		128,690
U.S. Government and Government Agency Obligations - continued
	Principal Amount (000s)		Value (000s)
U.S. Treasury Obligations - continued
U.S. Treasury Notes: - continued
4.875% 5/31/11	$ 20,740		$ 20,951
4.875% 6/30/12 (b)	61,471		62,182
5.125% 6/30/11	23,214		23,666
TOTAL U.S. TREASURY OBLIGATIONS			2,511,846
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (Cost $4,494,382)		4,503,393
U.S. Government Agency - Mortgage Securities - 32.0%

Fannie Mae - 26.4%
3.729% 10/1/33 (g)	704		695
3.75% 1/1/34 (g)	657		648
3.75% 4/1/34 (g)	11,938		11,739
3.757% 10/1/33 (g)	720		717
3.802% 6/1/33 (g)	549		551
3.825% 4/1/33 (g)	1,988		1,996
3.847% 10/1/33 (g)	30,880		30,833
3.877% 6/1/33 (g)	2,681		2,690
3.902% 5/1/34 (g)	6,663		6,565
3.91% 5/1/33 (g)	4,715		4,742
3.913% 9/1/33 (g)	11,186		11,086
3.944% 5/1/34 (g)	5,281		5,200
3.947% 5/1/33 (g)	230		229
3.967% 9/1/33 (g)	9,140		9,031
3.998% 4/1/34 (g)	10,531		10,379
3.999% 10/1/18 (g)	508		502
4% 9/1/13 to 6/1/20	27,020		25,401
4.013% 4/1/33 (g)	187		188
4.033% 6/1/34 (g)	9,627		9,485
4.063% 3/1/35 (g)	17,948		17,760
4.076% 2/1/35 (g)	372		373
4.114% 5/1/33 (g)	8,396		8,412
4.166% 1/1/35 (g)	1,571		1,544
4.187% 11/1/34 (g)	12,876		12,913
4.205% 6/1/34 (g)	10,741		10,600
4.249% 1/1/34 (g)	2,105		2,084
4.25% 2/1/35 (g)	767		755
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount (000s)		Value (000s)
Fannie Mae - continued
4.264% 5/1/35 (g)	$ 773		$ 774
4.28% 10/1/33 (g)	332		330
4.282% 3/1/33 (g)	831		835
4.283% 6/1/34 (g)	11,653		11,534
4.294% 8/1/33 (g)	1,342		1,344
4.295% 3/1/35 (g)	656		660
4.3% 3/1/33 (g)	276		272
4.302% 6/1/33 (g)	430		433
4.304% 3/1/33 (g)	370		364
4.321% 4/1/35 (g)	381		382
4.343% 1/1/35 (g)	832		820
4.355% 10/1/19 (g)	1,207		1,192
4.36% 2/1/34 (g)	1,313		1,301
4.386% 10/1/34 (g)	4,044		3,996
4.396% 2/1/35 (g)	1,047		1,031
4.411% 7/1/35 (g)	19,301		19,009
4.419% 5/1/35 (g)	2,123		2,117
4.429% 5/1/35 (g)	616		617
4.432% 3/1/35 (g)	1,101		1,085
4.445% 8/1/34 (g)	2,165		2,148
4.481% 1/1/35 (g)	5,530		5,460
4.484% 11/1/33 (g)	1,650		1,638
4.494% 12/1/34 (g)	458		452
4.5% 2/1/18 to 4/1/20	16,046		15,376
4.503% 2/1/35 (g)	635		639
4.504% 2/1/35 (g)	333		336
4.512% 1/1/35 (g)	876		867
4.519% 2/1/35 (g)	11,901		11,819
4.524% 7/1/35 (g)	2,513		2,504
4.53% 10/1/35 (g)	416		415
4.554% 9/1/34 (g)	19,342		19,158
4.57% 7/1/35 (g)	3,098		3,108
4.575% 2/1/35 (g)	3,589		3,548
4.614% 7/1/34 (g)	26,137		26,045
4.651% 10/1/34 (g)	3,356		3,327
4.653% 3/1/35 (g)	614		619
4.702% 10/1/34 (g)	2,776		2,755
4.719% 7/1/34 (g)	1,970		1,957
4.723% 3/1/35 (g)	253		255
4.733% 12/1/35 (g)	64,285		63,872
4.772% 1/1/35 (g)	4,800		4,761
4.779% 12/1/35 (g)	4,486		4,465
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount (000s)		Value (000s)
Fannie Mae - continued
4.781% 12/1/34 (g)	$ 686		$ 681
4.794% 4/1/35 (g)	12,356		12,330
4.8% 7/1/35 (g)	4,715		4,669
4.801% 11/1/34 (g)	2,315		2,299
4.803% 6/1/35 (g)	3,587		3,597
4.803% 11/1/35 (g)	10,309		10,315
4.808% 2/1/33 (g)	1,141		1,152
4.808% 1/1/36 (g)	25,970		25,762
4.832% 10/1/35 (g)	2,001		1,988
4.849% 7/1/35 (g)	10,016		9,930
4.857% 10/1/34 (g)	8,122		8,076
4.86% 7/1/34 (g)	6,286		6,256
4.87% 5/1/33 (g)	36		36
4.894% 5/1/35 (g)	1,781		1,768
4.899% 8/1/34 (g)	5,359		5,333
5% 12/1/15 to 12/1/35 (e)	228,426		218,572
5.005% 2/1/34 (g)	8,241		8,166
5.016% 7/1/34 (g)	355		353
5.052% 5/1/35 (g)	4,154		4,184
5.069% 9/1/34 (g)	5,765		5,750
5.084% 9/1/34 (g)	735		733
5.087% 8/1/34 (g)	626		625
5.108% 10/1/35 (g)	4,553		4,531
5.135% 7/1/34 (g)	2,204		2,200
5.137% 8/1/36 (g)	31,468		31,432
5.162% 1/1/37 (g)	5,998		5,975
5.165% 3/1/36 (g)	14,153		14,126
5.17% 6/1/35 (g)	2,942		2,961
5.176% 8/1/33 (g)	1,042		1,043
5.176% 3/1/35 (g)	388		388
5.242% 5/1/35 (g)	5,794		5,790
5.277% 4/1/36 (g)	5,513		5,562
5.297% 7/1/35 (g)	396		399
5.31% 3/1/36 (g)	38,095		38,087
5.324% 12/1/34 (g)	1,042		1,042
5.356% 12/1/36 (g)	3,536		3,530
5.365% 2/1/36 (g)	8,514		8,518
5.394% 7/1/35 (g)	2,589		2,590
5.407% 2/1/37 (g)	3,127		3,130
5.449% 2/1/37 (g)	14,139		14,163
5.5% 4/1/09 to 12/1/35	404,307		395,248
5.5% 8/20/22 (d)	13,000		12,857
5.518% 1/1/34 (g)	77		77
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount (000s)		Value (000s)
Fannie Mae - continued
5.612% 2/1/36 (g)	$ 3,401		$ 3,417
5.67% 4/1/36 (g)	12,513		12,576
5.67% 6/1/36 (g)	8,147		8,191
5.757% 4/1/36 (g)	6,620		6,664
5.804% 3/1/36 (g)	8,634		8,698
5.807% 5/1/36 (g)	3,745		3,775
5.818% 1/1/36 (g)	2,679		2,686
5.831% 5/1/36 (g)	19,628		19,791
5.854% 6/1/35 (g)	2,147		2,164
5.872% 3/1/36 (g)	8,089		8,116
5.897% 12/1/36 (g)	4,655		4,689
5.9% 3/1/36 (g)	7,602		7,671
5.925% 6/1/36 (g)	14,806		14,942
5.94% 5/1/36 (g)	5,459		5,511
6% 5/1/12 to 7/1/33 (e)	104,928		104,948
6% 8/1/22 (d)	23,000		23,160
6% 8/1/37 (d)	65,000		64,465
6% 8/1/37 (d)	107,000		106,119
6% 8/14/37 (d)	48,000		47,605
6.038% 4/1/36 (g)	52,142		52,707
6.106% 4/1/36 (g)	28,823		29,145
6.226% 3/1/37 (g)	1,495		1,508
6.314% 10/1/36 (g)	23,129		23,379
6.352% 8/1/36 (g)	7,422		7,512
6.5% 2/1/12 to 1/1/35	25,718		26,177
6.58% 9/1/36 (g)	10,877		11,031
7% 7/1/13 to 7/1/32	5,688		5,916
7.5% 8/1/10 to 4/1/29	155		160
8% 1/1/22	9		9
8.5% 1/1/15 to 7/1/31	617		651
9% 11/1/11 to 5/1/14	646		649
9.5% 11/15/09 to 10/1/20	893		968
10% 8/1/10	2		2
11% 8/1/10	14		15
11.25% 5/1/14	9		10
11.5% 6/15/19 to 1/15/21	1,428		1,593
12.5% 8/1/15 to 3/1/16	3		3
			1,913,585
Freddie Mac - 5.0%
3.377% 7/1/33 (g)	9,295		9,201
4% 5/1/19 to 11/1/20	26,657		24,871
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount (000s)		Value (000s)
Freddie Mac - continued
4.283% 2/1/35 (g)	$ 1,796		$ 1,799
4.288% 3/1/35 (g)	842		842
4.301% 12/1/34 (g)	1,107		1,087
4.424% 6/1/35 (g)	1,284		1,278
4.426% 2/1/34 (g)	780		771
4.426% 3/1/35 (g)	1,054		1,035
4.444% 3/1/35 (g)	1,076		1,059
4.5% 2/1/18 to 8/1/33	17,105		16,227
4.539% 2/1/35 (g)	1,585		1,560
4.701% 9/1/36 (g)	3,473		3,449
4.704% 9/1/35 (g)	26,676		26,548
4.737% 2/1/34 (g)	8,503		8,358
4.784% 3/1/33 (g)	361		366
4.789% 2/1/36 (g)	1,410		1,392
4.922% 10/1/36 (g)	19,855		19,768
4.988% 4/1/35 (g)	4,699		4,722
5% 1/1/09 to 9/1/35	13,435		12,779
5.021% 4/1/35 (g)	527		517
5.128% 7/1/35 (g)	5,138		5,103
5.132% 4/1/35 (g)	4,463		4,439
5.278% 2/1/36 (g)	313		311
5.489% 2/1/37 (g)	12,155		12,106
5.498% 1/1/36 (g)	4,438		4,433
5.5% 8/1/14 to 11/1/36	56,405		55,704
5.536% 1/1/36 (g)	6,600		6,597
6% 7/1/16 to 11/1/33	31,292		31,441
6.489% 10/1/36 (g)	10,873		11,010
6.5% 11/1/10 to 10/1/36	48,678		49,550
6.538% 2/1/37 (g)	18,692		18,820
6.618% 12/1/36 (g)	18,478		18,674
7% 4/1/11	4		4
7.5% 5/1/11 to 7/1/16	2,286		2,384
8% 1/1/10 to 6/1/11	1		1
8.5% 8/1/08 to 9/1/29	232		248
9% 8/1/08 to 10/1/20	110		116
9.5% 6/1/09 to 8/1/21	358		388
9.75% 8/1/14	153		162
10% 7/1/09 to 8/1/21	37		40
11% 7/1/13 to 5/1/14	70		77
12% 8/1/13 to 3/1/15	3		3
12.25% 4/1/11 to 9/1/13	3		4
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount (000s)		Value (000s)
Freddie Mac - continued
12.5% 2/1/10 to 6/1/19	$ 35		$ 38
13% 8/1/10 to 6/1/15	9		10
			359,292
Government National Mortgage Association - 0.6%
4.25% 7/20/34 (g)	1,091		1,085
6% 7/15/08 to 12/15/10	1,510		1,523
6.5% 2/15/24 to 10/15/35	23,880		24,483
6.5% 8/1/37 (d)	10,000		10,185
6.5% 8/1/37 (d)	2,000		2,037
6.5% 8/1/37 (d)	4,000		4,074
7% 10/15/26 to 8/15/32	113		117
7.5% 1/15/08 to 8/15/29	137		144
8% 11/15/07 to 12/15/23	1,465		1,553
8.5% 10/15/08 to 1/15/25	14		14
9% 12/15/09	1		1
9.5% 2/15/25	1		1
10.5% 4/15/14 to 1/20/18	105		118
13.5% 7/15/11	8		9
			45,344
TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES (Cost $2,338,955)		2,318,221
Asset-Backed Securities - 0.5%

Fannie Mae Grantor Trust Series 2005-T4 Class A1C, 5.47% 9/25/35 (g) (Cost $37,634)	37,634		37,887
Collateralized Mortgage Obligations - 7.9%

U.S. Government Agency - 7.9%
Fannie Mae:
planned amortization class:
Series 1992-168 Class KB, 7% 10/25/22	1,537		1,591
Series 1993-109 Class NZ, 6% 7/25/08	938		937
Series 1993-207 Class H, 6.5% 11/25/23	18,360		18,860
Series 1993-240 Class PD, 6.25% 12/25/13	6,432		6,520
Series 1994-23:
Class PG, 6% 4/25/23	5,761		5,763
Class PZ, 6% 2/25/24	10,056		10,038
Series 1994-27 Class PJ, 6.5% 6/25/23	319		318
Collateralized Mortgage Obligations - continued
	Principal Amount (000s)		Value (000s)
U.S. Government Agency - continued
Fannie Mae: - continued
planned amortization class:
Series 1996-28 Class PK, 6.5% 7/25/25	$ 4,114		$ 4,220
Series 2003-28 Class KG, 5.5% 4/25/23	4,940		4,816
Series 2006-45 Class OP, 6/25/36 (i)	6,641		4,880
Series 2006-62 Class KP, 4/25/36 (i)	13,648		9,648
sequential payer Series 1997-41 Class J, 7.5% 6/18/27	3,010		3,189
Series 2003-22 6% 4/25/33 (h)	20,731		4,920
Fannie Mae Grantor Trust:
planned amortization class Series 2005-81 Class PC, 5.5% 9/25/35	2,150		2,056
sequential payer Series 2005-93 Class HD, 4.5% 11/25/19	1,428		1,391
Fannie Mae subordinate REMIC pass-thru certificates:
floater:
Series 2001-38 Class QF, 6.3% 8/25/31 (g)	762		780
Series 2002-49 Class FB, 5.92% 11/18/31 (g)	1,203		1,224
Series 2002-60 Class FV, 6.32% 4/25/32 (g)	502		516
Series 2002-75 Class FA, 6.32% 11/25/32 (g)	1,028		1,058
Series 2004-54 Class FE, 6.47% 2/25/33 (g)	522		524
planned amortization class:
Series 2002-18 Class PC, 5.5% 4/25/17	1,170		1,170
Series 2003-113:
Class PD, 4% 2/25/17	23,515		22,334
Class PE, 4% 11/25/18	7,545		6,815
Series 2003-128 Class NE, 4% 12/25/16	13,100		12,442
Series 2004-21 Class QE, 4.5% 11/25/32	1,500		1,394
Series 2004-80 Class LD, 4% 1/25/19	10,160		9,569
Series 2005-102 Class CO, 11/25/35 (i)	6,783		5,005
Series 2006-12 Class BO, 10/25/35 (i)	31,149		22,967
Series 2006-37 Class OW, 5/25/36 (i)	7,297		5,413
sequential payer:
Series 2001-20 Class Z, 6% 5/25/31	24,462		24,478
Series 2001-46 Class ZG, 6% 9/25/31	8,550		8,560
Series 2004-3 Class BA, 4% 7/25/17	723		696
Series 2004-86 Class KC, 4.5% 5/25/19	3,213		3,122
Series 2004-91 Class AH, 4.5% 5/25/29	6,395		6,220
Series 2005-117, Class JN, 4.5% 1/25/36	645		564
Series 2002-50 Class LE, 7% 12/25/29	5		5
Series 2005-14 Class SE, 0.73% 3/25/35 (g)(h)	21,743		677
Series 2007-36:
Class GO, 4/25/37 (i)	1,469		1,102
Collateralized Mortgage Obligations - continued
	Principal Amount (000s)		Value (000s)
U.S. Government Agency - continued
Fannie Mae subordinate REMIC pass-thru certificates: - continued
Series 2007-36:
Class PO, 4/25/37 (i)	$ 3,261		$ 2,427
Class SB, 1.28% 4/25/37 (g)(h)	42,342		2,114
Class SG, 1.28% 4/25/37 (g)(h)	19,112		971
Series 2007-66 Class SA, 7.68% 7/25/37 (g)	5,575		5,775
Freddie Mac:
planned amortization class:
Series 1413 Class J, 4% 11/15/07	100		99
Series 2115 Class PE, 6% 1/15/14	1,037		1,039
Series 2356 Class GD, 6% 9/15/16	636		643
Series 3149 Class OD, 5/15/36 (i)	35,541		25,496
sequential payer Series 2114 Class ZM, 6% 1/15/29	2,704		2,729
Freddie Mac Manufactured Housing participation certificates guaranteed:
floater Series 1686 Class FA, 6.275% 2/15/24 (g)	1,017		1,036
planned amortization class Series 1681 Class PJ, 7% 12/15/23	8,867		9,097
Series 1560 Class PN, 7% 12/15/12	6,638		6,661
Freddie Mac Multi-class participation certificates guaranteed:
floater:
Series 2389 Class DA, 6.22% 11/15/30 (g)	765		767
Series 2448 Class FT, 6.32% 3/15/32 (g)	1,182		1,212
Series 2530 Class FE, 5.92% 2/15/32 (g)	697		705
Series 2630 Class FL, 5.82% 6/15/18 (g)	550		556
Series 3008 Class SM, 0% 7/15/35 (g)	377		381
planned amortization class:
Series 1141 Class G, 9% 9/15/21	435		461
Series 1614 Class L, 6.5% 7/15/23	5,333		5,412
Series 1671 Class G, 6.5% 8/15/23	1,191		1,196
Series 2006-15 Class OP, 3/25/36 (i)	8,127		5,738
Series 2543 Class PM, 5.5% 8/15/18	250		250
Series 2625 Class QX, 2.25% 3/15/22	72		72
Series 2640:
Class GE, 4.5% 7/15/18	7,310		6,975
Class QG, 2% 4/15/22	86		85
Series 2660 Class ML, 3.5% 7/15/22	6,346		6,289
Series 2682 Class LD, 4.5% 10/15/33	777		676
Series 2752 Class PW, 4% 4/15/22	2,515		2,484
Series 2802 Class OB, 6% 5/15/34	10,455		10,415
Collateralized Mortgage Obligations - continued
	Principal Amount (000s)		Value (000s)
U.S. Government Agency - continued
Freddie Mac Multi-class participation certificates guaranteed: - continued
planned amortization class:
Series 2810 Class PD, 6% 6/15/33	$ 995		$ 993
Series 2866 Class XE, 4% 12/15/18	19,350		18,246
Series 2937 Class KC, 4.5% 2/15/20	19,686		18,524
Series 2966 Class XC, 5.5% 1/15/31	25,111		24,877
Series 3077 Class TO, 4/15/35 (i)	17,855		12,817
Series 3110 Class OP, 9/15/35 (i)	16,826		12,131
Series 3119, 2/15/36 (i)	20,299		14,338
Series 3121 Class KO, 3/15/36 (i)	7,162		5,453
Series 3123 Class LO, 3/15/36 (i)	13,128		9,225
Series 3145 Class GO, 4/15/36 (i)	11,854		8,368
Series 3151 5/15/36 (i)	12,724		8,910
sequential payer:
Series 2546 Class MJ, 5.5% 3/15/23	2,861		2,741
Series 2570 Class CU, 4.5% 7/15/17	2,060		2,013
Series 2587 Class AD, 4.71% 3/15/33	5,785		4,891
Series 2601 Class TB, 5.5% 4/15/23	869		831
Series 2617 Class GW, 3.5% 6/15/16	4,132		4,057
Series 2675 Class CB, 4% 5/15/16	2,018		1,958
Series 2677 Class HG, 3% 8/15/12	1,169		1,158
Series 2683 Class JA, 4% 10/15/16	2,104		2,036
Series 2685 Class ND, 4% 10/15/18	9,064		8,147
Series 2750 Class ZT, 5% 2/15/34	1,020		879
Series 2773 Class HC, 4.5% 4/15/19	704		644
Series 2809 Class UA, 4% 12/15/14	3,028		2,980
Series 2849 Class AL, 5% 5/15/18	7,819		7,684
Series 2860 Class CP, 4% 10/15/17	2,474		2,403
Series 2866 Class N, 4.5% 12/15/18	7,093		6,991
Series 2937 Class HJ, 5% 10/15/19	9,618		9,472
Series 2998 Class LY, 5.5% 7/15/25	2,011		1,908
Series 3007 Class EW, 5.5% 7/15/25	8,875		8,421
Series 3013 Class VJ, 5% 1/15/14	1,981		1,957
Series 2769 Class BU, 5% 3/15/34	5,744		5,191
Series 2863 Class DB, 4% 9/15/14	1,319		1,251
Series 2957 Class SW, 0.68% 4/15/35 (g)(h)	29,878		823
Series 3002 Class SN, 1.18% 7/15/35 (g)(h)	29,958		1,283
target amortization class:
Series 2156 Class TC, 6.25% 5/15/29	9,895		10,184
Series 2877 Class JC, 5% 10/15/34	1,413		1,382
Collateralized Mortgage Obligations - continued
	Principal Amount (000s)		Value (000s)
U.S. Government Agency - continued
Ginnie Mae guaranteed REMIC pass-thru securities planned amortization class:
Series 1997-8 Class PE, 7.5% 5/16/27	$ 4,821		$ 5,135
Series 2005-58 Class NJ, 4.5% 8/20/35	21,605		21,183
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $575,569)		569,028
Cash Equivalents - 27.6%
	Maturity Amount (000s)
Investments in repurchase agreements in a joint trading account at 5.3%, dated 7/31/07 due 8/1/07:
(Collateralized by U.S. Government Obligations) #	$ 13,512		13,510
(Collateralized by U.S. Government Obligations) # (a)	1,985,314		1,985,022
TOTAL CASH EQUIVALENTS (Cost $1,998,532)		1,998,532
TOTAL INVESTMENT PORTFOLIO - 130.2% (Cost $9,445,072)			9,427,061
NET OTHER ASSETS - (30.2)%			(2,185,321)
NET ASSETS - 100%		$ 7,241,740

Swap Agreements
	Expiration Date	Notional Amount (000s)	Value (000s)
Interest Rate Swaps
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed rate equal to 5.57% with Goldman Sachs	August 2017	$ 100,000	$ (443)
Receive quarterly a floating rate based on 3-month LIBOR and pay semi-annually a fixed rate equal to 5.96% with Morgan Stanley, Inc.	July 2037	27,500	(1,027)
Receive semi-annually a fixed rate equal to 5.035% and pay quarterly a floating rate based on 3-month LIBOR with Deutsche Bank	April 2010	225,000	(723)
Receive semi-annually a fixed rate equal to 5.51% and pay quarterly a floating rate based on 3-month LIBOR with Morgan Stanley, Inc.	July 2010	140,000	1,409
Receive semi-annually a fixed rate equal to 5.706% and pay quarterly a floating rate based on 3-month LIBOR with Deutsche Bank	June 2017	75,000	1,148
		$ 567,500	$ 364